Time for a financial health check?

Did you set any financial goals this year? If so, now’s a good time to see if you are on target to achieve them. Were you saving for a holiday or a wedding? Are you planning to go on Hajj next summer? Or perhaps you are building your rainy-day savings. If you don’t have a financial goal, it’s not too late to set one; they can really help us focus our financial minds and make sensible choices with money. You just need to make sure that it is meaningful to you to make the work required to achieve it worthwhile. 

The first step in your financial health check is to understand your outgoings. You can use an online budget calculator, make a spreadsheet, or just write everything down – whatever suits you. Make sure you’re being truly honest and practical when you’re working out your outgoings. 

You need to note down what you spend, not what you think you should spend or the minimum you think you could get away with. If you love getting an expensive coffee every morning on your way to work and you can afford it, that’s fine – just make sure you factor it into your budget. 

It’s also important for you to understand the expenses that you have coming up. For example, if you’re self-employed, are you putting enough away to pay your tax bill? Have your children just started University? Is your house in need of repairs that you just can’t put off any more?  

Sometimes, a frank assessment of our incomings and outgoings can give us a nasty shock, but knowledge is power and once you know where your money is going, you can decide if you need to make changes. If you do want or need to spend less, consider it to be a great opportunity to stop and think about whether there’s anything you can cut back on. It might be enough just to cut back on luxuries, or you might have to shop a little smarter. 

Here are 4 things to consider, whether you’re overhauling your finances or just trying to make sure your bills are streamlined and affordable:

1. Know what you’re spending your money on: it’s so easy for money to drip-drip-drip away without us noticing. Lots of small costs soon add up. It’s easier to be savvier with our money when we really know where it’s going. 
2. Get the best deals: One way of getting on top of your finances is to take a regular look at your outgoings. Essential bills like energy, telephone, internet, and television services can be a significant chunk of our monthly outgoings, and some people can save hundreds of pounds a year by searching for better deals on their utility bills and other essential finances. If you can put aside just one day to use online comparison tools and switch deals, it could prove to be one of the most lucrative days of your year.
3. Check your standing orders and direct debits: Hopefully, they will all look familiar; your gas and electricity suppliers, mobile phone providers and so on. But you might just find some outgoings that you’d forgotten about, like a yearly fee for a website you no longer use, or a subscription to an online newspaper or magazine that you no longer need.
4. Involve your family: if you’re the main breadwinner or bill-payer, it can help to get other members of your household involved in the day-to-day finances. It’s a valuable lesson for children and can set them up to become financially savvy adults. It might also help them appreciate the value of the home life and comforts you provide for them.