Posted on

LOUISE FAIRSAVE: Your money priorities for 2017


LOUISE FAIRSAVE

LOUISE FAIRSAVE: Your money priorities for 2017

Social Share
Share

THE DAWN OF a new year is usually our opportunity to make resolutions for improving our personal financial position. Resolutions that we often circumvent in one way or the other before the first three months of the year have passed. So let 2017 be our year to take a different approach.

This year, let us try to be more practical by developing and working systems, procedures and habits that help us to achieve specific financial goals. 

Our country is going through a challenging economic period. The effects of this are reflected in the prevailing savings and loans interest rates, the uncertainty of sustained employment levels in certain sectors, and the falling standards in social services – to identify a few ready indicators which you can monitor and note any changes as the year progresses. Such is the current economic environment that serves as the background to our plans.

While keeping ourselves abreast of any changes in the prevailing economic environment, let us look at practical steps to improve our finances during the year, as follows:

Step 1: This involves thinking through the desired goals for our life for the year. Typical example of goals include: funding our own educational advancement or that of our dependents, acquiring a vehicle or home for the first time, or making an upgrade on the ones already owned, further funding our emergency fund or retirement nest egg, or a commitment to reduce, or get out of, debt. 

Step 2: Involves describing each goal in as much detail as possible. For example, what is the likely cost? When will the commitment of funds be made to that goal? How much are we willing and able to commit moneywise to each goal? What quality or standard can we afford? 

Step 3: This requires recognising the need to set priorities and undertaking the careful assessment of conflicting goals. For instance, this year the need to contribute to our child’s university fund may conflict with the need to boost our retirement nest egg. In such a case, consider that it is likely you secure a loan if necessary towards your child’s education. However, there are typically no loans available for retirement – even the idea of borrowing money to fund one’s retirement is laughable.

The point, though, is that setting priorities for our financial goals is a difficult task that is likely to take the most time and thought. In setting such priority, it is useful to ask questions of say, your bank manager or similar finance professional, seek online advice, and/or read and research the conflicts to ensure we are aware of the important factors that can guide the trade-off between different goals. An important and critical sub-goal for 2017 is to spend the time necessary to improve our knowledge and understanding of personal financial management issues.

Step 4: Involves consideration of which goals may be set aside for another year. Given the current national economic challenges, it makes sense to give priority to the goals that are likely to improve our financial resilience. For example, the recommended top four goals for the average Barbadian in the 40 to 60 age group are:

1. Boost emergency funds.

2. Boost retirement savings.

3. Limit discretionary spending.

4. Avoid increasing debt.

During 2017, these goals will be explored in gathering a better understanding of why they are priority, and how to develop systems, procedures and habits that lend towards achieving a more favourable personal financial position by the close of the year.

The measure of our success with managing our personal finances is reflected in the extent to which we can all survive the challenges and stresses of the environment in which we live, no matter how extreme those circumstances may become. Our ultimate goal therefore is to traverse what portends to be a financially testing year for our country, our business and ourselves. 

• Louise Fairsave is a personal financial management adviser, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances.

LAST NEWS