Personal Finance Assessment: A Wake Up Call
Are You Financially Fit? A Personal Finance Assessment That Could Change Everything
How long have you been working—and how much have you saved? Be honest.
Now take that number, divide it by the years you’ve worked, and project that average forward to retirement. Still feel confident?
If you stopped working tomorrow, could you live off what you’ve saved for the next 30, 40, even 50 years? For most people, the answer is a hard no. But here’s the thing: it's not because you're not earning enough. It’s because you're not paying attention.
Most people believe they’re 'doing okay' with money—until they realise they’ve been winging it their whole adult life. They’ve never sat down to actually assess their financial health. They don’t track their spending. They don’t have a clear plan. And they certainly don’t know if they’re on track to retire.
This article isn’t here to sugar-coat things. It’s here to hold up a mirror and make you take a hard look at your financial habits.
We’re going to walk through a step-by-step personal finance assessment that’s designed to shake you out of autopilot and give you the framework to actually build wealth. Real wealth. Let’s get started.
Step 1: Know Your Numbers
Let’s start with the basics. Ask yourself:
- How much do I earn (after tax)?
- What are my fixed costs each month (rent, utilities, insurance)?
- What are my variable costs (food, transport, entertainment)?
- How much do I save or invest each month?
- How much debt do I have?
Write these numbers down. Seeing them in front of you is often the wake-up call people need. If you can’t answer any of these questions off the top of your head, that’s your first red flag.
Step 2: Evaluate Your Savings Rate
Take your monthly savings/investments and divide it by your take-home income. Are you saving at least 20% of your income? Ideally, closer to 30%?
If you're saving nothing or very little, ask yourself: where is your money going instead?
Step 3: Check Your Debt-to-Income Ratio
Take your total monthly debt repayments and divide it by your monthly income. If it's more than 35%, you're in a high-risk zone. Debt is a killer of wealth creation. Paying off high-interest debt (credit cards, personal loans) should be a top priority.
Step 4: Identify Your Emergency Buffer
Do you have 3–6 months of expenses saved in cash? If you lost your job tomorrow, how long could you stay afloat? No emergency fund means your finances are one unexpected expense away from disaster.
Step 5: Define Your Goals
Now for the big one: what are you actually working towards?
- Do you want to retire early?
- Are you aiming for a certain level of passive income?
- Do you want to buy property, start a business, or travel the world?
Without a goal, money just gets spent. Goals give purpose to your saving and investing habits.
Step 6: Measure Your Progress
Once you've set your goal—say, £1 million by age 60 for financial independence—break it down. How much do you need to save/invest each month to get there?
Let’s say you’re 30 years old and want to have £1 million saved by the time you're 60. If you assume an average annual investment return of 7%, you’d need to invest roughly £820 per month every month for the next 30 years.
This is where most people realise they’re miles off track. But the good news? With a clear picture, you can now do something about it.
Step 7: Create a Plan
Here’s the final and most important step: what are you going to do differently?
- Will you automate your savings?
- Set up a regular investment plan?
- Pay down debt faster?
- Reassess your spending habits?
You can’t change what you don’t measure. And you won’t get wealthy by accident. Doing this personal finance audit might just be the thing that finally pushes you to stop living month-to-month and start building a future that feels secure.
Your financial fitness is in your hands. The first step is taking an honest look in the mirror. Ready?
Book a meeting now!
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