Smoothing your financial ride
Suddenly it’s December again and Christmas is coming hurtling towards us in a blur of sparkly lights and parties and last minute shopping, making excessive demands on our budgets. That’s how it often feels – to have come suddenly at us, even though December follows November each and every year.
One of my clients, Anna, is taking Advanced Driving lessons and her instructor had said that the most common word in accident reports was ‘suddenly’: ‘suddenly the van came hurtling round the corner’; ‘the car ahead braked suddenly’. Anna was learning that Advanced driving skills are all about anticipation - looking well ahead, adjusting your behaviour to ensure a smooth ride. Things rarely happen ‘suddenly’ if you’re anticipating well. She realised that she was making the same mistakes with her finances as she was with her driving: not looking far enough ahead and not seeing things coming until they were too close. And this resulted in a bumpy financial ride – often lurching, sometimes swerving and occasionally crashing.
So while you’re filling in your shiny new diary for 2012, it’s worth taking the time to think about the costs that are coming in the year ahead – smoothing out your expenditure will ensure a safer and far more comfortable ride through the year. Download our simple chart and fill in all the occasional spends that you can see coming through the year: birthdays, holidays, car costs, Christmas etc. Then, you can estimate the total amount you need to save each month towards these costs.
In our experience people get into money trouble because they haven’t anticipated these occasional costs. You can plan more than you think you can and anticipate what is coming to avoid ‘sudden’ financial shocks. Think through the different spheres of your life - any computer equipment? House repairs or maintenance? Home or garden improvements? Replacement of electrical goods? Some will be personal to you – mooring costs, for example, if you live on a boat!
When you have filled in the chart, the aim is to spread the costs as evenly as possible through the year. Explore the options to pay costs such as insurances monthly if you can to avoid an annual lump sum causing a pot hole in your purse. Car insurance may be more costly to pay monthly but if it helps smooth your cash flow it could make sense for you. Once you’ve anticipated your costs you can set aside a monthly equivalent, it will help you on a much more relaxed journey through the new year.
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