How do you feel about the current state of your finances?
Maybe you feel as though things are tracking OK at present – and that’s great! But I’m sure there are times, whether it’s daily, weekly or monthly where you feel as though things aren’t as ‘sorted’ as you’d like them to be.
When life gets crazy busy (like it always does & especially so with little people in the mix), your financial future tends to slip down the priority list. How can you be sure you are on track to build wealth and hit each and every financial goal that you’ve set for yourself?
Instead of comparing your financial situation to your friends or living under a box pretending everything will turn out okay, take a look at these simple, yet powerful signs that your finances are on track.
And if you’re not ticking any of these boxes, it may be time to stop, take a pause and figure out how to turn them around in your own life.
Here we go:
- Your financial well-being doesn’t change month to month
So you feel good about things this month? What if I was to ask you how you felt about your finances last month, or the month before, or even next month? Would your answer be different to right now?
If the answer is yes, then it’s more than likely that you are living month to month. You’re lacking in terms of cashflow management at home.
You don’t have a budget, or maybe you do and it’s just not working for you. If this is the case, it’s time to get back to basics and get your cashflow under control.
- You don’t find yourself stressed by unexpected expenses
If you do – you likely don’t have that all important cash buffer, emergency fund or “Mojo money” as The Barefoot Investor calls it (if he’s your guru).
Planning for the unexpected might sound counter-intuitive but in reality it’s not. You know that in any given year – there are likely to be ‘thing’s’ that come out of left field.
Do you own a car? You’re likely to have an unplanned expense relating to it.
Do you have family overseas or interstate? Well you might have to up and go at the last minute to see them.
Do you own a washing machine or dishwasher? Well, there’s every chance you’ll need a new one this year.
Are you human? Yes, well you know then that not everything in life can be planned, so best to be a little prepared for the unexpected.
- You consciously give yourself a ‘lifestyle’ budget each week
If you don’t then I can almost guarantee you’re not happy with how much it currently costs you to live. Why – because you’re spending more than you’d like to be!
It doesn’t matter if it’s $100 or a $1,000 a week – we all have different means and that’s why there is no size fits all approach to cashflow and budgeting. And again, why even though the concept of a budget is simple – it ain’t easy!
It has to be a conscious decision and it has to be funded by an entirely separate account to your other expenditure.
- You are always able to pay your bills on time
Have you ever had to put an expense on a repayment plan? If it wasn’t due to circumstances beyond your control, then it’s likely you haven’t quite got your budget and cashflow right.
Maybe it was an expense you forgot to account for, or you underestimated the cost. Go back and re-jig your numbers so you’re not caught out next time.
- You don’t carry credit card debt
Are you currently making the minimum repayment on your credit card? Have you ever done a calculation on how long it will take you to repay your credit card by just making the minimum repayment each month and how much interest you will pay in total over that time?
If not, you definitely should.
In fact, do it now. The MoneySmart website has a credit card calculator that lets you do the calculation yourself. Don’t wait for your bonus or your inheritance or your next big sale to start paying off your credit card debt. Make it priority numero uno!
- You know how much you’re worth
What is the point of being ‘on point’ with your finances if your efforts are not continually moving the dial forward with regards to your overall financial position?
You know the saying; if you’re not going forwards you’re going backwards? Well, it’s certainly true when it comes to your finances.
As you grow in years, you want your finances to grow with you. You want to be avoiding bad debt, saving money, investing it and saving some more.
How you do this is to work out your net position and keep a watchful eye on how your day to day finances and the smart moves you make throughout each year impact and propel your Net Worth.
- You have a handle on your super…
You don’t need to be an investment specialist to get this. And even if retirement is several years off or you are focused on accumulating wealth outside of superannuation (i.e. through real estate or business) – it’s still money folks. In fact, it’s almost 10% (currently) of your salary year on year being syphoned away and invested on your behalf. In other words, it’s worth paying attention to.
At a minimum here’s a “what you should know” checklist to help you cover off on this point:
- how much do you have?
- who it’s with (which super fund)?
- how many accounts you have (preferably one or few if there’s a good reason to have more)?
- how it’s invested (what funds, shares, portfolios your dollars are invested in)
- do you have any insurance in there? (and how much are you paying for it)
- who does it pass to if you pass away?
- You know what you’re doing with your savings
Got savings? Congratulations! But now come the next step; what should you do with that money? It definitely is a struggle putting that first little lump together. But then you want to make sure that you invest it wisely – otherwise what was the point right?
Should you buy your first home, invest it into the share market or is there something else you could be doing with it that is the ‘smart move’ for you.
The answer to that question entirely depends on how much you have and you and what your financial goals are – and that is where a financial planner comes in.
But having the answer to this question means you are on track. If you’re stuck at this point, then you really should see about some help with your next steps.
- You know you’ll be financially OK if something unexpected happened to you or your partner
If the thought alone makes you fret, then they may be something missing from your financial planning. Adequate insurance coverage to provide for your family in the event something unforeseen happens can mean the difference between a staying on track with your financial affairs or coming unstuck and without the means to get back on course.
- You don’t lose sleep over your finances
Even if you seemingly tick every box on this list – if you’re still losing sleep then it’s likely you know there is something else that needs attention when it comes to your money and finances.
Whether it’s a big gaping hole somewhere or even a small little leak – there is a solution to it.
It you are looking for some professional help with a personal touch – then get in touch!
I’m here to help