FOOL SCHOOL
Take A Financial Healthcheck

January 10, 2003

OK, hands up if you spend your life waiting for your next pay cheque to arrive or if you just pay off the minimum amount on your credit card each month? Thought so. It's nothing to be ashamed of though. A lot of people are in the same boat as you. Hands up if you like in being this situation? Thought so as well. But it doesn't have to be that way. With a little knowledge you can turn your financial situation on its head. You should control your finances, they should not control what you do.

Excuses, excuses

That's fine you might say, but I can't do that because a) I don't have the time and b) I don't understand all this finance stuff!

Believe it or not you do have the time. You can do an awful lot to get your house in order without putting in a great deal of effort. Of course, if you're prepared to put some extra work that's better still. In fact we'd wager that once you've discovered exactly how much you can do you might find yourself making the time to go that little bit further. It's a virtuous circle as well. Once you are in control it is relatively easy to stay that way and build upon it. It's also better to get started sooner rather than later. The longer you leave your finances in control the harder it will be to reverse the situation and, obviously, you'll have less time for it to take its full effect.

Don't be put off by the jargon. For example, did you know that despite the vast array of financial products on offer today they can all be boiled down to just four basic types namely cash, bonds, property and shares. Once you know the basics characteristics of each it becomes much easier to decide which is right for you. In fact you don't even need to know anything about these for the purposes of this financial health check. It's a sad fact but most of the complexities surrounding financial products are only there to mask the high level of charges made.

None of us are taught about finance in our formative years, although that it is starting to change. These days, through web sites such as this, it is easier than ever before to find out what you really should have learned at school.

Take a financial journey

Think of taking control of your finances as a journey. There are three things you need to know in order to make any journey:

• where am I now?
• where do I want to go?
• how do I get there?

Most people instantly jump to the third question without considering the first two. But how can you choose the best route without answering those questions? In next week's Fool School articles we'll look at how you answer all three of these questions.

> Financial healthcheck - Part 1 | Part 2 | Part 3 | Part 4