• George Callaghan

Re-set your finances


These are tough times, no doubt. But, as with any challenge we face, there are opportunities for growth and development. I’d like to raise some of the positives for our personal finance.

The first is a renewed focus on the importance of liquidity in our personal finances. Just as many sm

all businesses are stretched beyond breaking point if they have insufficient cash flow to cover regular outgoings, so household finances might buckle if there is a drop-in income but still substantial outgoings.

Many employed people will either still be earning their full salary or, if they are covered by the Government Scheme, be on 80% of their wages. But many others may already have been laid off and many more self-employed will be without inflows of money - at least until some form of Government assistance actually materialises. For these people, who are numbered in millions, having sufficient liquidity will be a matter of the upmost importance.

No matter what your current employment situation is, use this time to firstly recognise the importance of household liquidity and secondly take action to improve it in the future.

Even if at the moment you are stretched make a commitment to build 3-6 months of regular expenditure in an easy access savings pot from future income flows. Ring fence this money and keep it for future challenges.

The second positive is to assess and potentially re-set spending. Ask yourself “what have I been doing with my money and have these purchases really been worth it?” While the occasional meal out/ cinema trip/ home delivery should quite properly be enjoyed it is likely many people spend on what might be described as “non-essentials”. I won’t list them as everyone clearly has their own priorities, but you could begin tracking your patterns expenditure. You could also set yourself other goals, such as “decrease my spending by 10%” or “identify 2 categories of spending I will cut out”.

Then commit to track your spending regularly each month. Use monthly surpluses to build your contingency savings pot.

These two actions: tracking spending and building liquidity will enable you to emerge from these tough times both with potentially stronger finances and, more importantly, more positive money habits.


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