Do you feel like you have no control over your money? Knowing the right questions to ask about money is the key to taking control of your finances.
From budgeting to saving for retirement, these 5 essential questions to ask about money management will help you take charge of your financial well-being.
1. What are my financial goals?
Identifying your financial goals can help you create an achievable plan to reach them.
Think about what you want your financial life to look like in one year, five years, and even 10 years from now. Your financial goals should change over time as you get older. So start planning now.
Do you need more savings?
Aim to have at least 6 months of cash reserves to meet your financial commitments. Building your savings to have at least 6 months may be a bit scary to start with so begin by looking at where you are right now.
If you have no money by the end of each month and no savings at the moment, your first goal is to have at least 1 month of costs set aside.
- Rent/Mortgage.
- Utility Bills.
- Loan Repayments.
- Grocery Bills
Are there any big purchases coming up soon?
Setting clear, achievable goals will ensure that you have the financial security and stability you need for the future.
- Buying a home.
- Having Children.
- Education to further your career.
- Saving for your retirement.
- Investments.
- Starting your own business.
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2. What monthly income and expenses do I have?
Understanding your monthly income and expenses is key to mapping out your financial plans.
What are your sources of income, such as an earned salary, investments, or other income?
Then consider what expenses you cover every month. Knowing where and how much money is coming in and out of your accounts will help you create a budget and make informed decisions about how to best use your funds.
When you look at your expenses break them down into annual or monthly expenses. If you have a lot of monthly expenses do you get better value by paying annually?
Common areas where people can save money are:
- Don’t use cash – cash in your pocket will always get spent. Use your debit cards to pay for things. This makes it easier to see where you’re spending each month.
- Price utility and insurance providers each time you are coming up for renewal. Make sure you are getting the best deal you can.
- For energy bills make sure you check your electricity and gas meters every month and update your readings using your provider’s web. If you leave it to estimates you’ll get bill shocks after winter every year.
- Stay away from Hire-Purchase agreements sold by shops & retailers. If you need to borrow for a large purchase you could find better value by getting personal loans from banks, credit unions or the post office.
- Plan your food shopping – make a list and stick to it. Shops are experts in getting you to spend more than you planned to.
3. Should I use a budgeting tool or spreadsheet to keep track of my finances?
A budgeting tool or spreadsheet can be a great way to keep track of your finances and stay organised.
There are many easy-to-use, digital budgeting tools that can help you get a clearer picture of your income and expenses.
A spreadsheet can also help you to create a plan for saving money and staying on top of your bills each month.
Pick a day at the end of every month (Sunday morning works for us) and go through your spending for the previous month. This will highlight areas you did well in and places you can improve.
If you’re not sure which method would work best for you, consider talking with a financial adviser who can help you find the best option for managing your money.
4. How can I build an emergency fund?
A key part of personal finance is having an emergency fund. Emergency funds are savings set aside to help cover unexpected expenses in the case of an emergency, like a medical bill or car repair.
Setting aside just 10-15% of your income each month can help you build up a sizable safety net. If you can’t afford to put 10% of your income into your emergency fund pick what you can afford to put away. Any amount is better then nothing.
It’s important to consider factors such as your lifestyle, current debt levels, and living expenses when deciding how much to save each month. If you have large amounts of personal debt it may be advisable to clear the debt instead of saving money.
You may also want to speak with a financial adviser for more personalised advice.
5. How can I make more money
One of the best things anyone can do is increase their income. Be aware of passive income / make money from home schemes.
Look at your primary employment. How can you leverage that into more income?
- What industry are you working in currently?
- Are there other industries that pay more for similar skill sets?
- Can you upskill by completing courses that could move you onto a higher salary?
