9
Smart Ways to FINANCIAL CONTROL
No one likes to talk about money, whether it is the debt they have occurred or their uncertainties around their net worth. Presenter and Money Secrets 101 author, Janet Xuccoa, opens the discussion and shares some financial tips to help us stand on our own two feet and control our finances.
I
t’s this flipping simple – the one relationship you’ll constantly have throughout your whole life is the one you have with money. You can choose to be in control of that relationship or have the relationship control you.
To my mind, I like dictating the rules and being in control. It’s liberating. It’s empowering. It’s downright comforting when I get to call the shots as to where dollars, pounds and euros go. Ultimately, I like to have my money working for me rather than me working for my money. If you want to be in this situation, try some of the points I’m making here.
1
Understand Your Own Financial Health
The actual exercise of getting a grip on what financial shape you’re in is easy. All you have to do is calculate your net worth. Add up the value of all your assets (cash, stocks, bonds, value of your home, value of investment properties, etc.). Next add up all your debts (credit card debt, retail shop card loans, student loan, hire purchase loans, vehicle loans, personal bank loans, mortgage loans, etc.). Now subtract the total amount of debt from the total value of assets. The resulting number is your net worth. Some people find this exercise easier to do over a glass of wine. Others need a bottle. Whatever the case, understanding your net worth is vital because it enables you to set a plan on increasing that special number.
2
Know Thy Self
If you want a life that doesn’t involve scrambling to find money all the time, you need to understand how much you earn and how much you spend. This may seem straightforward, but most people don’t know where their coin goes until they’ve completed the exercise in Money Secrets 101. This frequently results in them having too much month left over after they’ve spent all their cash. A word of caution… when completing this exercise, remember to look back but don’t stare. Don’t berate yourself over past behaviour. Instead gain an awareness of your past actions. Now move on. Understanding money inflows and outflows not only reduces financial stress but also provides us with a sense of empowerment. This is because it permits us to take action, which in turn leads us to greater financial freedom. Once you know your true monthly financial position, you’ll be ready to find ways to cut expenses and/or develop ways to increase cash, all so you can travel towards achieving the money goals you’ve set yourself.
3
What You Own Is Important. Knowing What You Owe Is Vital
Debt can seriously affect our financial health. It’s amazing how it can spiral out of control in a really short space of time. Debt problems can leave you feeling embarrassed and overwhelmed. Rabbit and Ostrich behaviour follows and, in succession, domino effects occur. Total debt can – and frequently does – outweigh total asset values. Legal proceedings begin. Assets get seized by creditors. Here’s my first suggestion: give up the cross – we need the wood. Stop beating yourself up over the debt. Instead spend your energy fixing the problem. The first step is to talk with a professional. Trying to manage things on your own is like trying to drive to a place you’ve never been before without directions! The second step is to have your professional create a plan. Involve your creditors with open dialogue. Implement a budget and practice careful money management. Choose one of the money management systems and the debt repayment strategies I’ve mentioned in Money Secrets 101.