John-Paul Flintoff

Step 1: Face up to where you are right now

If you want to make any kind of change, you need to be clear about where you are going. And before that, you need to know where you are.

Check your credit rating
Begin by looking up your credit score (here). This shows you what financial institutions know about you. Ignoring it doesn't make it go away.

Calculate your net worth
Next, calculate your net worth, because if you don't know your net worth now, how can you hope to describe your financial goals, or measure your progress towards them? Before you start, decide whether you want to calculate your own net worth, or the net worth of your household.

Having made that decision, draw up a list of all your financial assets: money in the bank, investments of any kind, and cash in your pockets or under your bed. Be sure not to leave anything out. You may want to include the value of your home, and any other possessions that have resale value (jewellery yes, old socks not so much).

Then add up all your liabilities: credit card debt, bank loans, student loans, money you owe to friends or family, and your mortgage (if you have one, and if you included your home as an asset).

Don't forget that your net worth should not affect your self-worth. The idea is to move out of negative numbers into positive, and to increase the total over time. Measuring that takes time, so make a date in your calendar to calculate your net worth again soon – and do the same after that.

Step 2: Set your financial goals