In 2016, I took control of my finances.
Even though I graduated from university with a business degree in 2010 and had been working ever since I hadn’t really had control of my finances. I was able to secure a job at a great company and worked my way up through multiple promotions and was earning well, but I didn’t really have a plan.
I was able, fortunately, to get on the London housing ladder in 2014 thanks to a couple of years of massive company growth and a generous commission structure (the good old days).
But since then I found myself not focused on any real financial goal and really not making my money work for me. This all changed when I started discovering the Personal Finance community and the idea of Early Retirement – I was hooked. I have always been one to read but I was truly voracious when it came to learning about this subject. The idea that one could retire many, many years earlier than I had ever anticipated gave me the impetus to change.
The First Step – Tracking things down
The real first goal was getting my current affairs in order. Having the knowledge of where your current assets and liabilities are is key. I thought I was being a good saver by having money in a cash ISA with a high street bank, upon inspection I was getting 0.05% interest and effectively losing money to inflation. I moved my money into a Stocks and Shares ISA which I will look to review at a later date, but even if you are not willing to risk money in Stocks and Shares there are many other Cash ISA options that pay at least 1%.
I also found out about my company pension. Within the UK I believe companies of all sizes are in the process of being auto-enrolled and have to contribute at least something towards your pension. I enquired and found out our company offered more than the government requires and will match up to 3% of my contributions, the current legislation only requires them to match 1%. Taking advantage of these kinds of benefits was something I was totally unaware of and at this stage of my life, with so much compounding that will take place over decades, they can make massive differences to my future finances.
I then turned to my liabilities. I tracked down all my credentials to my Student Loan (thank goodness I had lower fees and a low-interest rate), and also created a spreadsheet which tracked my outstanding mortgage based on monthly payments and interest. Now I had a clear picture of both my assets and liabilities I was able to calculate my Net Worth.
Tracking Net Worth
Seeing this figure rise every month is incredibly satisfying and allowed me to really understand the levers I had at my disposal to make sure things were going in the right direction. It doesn’t have to be mega complicated, I’ve used a simple Excel spreadsheet and once a month capture and cash I have in current accounts, the value of both my pension pot and my stocks and shares ISAs, I then check my liabilities and get my outstanding mortgage owed, as well as my latest student loan calculation and finally any outstanding credit card spend I’m yet to pay off. It is an incredibly valuable 15 minutes every month and reinforces the choices I’ve made and shows me that I’m one step closer to my early retirement goal.
See my first post listing my net worth here.