Business | Your Money
Planning your finances for the new year
It is important that you set specific action plans to help you reach your financial goals for 2010
- By Cleofe Maceda, Staff Reporter
- Published: 00:00 December 26, 2009
- Image Credit: Supplied
- If you have been a habitual non-saver with a mounting credit card debt, the first thing you need to do is get control of your money as fast as you can and cancel your numerous plastic cards.
It's always easy to declare you will welcome the New Year with a strong resolve to save more money. But putting your resolutions into action is the hardest part. That's why it's important that you set specific action plans to help you reach your financial goals for 2010.
If you have been a habitual non-saver with a mounting credit card debt, the first thing you need to do is get control of your money as fast as you can and cancel your numerous plastic cards. You can probably keep one at home for emergency use, but make sure you don't take it with you when you're out shopping.
"Rather than continuing to make the minimum monthly payments, speak to the credit card provider and set a monthly repayment which is more than the minimum payment but which you feel comfortable with. Throughout the year, try and increase this set monthly repayment as you get used to larger amounts leaving you account each month," advises Darren Ashley, managing director of Candour Consultancy.
Record expenses
Getting into the habit of saving can be difficult, so beginning January, write down all your expenses on a notepad and keep track of everything you spend. This way, you will have a clear picture of your current financial state.
If you can't live without a credit card, use your monthly statements to monitor areas where you are overspending, says Kamran Siddiqi, Visa general manager for GCC, Levant, Pakistan and Afghanistan.
"Review your spending at least once a month and ensure your debt balance is coming down. Resolve to repay 10 per cent minimum of the outstanding each month. Failure to do so will eventually get you into trouble," notes Steve Gregory, director of technical services at Holborn Assets Insurance Brokers.
Once you have paid up all your debts, the next important thing to do is set aside an emergency fund before considering long-term savings plans. Gregory says this will be your safety net in case you lose your job or go through a period of illness.
Emergency fund
Ideally, you should put six months of your salary in your emergency fund, says Ishrat Kiyani, regional head of wealth management and insurance at HSBC Bank Middle East. Gregory recommends that you buy an income protection plan to insure your income, as well.
If you're an average wage earner with some money in the bank, it will be good to put that idle money to good use. Buying a life insurance will be practical, especially if you have dependants. If you haven't given retirement a thought yet, it's about time you start planning your pension.
"Once your pension has been started, look also at savings plans for shorter terms, to build capital or to provide for children's education, for instance. Good habits start with good motives. Be motivated and watch your net worth grow. Review yearly at least, with a competent financial advisor. Avoid anything that looks too good to be true," Gregory adds.
If you think you have enough investment capital and doesn't know how to start, it is always a good idea to speak to a financial advisor. Start with a financial review and get your advisor to confirm in writing how much their services will cost you.
Make sure you don't put all your eggs in one basket or risk all your savings by tying them into medium to long term investments.
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