Understanding my financial situation

If you want to stop worrying about your finances you must first understand your financial situation. You need to know exactly how much your assets are worth when compared to your debts.

First, you should look at your monthly income. This can include your wage, dividends and other types of income (such as rental income  ). Once you determine your monthly income, you should  assess your expenses.

Start by checking  what your total expenditure for a month is, by collecting all the bills and receipts. It is important to keep  every receipt regardless of how small it might be. It will help you to divide your expenses into:

  • non-discretionary expenses: those that you cannot avoid, such as paying for your monthly internet access; and

  • discretionary expenses, such as dining out or going to the cinema.