Performing a Financial Health Check

It can often be difficult to know if our finances are in order. The “health” of any portfolio will often determine the levels of liquidity that we can enjoy in the future. This is obviously important, for there can be instances when we suddenly need to access these funds. Let us take a some of the methods involved with performing a financial health check as well as why they can prove to be so very effective. After all, fiscal health is just as important as your physical well-being.

Determine Your Requirements in Relation to Your Finances 

Before we delve into any specifics, it is first a good idea to accurately estimate your monthly expenditures. These include areas such as utility bills, any types of rental costs, weekly expenses and so forth. These will then be balanced against your earnings after taxes. A clear picture should begin to emerge.

Are you spending more than you can afford to in the long run? Are you losing money at the end of every pay cycle? If you are able to add to your savings, what surplus can you expect to enjoy? A healthy financial status is one which generally allows you to set aside between five and ten per cent of your revenue on a monthly basis. Anything less might signal that you need to perform a bit of financial housekeeping.

Tackling Inflation 

In a perfect world, we would never be forced to deal with the impacts of inflation upon our daily lives. Unfortunately, society is far from perfect. October fiscal figures have pointed to the fact that inflation rates throughout the United Kingdom currently stand at three per cent. This will have a very real impact upon your expenditures. In effect, your money has lost three per cent of its aggregate value and you will be forced to spend slightly more in order to receive the same goods and services as in the past. Regardless of the health of our finances, inflation affects us all.

Tackling Your Financial Health Issues: What Options do You Have? 

Assuming that you have little desire to work an extra ten or 15 hours a week, what choices are at your disposal and how can these prove to be valuable financial tools? You will likely be surprised at the answers to this rather straightforward question.

One of the most effective ways to enjoy extra liquidity is to delve into the world of online investing. No longer will you require the use of an advisor or a financial middleman. Websites such as CMC Markets provide you with all of the tools required to turn a profit with time and experience. Additionally, there are countless different markets at your immediate disposal. These include (but may not be limited to):

  • Forex trading
  • Commodities
  • Treasuries
  • Indices
  • Contracts for difference

Each of these will appeal to specific traders. If you are looking for quick turnarounds, Forex (currency) positions could be a wise choice. More stability and longitudinal profits are often associated with index-based trades. In order to appreciate which method suits you the best, it is a good idea to examine one in greater detail.

Your Credit Rating 

You can think of a credit score as the “barometer” associated with your current financial state. It is easy to obtain an accurate reading. The most two common methods are to access official online websites such as Equifax and Experian. You will obtain a score in a matter of minutes and all information is kept strictly confidential. If you find that your credit score is far from perfect, it could be a wise idea to consider other options such as cutting back on weekly expenses or even obtaining the services of a debt consolidation specialist.

Much like our physical health, it is wise to pay attention to the state of our finances. You will be able to find ways to improve your status and over time, liquid capital could be much more of a reality. Always consider investing as a viable alternative; you will be surprised at how many possibilities await.

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