10 Weeks to Wellbeing: Week 7 – Finances
[First published in my Irish Sunday Mirror wellbeing column, 26th Oct ’14. Ideas shared in this article do not constitute financial advice; seek professional advice for individual issues.]
This week’s topic is one that can be a huge source of stress in life: finances. Quite often, high stress levels are caused or worsened by a lack of information and clarity. Whilst professional financial advisors are the best source of tailored advice and information for your needs, there are some basic steps you can take to boost financial wellbeing (I’ve listed some useful links below). If your blood’s running cold just thinking about finances, remember that issues can’t be ignored forever, that there’s help out there, and that however grim you think the picture is, taking control of your finances – with support – will be a huge weight off your shoulders. So:
To improve your finances it’s crucial to get clear picture of your current circumstances – make some time to gather information, step by step. You can find many free templates online that you can use for some of the following:
- Keep a spending diary for at least one month. Note everything you spend money on, and tot up expenditure in categories at the end of the month.
- Calculate your income and expenditure – how much comes in and goes out each month. What’s left over after necessary expenditure? How much of your income is spent on servicing debt? Is your non-essential spending greater than your essential spending (bills, rent, etc.)?
- Calculate your balance sheet – your assets and debts. If your debts are greater than your assets, seek professional advice.
Get a copy of your credit report (you can get this from the Irish Credit Bureau).
Contact lenders to check what rates of interest you are being charged on credit cards, store cards, mortgage, loans, etc. If considering moving lenders for better rates, check what penalty clauses and other risks apply.
- Make a list of seasonal peaks and troughs – at what times of the year do your income and expenditure increase or decrease?
Money and emotion
How did you feel seeing the facts in black and white – was it a shock, or are you relieved? Think about your attitude to money: what beliefs do you have, and what has shaped them? How did money feature in your upbringing? How have you been influenced by peers and the media? What are your strengths and weaknesses? And what’s your emotional relationship with money? Many people spend money to feel better; as escapism, to create feelings of excitement and pleasure (or even risk), or to boost self-esteem – what are your triggers for ’emotional’ spending? If you think there are deep emotional issues at play that you can’t manage alone, consider therapy to fix underlying causes of your money woes.
What are your financial goals? These might include:
- Clearing debt
- Increasing income
- Being able to move house or make home improvements
- Being able to afford more holidays
- Increasing savings (including three months of income, if you were to be out of work)
- Securing adequate life insurance cover to maintain your family’s lifestyle if you should die
- Supplementing a pension
- Beginning or increasing investments
Do you know how to meet these goals? Are there any obvious steps you can take – perhaps selling things you no longer need, doing without a car (or with only one), downsizing or sub-letting, shopping around for best deals, creating a second income? Seek any necessary advice and information and put a plan together – one that is realistic and achievable. And remember to pay attention to your stories! Whatever your relationship with money has been in the past, you can improve it today.
Some useful links:
www.moneysavingexpert.com (UK-based, but has useful info/templates for budgeting etc. for anyone, anywhere)
www.alvinhall.com (worldwide info)
www.iwillteachyoutoberich.com (worldwide info)
www.richdad.com (worldwide info)
There are also lots of money management apps available; check out reviews for your smartphone’s platform to see which might help you meet your goals.
Next week: Family & Social
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