Another New Year, another resolution! What should it be this time?
With financial planning in mind and as is customary at the start of the year, here are the ‘magnificent 7’ resolutions to help you plan your financial life!
1. Make a plan. Not just any plan, take it one step further and make a financial life plan. A financial life plan will require a review of where you are and where you want to be. You will need to set a series of targets over the phases of your life. This can be complex or very simple and should be a base to work with as you progress through your life and career.
Most of us neglect the management of our money. We get it, we spend it, we save it and we invest it. What we don’t do is plan. We don’t sit down, decide realistically where we want (or need) to be financially and then work out how to get there. Another year passes by and the here we are again one of the 90% of people who haven’t been able to meet our resolutions.
Sit down and work out where you are financially. How much do you spend? How much are your assets worth? How much do you save each month? Then review it; which of those bits do you want to change and which can you change?
2. Set goals. Look at the big picture and set clear and realistic targets. Short-term goals might include specific monthly debt-slashing or saving a certain amount extra every month. Don’t cheat, Review your bank statements so you really know how much you spend and what you spend it on. An easy win could be to cut up your credit cards.
Longer-term goals might involve regular overpaying on your mortgage so you own your house by a certain date; or setting up and contributing to a retirement plan with a view to hitting an ambitious retirement income.
3. Be Specific. “Save more” is generally one of the top resolutions made. This will fall apart if you don’t add a proper target to your resolution. “Save $500 a month until I have three months’ worth of income in my cash account” is better.
4. Review your plan. Look at where you are – with your partner – every six months; check your progress against your targets; and make new ones if you are ready to do so. Begin with the end in mind and you might get the end you want.
5. Get yourself protected. So often overlooked, protecting you, your family and your assets against unforeseen circumstances is essential, especially if you have a family dependent on you. Make sure you and your nearest and dearest are protected against illness, accident, death or mishap. The easiest and most common way to do this is through an insurance policy.
6. Think about estate planning. For a start, make a Will. A morbid topic which is why many people put this off, However, although it may be an unlikely requirement it is best to be prepared and there is comfort in knowing that your family will not have an unnecessary burden of probate discrepancies to deal with. Will substitutes such as adding a list of beneficiaries to your life cover; changing your property ownership to tenants in common or using a trust can also be very effective.
7. Speak to a qualified financial adviser. A professional planner will work with you to develop a series of strategies helping you to achieve your short, medium and long term goals. They will look objectively at your finances and risk profile, planning with you instead of for you. Thus enabling you to manage your financial life and meet those New Year’s resolutions.
If you would like to review your financial goals with a qualified Wealth Manager, please click here to book a free Financial Health Check.