Financial health check
What do I earn, what do I spend and what do I need?
Many of us only have a rough idea of where our money goes. This activity will provide a simple spreadsheet to enable you to get an accurate picture of your current financial situation.
A major barrier to getting what we want out of life is the belief that we can't afford to live on less money than we earn or receive now.
This activity will help you to record specific data on your outgoings and your income and invite you to assess exactly what you're getting for your money.
Financial health check
- Download your financial health check spreadsheet (excel spreadsheet 36KB) here. (If you haven't got access to Microsoft Excel, you can download free software from the Open Office website, which will help you view the file.)
- Save the spreadsheet to your hard drive and you're ready to begin!
- As you add your data the sheet will automatically total it up for you. The '%' column will also calculate the percentage of your total spend for each item. You'll be able to see just what percentage of your money is spent on alcohol, energy bills or holidays! You can change any of the headings so that they accurately reflect the items or services you're buying. You can also insert or delete specific rows by right clicking on any of the rows and selecting insert or delete.
Please note: This workout does involve considerable preparation in order to complete it accurately.
We suggest that you budget for a year. Look at your bills for last year and double-check your direct debits, your cheque books and your bank statements. Look at gas, electricity and water charges, your council tax charges and your rent or mortgage payments.
- Most of us usually underestimate what we spend on food, drink, clothes and going out. Be honest with yourself! If you keep all your old receipts, you can input actual amounts into each section.
Work out the totals for the year and place one-twelfth in each monthly column. Estimate for any other items you can't pinpoint precise costs for - for example, money spent on holidays, eating out, entertainment, travel, or the cost of running your car.
- When you have completed your spreadsheet (make sure you save it), try answering the following questions:
- What does the picture tell you about your financial situation?
- What would you like to change?
- What might you need to change?
What comes next?
It's now time to see just what you're getting for your money.
- Enter your spreadsheet again. You will see three columns on the far right-hand side. The first column asks you if each specific piece of expenditure is 'essential', i.e. if you really could not or would not do without it.
Consider each item on your list and type in an X next to each one you believe to be essential to the way you want to live your life. - The next column asks you which of these items are 'nice to have'. Again type in an X as appropriate.
- The third column is asking you if you could spend less on a specific item. You can choose between giving it a 1 which means 'absolutely not', 2 which means 'to some extent', 3 which means 'significantly' and 4 which means you could 'eliminate' the item entirely.
Again, save your completed spreadsheet.
Reflections
Now ask yourself the following questions:
- What do you realise as a result of this activity?
- Are you surprised by anything that you have found from this activity?
- Which are the items that you could cut down on or get rid of, if you chose to do so?
Many of us trap ourselves into a lifestyle, according to the assumptions we make around what we must have before life is worthwhile. Our hunger can sometimes be so consuming that we pursue goals that are not in our best interests and not even in line with our life values.
Use our simple workout to identify your life values.
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