2 Finances – how much is enough?
Our financial resources are made up of our assets (what we have) and our liabilities (what we owe to others – debts). Unstable earnings or debts can have a major impact on how secure individuals feel. Most of us have had periods of leaving bills unopened or may have been surprised by an unexpected car repair. It is easy to underestimate how much these nagging fears and feeling slightly out of control of our finances can drain our energy.
Understanding your assets and finances is important in times of change, particularly if you are considering a career change or setting up your own business, like Hilary Devey who you listened to in Week 2. You may remember that Devey sold her house and her car to finance the early days of her business. Even if you are not planning such drastic measures, knowing what assets you have and tracking your income and outgoings can relieve pressure, so you know that you could afford a month off work without earning, for instance, or can identify which credit card to pay off first. Some people save towards a ‘freedom fund’, putting away 10 per cent of their income each month, to show they are committing to making their longer-term dreams possible. That may not feel possible for now, but what might feel possible today?
Activity _unit6.2.1 Activity 3 Into action: finances
Earlier this week, in Section 1, you trialled a 20-minute activity to try a new physical activity. What 20-minute action could you do now, that would make a difference to how you feel about your finances?
You could print off bank statements for the last three months and look at your spending patterns; you could find a notebook and start tracking what you are spending over the next month; or you could write down what your teenage son owes you and discuss a repayment plan. Have a go now.
If you did take action, how do you feel now? Was it as tricky as you feared? Were you over-ambitious in what you thought you could achieve? How motivated do you feel to take a second step?
Just as most of us do not yet have the skills we need for jobs in 2030, many feel on unstable ground about finances. However, getting clearer about your personal situation can help forestall difficulties. Taking small actions to solve problems, from opening a pile of bills to requesting a pension forecast, can build confidence and remind us of just how competent we are.