Check Your Financial Health in Just 5 Minutes
While we regularly check our skin for wrinkles, spots and stray hairs and our body for every bump or wobble – our finances go largely unchecked. Yes, we look at monthly inflows and outflows, but not the larger picture.
As our finances do not stare back at us in the mirror everyday, they are pretty easy to ignore.
Coming to grips with all that terminology can be, more than a little overwhelming, and fitting this enormous task into our overbooked lives is just too dam hard.
Unfortunately, a strategy of ignorance, has very rarely proved effective. In a money driven world, understanding where you are, is critical. If we don’t understand where we are, we are left in a position of insecurity.
As a financial planner, I have seen that the hardest step for most women is the first one. So, I have drawn on my 15 years of experience to remove this hurdle.
Instead of this huge, complex subject, let’s break finance down into 5 manageable components: income, investment, debt, risk and retirement.
Ask yourself these simple questions on each subject and score your answers from 1 (not confident) to 4 (confident).
Income:
How confident am I that…
1) My income is well structured and tax efficient?
2) My current income meets my living costs?
3) My children’s education costs are covered?
4) My surplus income is being invested efficiently for wealth creation?
5) My income and employment are secure?
Investment:
How confident am I that…
1) I have an appropriate 5 year wealth plan?
2) I have a tax efficient investment structure?
3) I understand the risk/reward trade-off between my investment strategy and other options?
4) My investments are achieving my goals?
Debt:
How confident am I that…
1) My debt is structured in the best possible way?
2) I have the right mix of personal and investment debt?
3) I have a strategy to eliminate my personal debt in the shortest possible time?
4) My overall debt levels are appropriate for my current life status?
5) My debt plan is regularly reviewed?
Risk:
How confident am I that…
1) My insurances cover me comprehensively for most foreseeable circumstances?
2) I am paying the most competitive premiums?
3) I have the appropriate levels of cover in place?
4) My family would continue to live comfortably if something happened to me?
5) My insurance policies are regularly reviewed?
Retirement:
How confident am I that…
1) I have a clear understanding of my retirement goals?
2) I have a clear understanding of my desired retirement income needs?
3) I am on track to achieve my required income in retirement?
4) My retirement funds will last throughout my retirement?
5) My retirement funding strategy is structured tax efficiently?
Well done for taking the first step! I bet that you are thinking that it wasn’t so hard – you should have done it ages ago.
You also probably realised that you are better than expected in some areas and need some desperate help in others. Either way, knowing where you are makes things enormously less stressful.
As a financial planner, my core goal is empowering my clients through clear, simple advice in language that they can understand.
WHY? Because life is too important to worry about money.