Naz Financial

A Personal Financial Blog from Naz Miller

Time for Your Personal Financial Health Check

Personal financial health checks are a clever idea at this time of year. As one year ends and another starts anew, try to devote some attention onto your personal financial health.

In my view, financial health is as important as physical and mental health in terms of living a happy, fulfilling life.

Strong financial health is good for your well-being. It can mean less time worrying about money, as you spend responsibly and save your money effectively.

What is a Personal Financial Health Check?

Primarily, a personal financial health check is a review of your personal finances to see if you’re managing money optimally. It’ll help you reach your financial goals.

Personal financial health checks are sometimes called financial check-ups, personal financial reviews, money health checks, fiscal check-ups, and more.

When reviewing your finances, you should assess your:

  • Spending patterns
  • Saving habits
  • Debt levels.

You can do this yourself, or work with a professional adviser, like me. Better still, do both. Here’s my guide to how you can help yourself, to start with.

5-Step Personal Financial Health Check

It can be daunting, even frightening for some, to inspect your personal finances like this. But don’t be deterred, it’s very cathartic, and you’ll feel better at the end of it.

My personal financial health check starts with a review of all your outgoings. See what you can free up to save and start to build a plan.

money health check up

1. Monitor Your Spending

Take a recent bank statement and look at it, line-by-line. I’d advise against the December one or the January one, either, for the same reason, they’re distorted by Christmas. Take a ‘normal’ month.

  • Do you recognise all the payments?
  • Are you still paying for things you don’t use any more? That gym membership was good for a while, but are you still using it?
  • Look at small outlays, as well as large. A daily large coffee, 5 days a week costing £2,65 will set you back £689 per year. A £7 lunch every weekday, will cost you £1820 per year. Make your own lunches to pay for a holiday? It can be done.
  • Are you dipping into overdraft? The costs of these have risen dramatically in recent years. If you can, avoid it, or at least minimise it. A simple rescheduling of direct debits to later in the month can save some people significant sums.

2. Minimise the Cost of Essentials

Fuel prices have risen a lot recently. Petrol, diesel and of course, gas and electricity. These are expected to rise further in the coming months, too. It’s much harder to switch supplier nowadays, as there are fewer of them, but it may still be worth seeking better deals for your usage.

And look at how much you spend on debt management. Paying for the car, the mortgage, credit cards can run out of control. Can you re-finance to save money? Take out an interest-free credit card to clear debt? Switch to a lower, fixed mortgage rate?

People that shop around with GoCompare for car insurance can typically save up to £256 a year, the site says. Other comparison sites say similar.

How much can you save on the weekly shop, without compromising on quality?

If you’d like some real-life inspiration on how to cut your outgoings, see this Times report about exactly how a woman paid off her £2,300 overdraft in just 6 weeks.

3. Savings for a Rainy Day

According to MaPS, the Money and Pensions Service, some 11.5 million people in the UK have less than £100 cash savings to fall back on. I don’t know about you, but I find that scary.

So, if you don’t have a ‘rainy day’ pot, it’s a good idea to make one, using the savings made from inspecting your expenditure, in your personal financial health check.

Freelancers and the self-employed should generally aim to have a savings pot of 3-6 months expenditure, if they can. This can help mitigate against sudden or unexpected losses in earnings. Employees should look to cover themselves against possible redundancy or reduced working hours.

4. Long Term Savings

An integral part of your personal financial health check should be to review your long-term savings. These are typically pensions, ISAs, stocks and shares. My blogs have covered all of these investments and the different strategies you can employ and different life stages. Examples include Pension Planning Doesn’t Have to be a Chore and the Impact of Inflation on your Savings and Investments.

To find more, go to my blog archive and find an article by category on the right of the page.

5. Make a Plan and Stick to It

financial check-ups self help guide

Armed with your personal financial health check, you can then start to plan better. A good place to start is your credit score. Check its accuracy as well as its overall score. And work towards improving it.

Set yourself some savings goals. Maybe initiate short term savings through making a standing order into your savings account on pay day. Decide what type of retirement you’d like and seek professional advice on how best to achieve it.

Above all, make your plan realistic and achievable. And review it regularly.

In conclusion, now’s the perfect time to undertake a personal financial health check. Good, healthy financial habits can take some discipline, but it gets easier once you get into a routine. Here are some suggestions to maintain good financial health:

  • Watch your spending.
  • Cancel subscriptions you don’t use.
  • Pay off debt on credit cards or personal loans where interest rates are higher.
  • Nail your financial goals.
  • Check your credit score and make sure your details are correct.
  • Transfer money into your savings account as soon as you’re paid.
  • Build up an emergency fund of at least three months’ earnings.

If you’d like some support after you’ve started your personal financial health check, or if you want help to get started, please contact me without delay.

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Naz Miller

I'm Naz and I'm a Financial Adviser. Prior to working in private practice, I spent 34 years working at Lloyds Bank in Cambridge and surrounding areas. My work has always focused on helping clients achieve their long-term financial objectives.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.