Do not get uptight about your own finances but learn the simple basics so you feel on top.
There are some approaches that will help you factor in risk and guide you to achieve your longer term goals.
If you consider a 45 year working life even at a modest salary you will probably earn over £1 million so it is well to have some overview from the start.
The Big Picture and Overview
- You do not need a personal finance master plan covering your whole life and financial expectations. However you will benefit from understanding your money and how to manage income, expenditure and assets.
- To be master of your own personal finances and destiny you do need a strategic vision or overall objective to help your focus.
- The overview should equip you to research in more detail your personal finance issues as they arise from student days through mortgages, tax, pensions and death.
- Become aware of the personal finance industry and how it operates to your and their advantage
- Give more prominence to the next couple of decades as ‘the future is hard to predict’
The Little Picture and Tactics
- Look at the individual issues that affect as they arise.
- The devil is in the detail so examine each opportunity or money problem in thoroughly.
- Do not be put off by what seems to be over complex. Reduce your personal finance issues to a level you understand using common sense and available information.
- Know your own strengths and weaknesses. If you reach your limits seek help and do more research before getting committed.
- The elephant in the room can best be eaten in small bites.
Understand the Risks and Rewards
- Even if you are tolerant of risk you should take care.
- The bigger the perceived rewards the bigger the likely risk of loss or failure.
- If you are risk adverse deal with well known companies and well known and easy to understand products.
- It may seem to be a pain but read the small print, check the detail and record what why and who you dealt with.
- Keep good records in case you need to check in the future.
Simple Decision Taking
- Be clear what you want to achieve with each product or action.
- Gather the relevant information and discard the irrelevant
- Compare and evaluate the pros and cons of each option you have available. (marks out of ten may help)
- Decide what you think is best and implement you decision.
- Newspapers and magazines are good sources for upto date articles. The good papers often have Personal Finance supplements at the weekend
- Leaflets and booklets from finance industry or local libraries can provide a better understanding
- Websites including FSA, Which money and BBC may be good for research.
- Professionals may have a place in your personal finance but they are not simple and may over complicate matters. Use them when an issue is complex or the risk seems worth the extra cost and effort.