Have you tamed the Money Monster?

We process financial concerns in our primitive brain and respond to them emotionally rather than rationally. Once the Money Monster escapes, it takes over and runs amok. The only way to get it back under control and back in it’s cave is to have worked through your finances and have the rational arguments ready. The Money Monster will already be loose by the time your rational mind kicks into gear, so it needs to have already the answers immediately available. So this is really about how well you know and control your finances.

How much are you worth? What are all your assets and how readily available are they to you?
This will include any redundancy or severance payments, savings, stocks and shares, ISAs, savings plans and other financial products. You should get your financial advisor to help you with this. If you haven’t got one, now might be a good time to find one.

What’s your household budget? How much do you spend monthly and annually? What are your recurring expenditures? What is discretionary? 

What things do you have to cover (e.g. housing, food, transport)?

What things could you stop spending money on? What things could you do more cheaply?
What could you reduce your budget to (without making life miserable)?

What are bigger changes you could make e.g. downsizing, selling a car, renting out a room? At what point would you do these?

How much do you need for your new lifestyle e.g. retraining costs, setting up a business, day to day costs?

Given a reduced household budget and a new ‘business’ budget, how long would your resources keep you going without any income? (This is known as ‘the length of your runway’)

How do you track your expenditure and manage your budget? How diligent are you at this? 

If you are the sort of person who finds the financial side of things just freezes your brain, then you need to get some professional help on this. Just hoping for the best won’t hack it. Of course, if you decide to get someone to manage it all for you, then you can score yourself highly on this!

If you are comfortable, or have no option but to manage your finances yourself, then how good a grip have you got on them? (This is not about how strong your financial position is, it’s about how much you have it under your command).

Now score yourself out of 10 on the scoresheet.

Onto Question 4 >>

<< Question 2