New year, new money
The dawn of this New Year is our opportunity to make resolutions for improving our personal financial positions. This year is predicted to be challenging, with a likely rise in unemployment.
So let us consider five new money resolutions for the New Year.
First: We must resolve to plan. Truly, it is said that to fail to plan is to plan to fail. Let’s plan to live independent of handouts and freeness. No longer will we look to some unexpected windfall to solve our financial malaise. Nor will we be looking to better-off relatives or friends to help us through cash crises.
Not that there won’t be any handouts, freeness, windfalls or friendly loans. It is just that we will no longer depend on them as though they were our lifeblood. We will plan to do the best we can with whatever resources we have. The objective is to further our financial independence and to maintain a personal focus.
Our plan will be written in as much detail as possible. This way we are forced to think through the expected events of the forthcoming year and to carefully examine our personal goals in life. This plan must be reasonably challenging and ambitious; a wimpy plan will not provide the excitement and motivation that is essential for helping to maintain healthy financial discipline. The plan should show the amount of our expected income, spending, saving and investing for the year.
Second: To the extent possible, let’s hold on to our jobs, our regular source of pay, as our most precious possession during difficult times. We will honour our time commitment to our work and look for opportunities to be more useful on the job, to impress our supervisor and even to earn extra income.
Third: Let’s resolve to save and invest at least 20 per cent more than last year. For complex approaches to investing, like the use of a credit line or the purchase of investment vehicles that are new, we will seek professional advice first. The initial cost of such advice, if there is a cost, is expected to be well repaid by the long-term prospects for a better return as a result.
In order to save more, we will carefully scrutinize every expenditure for innovative ways of reducing the costs. For example, can we avoid the use of air-conditioning in our homes, take a packed lunch to work, or seek out free entertaining events?
Fourth: Let’s resolve to read and explore more information about financial institutions and their products, for example your credit union and your bank. Let’s build a close relationship with the managers.
Strengthening our relationship with our insurance broker is also useful. Our broker can review our life and property insurance and may also provide broader financial advice. Many brokers are trained financial advisors, so we may draw on this resource.
Fifth: Let’s resolve to maintain proper financial records. Let’s prepare a listing of our assets and of our debts and other liabilities and their terms and conditions. Also, let’s record a list of names and telephone numbers of important contacts relevant to our financial plan.
We will also maintain clear and comprehensive property and income tax records. Tax planning will be an integral part of our planning.
Finally: We undertake to review our performance on an on-going basis. We’ll be kind to ourselves. If we keep on track with our planning and reviewing annually, eventually, our finances will start to fall into place.
Happy New Year to you and your family! Best wishes for peace, good health and prosperity.
• Louise Fairsave is a personal financial management advisor, providing practical counsel on money and estate matters. Her advice is general in nature; readers should seek personal counsel about their specific circumstances.