Amy ran a successful furniture restoration business. She had a workshop in South London and employed two permanent staff, sometimes outsourcing work to other restorers.

Amy, in her mid-50s, was considering selling her business and relocating to the country. She dreamed of undertaking a few limited private commissions to keep her hand in whilst using her free time to garden and travel.

However, financial calm eluded Amy, who worried about money. She wondered if she could afford to change and if her money would run out before she did.

Working out the figures.

I worked with Amy to create the foundations of a plan, including, with my help and encouragement, a set of asset, liability, income and expenditure statements.

When we had a figure for Amy’s net worth, I asked if this was what she expected. I was amazed to discover Amy had no idea of her worth, and she was shocked to find out she was worth far more than expected. The look on her face made for one of those unforgettable moments.

However, the financial statements led to financial calm so Amy could make informed decisions about what to do next.

Ignorance is not bliss.

Unfortunately, fear is the dominant emotion around money and often comes from ignorance. Knowing where you stand, even if it could be better, can help you attain a sense of financial calm. At least you can do something about it. So, start by compiling some basic financial statements.

Assets

Include everything financial from cash to pension funds, but don’t include a value for used assets such as your house.

Liabilities

Include short-term liabilities such as credit card balances, unsecured loans, and longer-term secured loans such as mortgages.

Your net assets are your assets minus your liabilities.

Income

Have an annual date in mind, which could be the start of the year, your birthday, the tax year or your business year. For parents and teachers, the beginning of the academic year makes sense.

As your own boss, your income is governed by your capacity. Time is limited, and there is only so much time to service clients. Work out your capacity and estimate how much you will fill in a year. Stay within 80% of your capacity; leave time for unforeseen events and non-income-generating activities such as marketing and administration.

Expenditure

Measuring your spending can be challenging. Practically, accounting for numerous small expenditures is tedious, while the emotions aroused by seeing where your money is going can be a barrier. A small investment in a cash-flow app is worthwhile.

Deduct your annual expenditure from your income to see if your cash flow is positive or negative.

In conclusion

Your relationship with money is significant, so it helps enormously to know your figures. These four revealing statements will provide financial calm, enabling you to make informed decisions about what to do with your life and money.

Photo attribution

Photo by Johannes Plenio on Unsplash

Audio link

https://audio.com/jeremy_deedes/financial-calm/

Related posts

April Newsletter: How three steps can bring your financial powers under control

https://wordsnotdeeds.co.uk/financial-power/

Three revealing steps will determine how your money can give you the financial power to live rather than be controlled by it.

Do you work for meaning or money?

https://wordsnotdeeds.co.uk/meaning-or-money/
Even successful freelancers sometimes wish their businesses provided them with as much meaning in their lives as money.

How to beat financial fear

https://wordsnotdeeds.co.uk/self-image/

Your wealth is a reflection of you, so re-draw your self-image to avoid fear and guilt about your money.

How to deal with money worries

https://wordsnotdeeds.co.uk/money-worries/
Relieve your financial anxieties by working out your financial numbers and listening to the story they tell.

ABOUT

I work with ambitious, family-oriented professionals transitioning to independent consultants to create a 3 to 5-year holistic plan so that they grow wealthy, make a difference and find meaning.

My clients are aged 35-50. They are in a long-term relationship with family and parents who are supportive but ageing. They wrestle with personal and financial responsibilities and dream of more control, wealth, time and purpose.

If this excites you, you are coachable, willing to change, and want to stop going around in circles, then find out more at jeremydeedes.com

Then, take your next step and explore your way forward with a Mapmaker, a one-off online coaching gig to help you decide your options, assess our compatibility, and determine whether we are the right fit. Mapmaker is excellent value, held in confidence and without further commitment.

What do you think?

Your views are important, and your fellow readers would love to hear your opinion,
so share your thoughts in the comments box below, and thank you for your time and generosity.

What do you think?

Your views are important, and your fellow readers would love to hear your opinion, so share your thoughts in the comments box below, and thank you for your time and generosity.