110. Mid-Year Financial Check-In: Realigning Goals and Carrying Out a Financial MOT

We're halfway through the year; how are your financial goals coming along?
Have you achieved any of them, or have they been put aside? This episode is all about reflecting on our journey, celebrating our wins, and recalibrating our targets for the rest of the year. By the end of this episode, you'll have practical tips and strategies to achieve financial stability and growth, ensuring you're well-equipped for the second half of the year!

Chapters

• 0:00 Mid-Year Financial Goals Evaluation
• 7:14 Financial Health Check-In
• 14:44 Investment Portfolio and Financial Planning

Transcript

Speaker 1: 0:00

Hey guys, and welcome back to the Penny to Finance podcast with your host, kia, and this is a podcast where you aim to dispel your myths, simplify difficult financial jargon and rectify your own personal problems. Happy Monday, everyone. I hope you're having an amazing start to this week. Apologies for not having an episode last week. Life got very hectic. I'm gonna touch on this very quickly, don't worry, your episode is coming. But can you imagine, my car got broken into, completely smashed in, so that took up the majority of my week because, as I'm sure you can imagine, driving around with only three windows in your car is not ideal and I had some stuff taken. But I'm all good, I'm in good spirits, I'm ready to give you your episode this week. This week is just going to be me, but we're talking about financial goals.

Speaker 1: 0:43

We're halfway through the year and this is one of my favourite times because we're able to come back and reflect on how well things are going. How are things going for you? The goals that you set at the beginning of the year are you there? Have you hit any of them yet? Anything that needs to change? That's what we're talking about in this episode. So before we get into it, I want you to reflect back to the beginning of the year, that time in January, when you said right, I'm going to be a new person, it's a brand new year and I want to change my life. Think about your financial goals then. What did you set? If I think back to mine, what did I have for mine? I really wanted to grow my savings pot. That was a big one for me. Number two at the beginning of the year I'll touch on bit later but I was considering having some money to decide to move out. So I'm going to come back to that in a bit, but those were some of my financial goals for this year.

Speaker 1: 1:31

Now we're halfway through the year. It's time that we can reassess and reflect on those goals. First step is assess our progress. So to do that, we're going to ask ourselves have you achieved any of the goals already? So I know, for me, one of my goals, like I said, was to increase my savings pot. I have well and truly done that and I did that through having a savings pot that was completely locked. So I have many, many, many different savings accounts, just because I can and because I want to be able to review them and give you guys my honest opinions on them. But with some of them you're actually able to lock those pots. So I just said, right, I really want to be serious with saving and I'm going to hit lock because I want to reach my goals. So that means that any money that I put in I cannot take out until a certain time frame. So I did that because, like right, I want to be really serious and save towards my goals. So I've definitely got a part way to that and, like said, I'll come back to me wanting to move out.

Speaker 1: 2:25

But, yeah, ask yourself, have you achieved any of your goals already? If not, then ask yourself how close are you to reaching them Now? Like I said, we're only halfway through this year, so no one's expecting you to have hit your goal of having I don't know £10,000 saved in just six months. Right, you do have another six months to get there, but it is good to see how far have you come. Is it 10%, 20%? Have you not even started on that goal yet? It's good to really just assess that and see where you're at. And lastly, are there any goals that have been completely neglected? For example, maybe your goal was to not eat out as much right it might be, I'm only going to have a takeaway once a month, and you might have to ask yourself have I stuck to that? Have I had a takeaway once a month, or have I been having it a couple of times a week? So have there been any goals that have been completely, completely neglected?

Speaker 1: 3:20

With this, I don't want you to feel bad. What we're going to do is we're going to take stock of all of these answers and we're going to work out what's working. So what are the things that are going well, the goals you're working towards, some of the habits that you have, what's working and what isn't, the ones that are working and things that you're doing that are going well. You're going to celebrate those wins because on this journey that we're on to improve our finances, it is constant and the goalpost is always moving. So that's why it's so important to celebrate those small wins as you reach them. And then, anywhere where you're not doing as well maybe goals that you haven't started on, or you started and just fell by the wayside we're going to take note of what we need to improve on. Then the next step we're going to do is we're going to re-evaluate the goals that we have.

Speaker 1: 4:02

So, like I mentioned, life happens and things just change. Drop of a hat and sometimes your priorities may change. So, with that, you need to ask yourself are the goals that you set at the beginning of this year still important to you? So, like I mentioned, one of my goals at the beginning of this year was to move out. However, I've gotten halfway through this year and I'm like you know what, if you know me, I spend. So I live in Ipswich and Suffolk, but I spend a lot of my time in London for work. So, whether that's for events, whether that's for talking, engagements, all kinds of things, I probably spend probably about 65% of my time in London and probably 35% of my time in Ipswich. However, despite that, that was my main reason for moving. Despite that, I realised I really do enjoy coming back to Ipswich. It's a very quiet town. I like coming back with my family. I just love being here. So that has now been crossed off my goals list for this year.

Speaker 1: 4:55

So you need to ask yourself are there any goals that you have and you set at the beginning of this year that are no longer important to yourself if they're not just get rid of them. Secondly, you're going to ask yourself do they align with your current financial situation and life circumstances? Because, like I said, things change. The prices of things have been going up, we're having to tighten our belts, so the goals you may have had you may have wanted to save £20,000 by the end of this year. If you've had to tighten your belt and you can't save as much, is that goal still suitable? You might need to amend it to a more achievable and realistic goal.

Speaker 1: 5:31

Then you need to ask yourself do you need to add new goals or just adjust the ones that you set? For me, like I said, I only had two major goals, so I might consider adding an extra one, especially since I've dropped out the moving out goal. So you might have same thing. You might have only had one or two goals. Are there any ones that you can add on or you're just going to adjust the current ones that you set at the beginning of this year? I just want to re-emphasize it is okay to modify goals. You need to see goals as just a goal post and the goal post is forever changing and moving. I've spoken to people before who say oh you, you know what if I change my goal. I feel like I'm copping out and I feel like I haven't reached it. And I always say me in January is very different to me in December. So to be able to keep up with that, I will have to move that goalpost. As and when things change, my needs change and my situation change, so don't feel bad if you need to do the same with your goals.

Speaker 1: 6:24

With that being said, we've done the first half of assessing where we're at when it comes to our finances and our goals. We've looked at what goals have we set at the beginning of the year, how close are we to achieving those goals and what new goals we have to add or what do we need to change. Now comes the second part, and arguably my favourite part, is performing a financial MOT. Now, as a car owner, I have an MOT once a year and that is basically just assessing that my car is all good, everything's working and it's road worthy, and if there is anything that's wrong, that's the time where the garage will go ahead fix it so that my car is in good standing to drive me around for the coming year. And we're going to do the same thing with your finances, and I love doing it at this halfway point because you can, like I said, we can really take stock of what's worked up until this point and what do we need to change in this financial MOT?

Speaker 1: 7:14

First things first. In that MOT, we're going to review our budget, so have a look at the budget that you've set. Maybe you budget month to month. If you're on a variable income, it might just be as and when you get income. But have a look at your budget and, within that, look at your income and expenses over the past six months and ask yourself are you sticking to your budget? Now I want to hold your hand here, your loving big sister, and say be honest with yourself. If you haven't, it's okay. This is a no judgment zone but ask yourself have you stuck to your budget? Have there been any unexpected expenses? Things happen, life happens.

Speaker 1: 7:49

I mentioned the beginning of this episode that my car got broken into, so that was money that I didn't plan to spend, and that happens sometimes and then ask yourself are there areas where you can cut back or where you need to allocate more funds? And this is a massive one. We've seen bills go up exponentially in the last couple of months, so there may be places where you can cut back, whether that's subscriptions. I've said before that I'm someone guilty who will sign up to free trials, and some of them you're required to put in your car details. One that you don't fine, the free trial just cancels and that's it. But the ones we have to put in your car details, I will sometimes forget, and I think there's one thing I'm paying for right now that has just reminded me. Recording this I'm paying for Microsoft Word. It's a long story, but I needed it for something that I was working on and I'm pretty sure I paid for Microsoft Word for the last two months. So this has been my reminder to cut back on that.

Speaker 1: 8:38

So maybe you have some areas that you need to cut back on as well, or areas that you need to put and assign more money towards. Maybe it's your rent has gone up, maybe your your phone bill's gone up, just something where initially you might have allocated one amount but you might need to increase that allocation because prices and things have gone up Much like your goals. Adjusting your budget is completely normal because life changes and I always say personal finance is just that, it is personal. So when your personal situations change, so should your finances and the way that you're spending slash, saving slash, investing your money.

Speaker 1: 9:11

Speaking of saving, the second part is we're going to check our savings. So you're going to evaluate your savings goals. You're going to ask yourself are you on track to meet your savings targets for this year? Sit down with yourself what amount did you want to have in savings that could be towards a goal? Maybe your dream dream holiday, maybe buying a house? It could be to build up your emergency fund. Whatever that goal you had in mind is, are you on track to meet your savings target for this year? Within that, do you have a decent amount set aside in the emergency fund? As we've all heard this saying, when it rains, it pours, and especially in this UK, it rains a lot and we cannot predict when things go wrong and you need to dig deep to fix those things financially. So it's very important to have an emergency fund set to the side to cover yourself for those things and not have to dip into your actual spending money for your other bills and everything else that you've got. Then, lastly, ask yourself are you saving for specific goals this year, like a holiday or a new car? Like I mentioned, all of these things are really going to influence how you save, where you put those savings and how much of your paycheck every month you set aside to those savings.

Speaker 1: 10:19

If you are finding yourself it's just saying, oh, it's a little bit hard to save, then maybe you should either adjust the goal, reduce your savings goal, because it might be just a bit too much, it might stretch you a bit too much with the amount that you're currently setting aside. And I always say this phrase of over saving. And that is where I find people say right, I'm gonna save. I don't know, I bring in a thousand pounds a month and I'm gonna save 700 pounds. Unless you have next to no bills and know nothing that's going out, that's probably a very unrealistic target. And then people who do that and save 700 out of a thousand pounds every month tend to find themselves dipping in bit by bit throughout the month because they need that money back, and that is what I call over-saving. So you don't want to be a victim of over-saving because at the end of the day, you actually never have savings Put to the side fully. So instead, be realistic with how much you can save If that is only putting away £50 a month and not £700, because that's stretching you way too much. Then do that At least you'll see that those small increments will help your savings to grow over time and you won't dip into that.

Speaker 1: 11:26

Number three is to analyse your debt. So if you are someone who has consumer debt, so that is very different to student debt in the UK. So I'm not talking about student loan debt, because that's a completely different kind of debt that we have here compared to the US. So I'm not talking about student loan, I'm talking about consumer debt. Consumer debt is credit cards, overdrafts, loans, finances, anything like that. I want you to sit down and take stock of the debts that you have and ask yourself have you reduced any of the debts as you may have planned? So if you had a credit card with a thousand pound limit and you've maxed it out, you might have said right, I really want to get to having 300 pounds on my credit card by the end of this year. That's fine, we'll hover through the year. Have you made any reductions to those debts in the last six months? Also, are you managing to make more than the minimum payments Minimum payments when it comes to things like credit cards.

Speaker 1: 12:20

It's always this thing that I have, I wouldn't say an issue with, but I'm. I'll explain why. So minimum payments for your debts so let's just take a credit card is the minimum amount that you need to pay to the loan provider. So if that's your credit card, it's your credit card company, that's the minimum amount. So let's just say you owe £900 to your credit card, but your minimum payment might be £25 or £30, right, a lot of people see that and say, oh brilliant, I can afford that £30,. That say, oh brilliant, I can afford that 30 pounds, that's nothing, I can pay that. And although you're right, it's a small amount, it will take you forever to fully clear that debt if you're forever paying the minimum, not just because it's a small amount and you've got quite literally 20 times that on your credit card but each time you're making the minimum payments, you're also accruing more interest on your loan. So that is also having the payment added that the loan company will add and say, well, you've borrowed for more than 30 days, here's our interest for allowing you to have that money out. That also gets added. So the if you continue to pay the minimum, you're going to have even more interest to pay in the long run. So so, if you've borrowed £1,000, you may end up paying back £1,600 over the long run because of interest payments. So, wherever possible, always, always, always, try to pay more than the minimum payment on any loans that you have. If your minimum is £30, even just paying £50, if you can, will help you know when, in the long run, to pay less interest and obviously get that debt cleared in a quicker time frame.

Speaker 1: 13:51

And lastly, when it comes to your debts, ask yourself are there any debts that have grown unexpectedly? I speak to a lot of people sometimes who have taken out loans maybe it's car financing, maybe it's a credit card, maybe it's an overdraft and they haven't properly looked at the interest rates for said loan or debt, and they can then find that that debt is growing a lot faster than they may have anticipated and a lot quicker than they can actually pay it back. So ask yourself are there any debts that I currently have that are actually growing a lot faster than I planned? If you are struggling with any kind of debts, make sure you look to some helplines like Natural Debt Line and Citizen Advice, which are free services that can help you to put together a plan and to manage your debts properly. But again, if you really want to just sit down and take stock of your debt style, we have a debt repayment sheet on the PennySupply website, which is there for you to help you to plan your debts and make those repayments.

Speaker 1: 14:44

Next we're going to move on to your investments. So if you're someone who's currently investing, then this is for you. If you haven't started yet, if you're there like oh, I'm on the fence, then go back to a couple of episodes before when I explain how to start investing from today and make it really really simple on this podcast. But yes, next step is to evaluate your investments. So what we're going to do is you're going to review your investment portfolio and you're going to ask yourself are your investments performing as expected?

Speaker 1: 15:09

This one I want you to not take too much, too much emphasis on. Don't look at it too much, because investing is for the long term. This is not the Wolf of Wall Street. We are not day traders. If you put money in today, the likelihood is that you don't need it for the next three, five, ten years time. So if it is tanked tomorrow, that doesn't make a difference to you right now, because you don't need that money for the next couple of years, at the bare minimum. So you can have a look overall, but don't take too much stock if it's not performing very well right now because you don't need the money right now.

Speaker 1: 15:41

But next you're going to ask yourself do your investments align with your risk tolerance and financial goals? For example, if your financial goal is to buy a house in the next three years and you're currently investing, you may have a medium to low risk tolerance. Why? Because you need to guarantee that you can get that money back when you need to draw down on it, to get your house deposit or to pay for moving fees, pay for new furniture, whatever that may be. So that may be the risk tolerance that you're currently at. However, if you look at your investment portfolio right now and your investments are medium to high risk, despite your financial goal being wanting to buy a house in the next three to five years, you might want to take stock of that and say is that still a line of my goal? Is that still the risk that I'm willing to take on my money and my investments and maybe make adjustments accordingly? And then lastly ask ask yourself, have you diversified your investments portfolio.

Speaker 1: 16:33

So you've probably heard the phrase don't put your eggs all in one basket. Now, this applies to many things in life, but especially investments. As we know, investments can go up as well as down, and we don't want to have all of our money in one thing, because if you have all your money in I don't know, for the sake of this example, you have all your money in a penny. Don't know, for the sake of this example, you have all your money in a penny to pound stock and something happens and the stock completely tanks and all your life savings are in there. You would have lost everything, which is why it's important to diversify your portfolio. Put some in stocks, some in bonds, some in ETFs, and just spread out your money, which again will spread out your risk.

Speaker 1: 17:07

The last thing is financial MOT. What we're going to do is we're going to plan for any future expenses. I want you to now sit down and look ahead to the next six months and ask yourself are there any big expenses coming up that I need to prepare for? So we've got Christmas at the end of the year, but is there anything in between, any weddings, any big holidays, any major milestones that you need to financially prepare for and then ask yourself do you need to adjust your budget or savings to accommodate for these goals and things that are happening this year? Because it might be it's wedding season right now. It might be that you've got a massive wedding coming up and you need to set aside money for that. People might be going abroad. So you need to ask yourself is my current savings level, my current budget, going to allow me to pay for these big expenses that I have coming up in the future? Because planning ahead can really prevent any kind of stress financially that you may incur and help you stay on track when it comes to your goals.

Speaker 1: 17:59

And the next part is the fun part for me with the financial MOT and this is setting up a new plan for the next six months. So, first of all, we're going to set up some mini goals, and these are goals that you're going to work towards for the end of the year, so that could be inspired by your big overarching goals at the beginning of this year. They could be completely new goals. Wherever you pick, you're going to set some new mini goals for the next six months. Examples of this could be increasing your emergency fund by £500, paying off one credit card completely, or saving an extra £100 a month for your holiday fund. So, whatever mini goals you want to set, set those and have that in place and you're going to work towards those for the next six months. Then you're going to create an action plan and in this action plan you're going to outline the steps that you're going to be taking the next six months to achieve these mini goals.

Speaker 1: 18:52

I love to do this because I'll break it down into manageable tasks and deadlines. So, for example, I'll have my mini goals, which are your six months goals. Then within that I'll do three months, then I'll do a month, then I'll do a week and then from there I'll set daily tasks that I need to do to reach those goals. And it's a great way if you break do to reach those goals and it's a great way if you break down your goals. That way, it's a great way to have those steps and that plan in place to reach what you want to reach.

Speaker 1: 19:17

And the third thing is to stay accountable. My favorite way to do this is to have an accountability partner, and this is someone who ideally I would say just one person, but you might have a group of friends that you're going to do it with, but you, you guys are going to come together and you're going to say right, this is my goal for the next six months and I'm working towards X, y, z thing. They may do the same, they may not, but their role for you is to help you stay on track and to have regular updates of you and regular check-ins to see how you're doing. So that might be once a month. You might check in, it might be at the end of every week. You guys have a five minute debrief. Whatever that looks like for you, they are the person who's going to keep you accountable and keep you on track with your goals.

Speaker 1: 20:00

Trust me, finances, when you have an accountability partner, it feels more achievable and it actually just feels more fun because you've got someone who's working towards something or someone who's just invested in your success when it comes to your finances, and it is a great way to keep you on track. So, yes, it is the six month mark of this year, but it doesn't mean that you can't still achieve your goals or hit new ones when we hit the end of this year. So I'm really excited. I'm such a goal person and I have every faith that if you listen to this, you will achieve your financial goals and more this year. So thank you so much for listening. I hope you enjoyed and we'll be back again next week with another episode. Bye, guys.