How to Review Your Financial Situation Without the Stress
Taking a hard look at your finances doesn’t have to feel like a chore. With the right steps and a bit of honesty, you can get a grip on your money without losing sleep over it. Whether you’re trying to save more, get out of debt, or just want to know where your cash is going, this guide will help you build a clear picture of your financial health. Let’s break it down.
1. Know Exactly What You’re Earning
First things first – how much money do you actually make each month? It sounds simple, but you’d be surprised how many people don’t know their total income off the top of their heads.
- List Every Source of Income – Include your salary, freelance gigs, rental income, dividends, benefits, or anything else bringing money into your account.
- Make a Note of Irregular Payments – If you earn commission, bonuses, or seasonal income, estimate an average based on previous years.
- Calculate a Monthly Average – If your income varies, take a conservative approach by using the lowest monthly average to avoid overestimating.
2. Track What’s Going Out
Your expenses hold the key to finding savings and cutting unnecessary costs. Start by following the paper trail.
- Look Over the Past 3-6 Months – Go through your bank and credit card statements line by line. It’s time-consuming but worth it.
- Separate Fixed and Variable Costs – Fixed costs include rent, mortgage, and utilities. Variable costs are things like groceries, entertainment, or those takeaway Fridays that add up quickly.
- Don’t Overlook Irregular Expenses – Car insurance, holiday bookings, and birthday gifts can slip under the radar. Add them to the list and break them down into monthly contributions.
3. List Every Debt – Yes, All of It
Facing your debts head-on might feel uncomfortable, but knowing exactly where you stand is the first step to tackling them.
- Write Down Every Debt – Credit cards, personal loans, student loans, car finance – don’t leave anything out.
- Highlight Interest Rates – Prioritise the debts with the highest interest. These are the ones quietly eating into your bank balance.
- Compare Minimum Payments and Extra Repayments – Seeing how much longer you’ll be in debt by just paying the minimum can be a real eye-opener.
4. Count Up Your Assets
Now, let’s focus on the good stuff – the things you own that add value to your life.
- Savings – ISAs, regular savings accounts, or that old bank account you forgot about.
- Investments – Shares, pensions, bonds, or property.
- Physical Assets – Your car, jewellery, or even that rare collection of vinyl records. If it’s worth something, it counts.
5. Work Out Your Net Worth
Here comes the magic formula:
Total Assets – Total Debts = Net Worth
If you’re seeing a negative number, don’t panic. Plenty of people start here. The goal is to use this as your baseline and work your way up.
6. Spot Spending Habits That Need Tweaking
Once you’ve got the numbers in front of you, it’s time for a little reflection.
- Identify Problem Areas – Maybe your subscription services are piling up, or you’re spending more on eating out than you realised.
- Look for Ways to Save – Could you switch energy providers, negotiate your phone bill, or cancel a gym membership you’re not using? Small changes add up.
7. Set Goals That Actually Mean Something
Now that you know where you stand, what do you want to achieve?
- Short-Term Goals – Focus on building an emergency fund or paying off credit card debt.
- Long-Term Goals – Think about buying a home, investing for retirement, or planning a big holiday.
Make these goals specific and give them a deadline – “Save £500 by April” feels more achievable than “save money at some point.”
8. Build a Budget That Works for You
The idea of budgeting can leave some people cold, but they’re not about restriction – they’re about control. Set up a system that helps you live comfortably while still saving for the future.
- Prioritise Essentials – Rent, bills, and groceries come first.
- Add Savings to the Plan – Treat your savings like another bill you have to pay.
- Leave Room for Fun – A budget that cuts out fun is one you won’t stick to. Plan for treats and hobbies, just in moderation.
Handy Tools to Make It Easier
- Budgeting Apps – Try Plum, Snoop or Cleo to keep track of spending in real time.
- Debt Calculators – Use online calculators to see how much faster you can clear debt by paying a little extra each month.
- Good Old Spreadsheets – If apps aren’t your thing, a simple Excel or Google Sheets tracker works just as well.
Ready to Get Started?
Taking control of your finances isn’t about being perfect – it’s about being consistent. Start with small steps, and you’ll soon see progress.