Take control of finances

The current economic crisis seems to be so complicated it is difficult to see how any solutions can be found. At the time of writing, a fresh wave of uncertainty is impacting global markets. In simplistic terms however, as a nation we have, for many years, spent more than we have earned.

This is an unsustainable financial model, and that imbalance needs to be addressed.

If only they/we had taken the advice of Mr Micawber from the novel David Copperfield: 'Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.'

In my opinion, the simple logic contained within this Dickensian extract should become the mission statement for individuals, businesses and Governments alike.

I would like to focus in on our own business and personal situations.

Overspending can be sustained for a period, provided growth in profit is rising each year, as the expectation is that next year's increased profit will negate the overspend, and carry on in this manner. This has indeed worked for many businesses and individuals in recent years, but this model only works if profit continues to grow.