Whether you’re starting to feel like money is taking control of you and not the other way round, or you’re looking to boost your credit score, or save up for something amazing, taking a good look at your financial situation is the first step in getting where you want to be.
Luckily taking a financial selfie doesn’t require any fancy filters, a mirror, or a great pout! All you need is a computer, tablet or phone and 2 columns. If you’re old school (or just old, like me) you can even go ultimate retro and use pencil and paper…
If you don’t have any spreadsheet software available, use Google Docs – it’s completely free and it’s cloud based so you can access it anywhere from almost any device. All you need is 2 columns.
Lay it on the line
Put a heading on the top line of column one – “Income”. On each line put in amounts for all the money that comes in each month. Wages, benefits, any cash you receive from anywhere. Column two needs to be labelled “Outgoings”. This one does what it says on the tin as well – list line by line everything you spend. Mortgage or rent, groceries, insurances, petrol, nights out, new shoes, loan payments. You need to be honest with yourself – remember this selfie has no filters!
Once you’ve got a total for those columns, you can extend the picture further by having a column marked “savings” and another marked “debts”. Again, any balances you’ve got in ISAs, deposit accounts, emergency fund you should list out. In the other column put down how much you owe on loans, credit cards, overdrafts, store cards, etc.
A pretty picture?
That’s it – that’s your financial “selfie”, a simple portrait of income versus expenditure and assets versus debts.
Knowing where you are month-to-month is a fantastic first step towards building a working budget and getting in control of your finances before they get you out of control. You might be pleasantly surprised at how well you’re doing. You might wonder why you’re always skint if you’re supposed to have £200 a month left over. It’s worth checking out where the money goes if you don’t have anything spare to save (my guess is it comes out of the hole in the wall and you don’t realise…).
If the picture looks like you’re going to get into difficulties at some point then now’s the time to do something about it. You can get free and impartial advice from the government’s Money Advice Service or from your local Citizens Advice Bureau.