How best to manage your finances in the year ahead

Financial services talent specialists, Fram Search, recently asked Kunle to write a piece for them about what people can do to best manage their money in 2024. Here we share the article in full. It first appeared here on the Fram site at the end of November…

As we come to the end of yet another turbulent year in the financial markets, you may be wondering what on earth you can do to protect your finances and investments. You’re not alone. Here are my three go to strategies to make sure you can weather the storm and come out the other side (whenever that may be) unscathed.

Stick to the plan

Investing is for the longer term. You are only likely to get a real sense of your investment’s performance over a period of seven to 10 years. So, unless something has dramatically changed in your personal circumstances, I would recommend that you stick to the plan. Whatever you do, definitely do not try to time the market, this is always when the disasters happen – no one can accurately predict what’s going to happen every time.

And remember that markets do recover, it’s just a question of when. They did after the global pandemic, in fact looking back over the last 30 years the markets have recovered after every single crisis. So, sit tight.

Focus on household budgets

We all know that you cannot control the markets. But you can control your spending. As such, I suggest that at times like this, you focus on your day to day expenditure rather than on your investments.

The days of ultra – low interest rates and inflation are not set to return any time soon, which means we all need to take stock and reassess our household budgets. Getting on top of this will bring back a much needed sense of control to life and give us all a clearer picture of how we’re doing day to day. We just need to make sure that there is still more money at the end of the month rather than more month at the end of the money.

Be honest with yourself

When it comes to looking at your spending, you cannot afford to lie to yourself, so make sure you are honest about how much you’re really spending. I have an account which I use to pay all of my bills, including life assurance, investments and savings. This helps me to know what I have left for discretionary spending, for the things that I enjoy doing in life. A peer of mine has a coherent method of breaking down his spending, which you may like to use:

  • Required Income – your fixed expenditure, the non-negotiables like your mortgage, bills, food etc.
  • Desirable Income – how much you have to spend on experience moments from holidays to the theatre, a major sporting event or a show.
  • Aspired Income – when you’re investments have performed well, this is the money you use to put towards something that really matters to you. Here’s to having some of this again in the not too distant future.

And just as a final note, we know that it’s really hard to admit when you find yourself in a difficult spot financially, but if you are in trouble, the best thing you can do is talk to someone and seek professional help.