The Seven Steps Of Wealth Coaching - Step 2

Step Two – Know Your Numbers

Once you have identified your goals (see our previous blog for more details on how to figure this out), you’ll need to know your numbers. This means working out your current income, expenses, debts, and savings. When you have this information you will be in a position both to make improvements to your financial health and to start effective planning for the future.

Work out your income

While this may sound as simple as looking at your payslip, this is not always the case. If you are self-employed, for example, it may be harder to assess. If you have more than one income stream or a variable one, make sure you know what should be coming in and when, and make an assessment on how reliable it is. Do you depend on bonuses or discretional payments? )We will look at protecting your working income in our next blog. Do you have investments that pay regular amounts (see our investments section below)? 

If you just have one, regular income this is quickly done: otherwise add everything together to get the full picture. 

Work out your expenses

Do you know how much money is going out each month and exactly what you are spending it on? Mortgage, utilities, insurance, mobile phones, television and streaming services, food, entertainment, fuel, credit card payments, and so on. 

Work out what you are spending on each item. If you are not sure, or you pay for items on a yearly or quarterly basis, for example, go back over your old statements and add up each area of expense over a year. Divide the amounts by twelve to get an average monthly amount. Add in any future expenses you are aware of to build up a full picture of how much you are (or will be) spending and on what.

Work out what you have in savings, investments, and pensions

Know exactly what you already have in savings, investments, or retirement accounts. Did you take out an ISA that you had forgotten about? Did you open a savings account years ago with a different bank because there was a preferential rate? Do you have pensions in various accounts? Make sure all your savings are accounted for and you know what can be accessed, when, and on what terms.

If you find this process difficult a wealth coach will be able to help you get to grips with what you have and how and when it can be accessed.

Work out your debts

You might have loans, credit card debt, or other debts that you need to pay either now or in the future. Sometimes it feels easier to try to avoid thinking about debt, but this is an area where you can make positive changes (we’ll go into more detail about that in our next blog) if you know what you are dealing with. Make sure you know the amounts, interest rates, and payment terms of all the debts you have. 

When you know your numbers, you can start improving your financial health

Once you know what you have coming in and going out you can look at maximising your income and minimising your expenses. We have software that can help you forecast your income, savings, and expenses over time so please get in touch if you are struggling to see your overall financial health. We will be looking at how you can improve it in our next blog. 

If you need any assistance with your wealth planning, please make sure you speak to an expert wealth coach who can give you advice. Paula Bicknell Wealth Management can help make your money work better for you. Please get in touch as we would love to hear from you.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.