The secret to financial control is hidden in these five numbers, and your mission, should you choose to accept it is to uncover them.
I know you are the woman for the job because you are reading this blog clearly ready to become the boss of your money!
The mission is critical so let’s jump right in.
Your credit score
This is the one that trips up many an intrepid Ms MoneyPenny because you typically don’t know about it until you need to, for example when renting a property or more importantly buying a house.
Our credit score is the result of undercover surveillance spying on the money moves we make to assess how well we manage our money, especially the way we manage our borrowed money. Don’t panic no big brother is spying on you, the credit rating agencies do this legitimately by being notified by your lenders and credit card providers of how well you are managing your debt.
The credit rating agency analyses how disciplined we are in paying our debt back and our ability to keep our borrowings within a manageable limit.
And of course, the better we are, the higher we score.
Our credit score’s undercover nature means we are seldom told about how to keep it top of the class.
So, here’s your mission for today.
Get your credit score, either from your main bank or your credit card company if they provide it, or from a free credit monitoring APP. MoneySavingExpert has an excellent article on the best sources.
And remember that the objective is to keep your credit score high. If it is already high, well done, keep doing what you are doing. If not, you can get to work on improving it by paying all your bills on time, paying your credit card in full every month, utilising only 30% of your available credit limit and an easy one, registering on your local voters roll.
Your net income
A good money boss needs to know what tools are available to carry out their mission, in this case to get their money working for them.
The most obvious tool is the money that is flowing into their lives. Their net income.
How many of us know 100% what is flowing into our lives and in fact the deductions that were taken off before it even hit our bank accounts?
If employed, take a look at your payslip and understand exactly where your money is going and what it is doing for you.
If self-employed, don’t forget you still have to pay tax down the line. Make provision for it by saving an amount towards it out of every cashflow received. In fact every cash receipt should be allocated to the various expense buckets you have budgeted for in your business.
Your monthly fixed costs
Flexibility is key to the money boss and fixed costs once committed too are where we don’t have much maneuvering room.
The trick to the money game is to keep our fixed costs relevant, appropriate and manageable.
Our fixed costs should be those that cover our accommodation, utilities, communication, insurance, basic groceries and those real need to haves in our lives.
If we know them, we can monitor, manage and tweak them to be 100% efficient in fulfilling their function.
The next step of your mission is getting to know your fixed costs and assessing their efficiency in meeting your objectives. Where can you cut, renegotiate or reduce.
Your available cash
We are heading to the second most powerful number in the money code.
Our available cash.
This is what we have left after we have spent on our fixed costs and our “wants”.
The more available cash , the more flexibility and agility is available to the money boss. A money boss with a large amount of available cash is a money boss with choices!
Take a long hard look at what is left in your bank account at the end of the month. Assess whether the “want” expenditure that resulted in that remaining cash was supportive of your financial stability, flexibility and freedom to choose.
If not, your next mission is the “kill” mission. Eliminate, destroy and take a sharp knife to cutting all that fluff spending or debt that is keeping your money from working for you.
Your investing rate
Well done money boss you have come to the final number in the freedom code. The most powerful in your arsenal. How much money you have available to invest and are investing.
Investing is the supercharge to your money. It is the fuel that spurs your money to work hard and grow.
The more of your money you can get invested, the more you have working for you building your financial freedom.
This is your ongoing mission. Learn about investing, grow your available cash and get investing.