Forward Planning: Some sound resolutions for the New Year

As we have seen for the past few years, with the changing economic situation, interest rates have been falling, making money parked at fixed interest rate or saving accounts earn 1.5 per cent to 2.5 per cent only which with an inflation rate of 3 to 4 per cent is a financial crime. Not only you are not making money but actually you are loosing some.

Investing in the stock market either local or international has been risky due to the failing prices of shares in the IT sector, misbehaviour of a few large corporates in the U.S. and the generally unpredictable performance of the market.

Globalisation and its requirements for the unification of laws, regulations and standards to meet the free trade and free movement of goods and services will also affect us all one way or another. Saying all of that makes it very obvious that our personal and/or business financial needs will – and probably already have started to - change dramatically meaning that it's time to reorganise our finances again if we want to keep our financial security intact while at the same time making a decent profit on our investments.

This year's resolutions are all starting with big Ss and go as follows:

- Save regularly and put aside at least 10 per cent of your salary each and every month when you receive it and before any spending. It is even better to have a direct bank transfer effected automatically so as to make your saving systematic and regular.

- Save more if you can and buy only what's needed because your financial obligations and requirements are on the increase, many things won't be free any more in the future and you may have to pay taxes some day.

- Setup an emergency fund by opening a saving account holding no more than six months worth salary maximum (because this account won't earn you much anyway) which can be used for extreme and unforeseen necessities only such as fixing the car or repairing the house, etc.

- Save and invest regularly but never put all your eggs in the same basket: diversify.

- Stop paying rent and pay yourself instead of someone else: Seek shelter and buy your own home if you can afford the down payment and the mortgage; it will be your biggest and most important investment.

- Secure financially the older person that you will be some day by establishing your future pension and retirement requirements.

- Setup a personal retirement fund and pension plan which are very important for a healthy retirement and never depend on company pension or government social security only.

- Setup a future education fund for your children college fees and expenses so they can benefit from a quality education and increase their chances of success in their careers.

- Setup a fund for future financial objectives and goals like putting a down payment on a house or the initial capital required for starting your own business, buying the boat that you always wanted to have, taking a sea cruise to tropical islands, etc.

Seek professional help and assistance from a qualified and licensed financial planner or advisor in doing all of the above because messing up with your personal finance is most of the time uncorrectable and damages could hurt you and your family for the rest of your life.

Set up a financial plan based on your existing and future financial goals and objectives and avoid people who want to sell you a plan or invest your money without even looking at your whole financial situation and needs.

Second opinion may be needed before making financial decisions, so don't hesitate to seek advice from a financial planner or advisor from another firm.

Trust only registered and licensed financial services firms and individuals and never buy from those passing-by who only care about their own pockets.

Our resolutions for the new year should be: safe, sound and healthy financial decisions, having control on our finances and never leaving them to the elements or hazard.

Look after your and your family's financial security and have a happy and prosperous year 2003.