January, despite its unrelenting bleakness, is often the most hopeful month of the year.
With every fresh start comes new opportunities to do things differently, and if you’re focusing on financial goals in 2023 then you might be looking at how you can cultivate a healthier relationship with money.
Not sure where to start? Money coach Simonne Gnessen from Wise Monkey Financial Coaching has shared ten simple exercises to help you assess your current financial situation, and make the most of your pounds and pence over the next 12 months.
‘It’s always a good idea to keep track of your net worth – your assets and liabilities. Write down on one side any savings, investments, pensions, if you own a property, that kind of thing. And then on the other side, any credit cards, loans, overdrafts, mortgages. The number of what you own minus what you owe, is your net worth.
‘This lets you see where you stand regarding assets and liabilities, and then from there you can look at your income and expenditure. It’s a way to ask, “where am I right now? What have I got? And how do I want this to look in the future?”’
‘Pick either a typical month or a three to six month period and, with a sense of curiosity rather than self-judgement, have a go at analysing income and spending. This will help you become a bit more conscious about where your money is going – and it might identify some areas where you could be making different choices.
‘For example, you might isolate an area like eating out or takeaways and aim to start by just getting more in control of that particular aspect of spending.’
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‘Once you have a handle on what is coming in and out, you will be in a position to then make a plan to direct spending in ways that align with your goals. For instance, deciding to pay down debt over the next 12 months, or build up savings for a deposit, or increase pension contributions.
‘January is a great time to do a bit of a stocktake and think about “how do I want things to be for this year?” By reframing any ideas – whether it’s starting a new business, trying for a baby or studying – into a meaningful life goal, you have space to think of the financial implications linked to them, and the smaller steps or milestones that you will need to meet to make them happen.’
‘Most of us don’t think about Power of Attorney until we’re in your 70s or 80s, but actually we should organise that while we’re well and fit even at a young age, because we just never know what could happen.
‘It’s also a good idea to make a will. Some people put off writing it as they can’t decide who they want as an executor, or who will take care of their kids, but having something out there that could be changed at a later date is better than having nothing at all.
‘I’ve also seen people that are suddenly bereaved and they don’t know their loved one’s passwords so they can’t access anything, or deal with the banks. Taking some time to get on top of old financial paperwork, and writing down log-ins and passwords that can be stored in a secure physical or online digital vault can be one of the best things you can do for your family.’
There’s also life insurance, income protection and stuff like that to consider.
‘Dedicate a few hours to researching if there are opportunities out there that you’re not taking advantage of. Are you on the right mortgage deal? Are you taking full advantage of benefits your employer may offer? Have you got the best savings interest rate? Are you paying more than you need on a credit card – can you do a 0% balance transfer? Nowadays there are some accounts that pay 7% interest for regular savings – could moving money to one of those be a motivation to save more? Is it a good time to start a Stocks and Shares ISA?
‘All the information you need is out there to make sure your money is working as hard for you and going as far as possible.’
‘Many people have been left feeling incredibly anxious by the headlines about inflation and the cost of living crisis, which has a knock on effect on our health and wellbeing. While we have no control over the economy, we can control our own narrative and take steps to minimise the impact. If you’re financially secure yet find yourself still incredibly worried, it’s worth digging a bit deeper into your mindset.
‘For instance, I sometimes see with my clients family stories of relatives or ancestors losing their money, which can cause a tendency to hook into a “scarcity mindset”. If you think this applies to you, then ask yourself
“does my mindset serve me? Do my beliefs about money serve me? Am I hijacking myself in any way in terms of habits and behaviours?” Looking inwards can help you see things more objectively.’
‘Journaling is a good way to work through feelings and goals, but I am also a big advocate for drawing. There’s a really good TED Talk by Patti Dobrowolski where she demonstrates how to visualise your current reality and your desired new reality through a picture. She draws a bridge from one side to the other, made up of three arrows, which are the bold steps needed to live that life.
‘If you’ve got that up on your wall, your eyes are drawn to it and your unconscious mind is working towards making that happen, even when you’re not even consciously aware of it.
‘Similarly, finding a way to gamify a goal – perhaps challenging yourself to a “no spend week”. Or using a chart where you cross out each successful day you don’t use your credit card for anything unless it’s an absolute emergency, so you have a visual reminder and as time goes on it’ll be harder to break the chain.’
‘How you can maintain accountability depends on your personality, because some people are very good at holding themselves to account on things that they say. Meanwhile, other people need some kind of an accountability buddy to voice that commitment to.’
‘Setting rewards for yourself when you hit a milestone can be really motivational. It might be something inexpensive but fun, like a meal out, or a night away with a friend. Or taking a day off work.’
Turn it round
‘Turn your focus towards motivated goals rather than away from a habit or situation. Rather than making a goal, “I’m not going to be in debt anymore”, focus on what you want instead, like “I make smart financial choices”. Create positively framed goals that help you shift your identity.
‘Language is so important. Try renaming a savings account to something that’s emotionally charged and helps drive you towards the goal, like renaming it as “my freedom account” or “my enablement fund”.’