As an adviser, with more years of experience than I care to admit to, one of the most common questions I am asked is about financial priorities. Where should you start if you haven’t reviewed your personal finances before, or haven’t done so for some time? What should you do first and what is most important?
Naturally the requirements will vary depending on circumstances, but these apply to the majority of people.
Get your paperwork in order
Start by getting together a list of all your existing bank accounts, life policies, savings plans and pensions, together with insurance policies, mortgages and credit cards. Then calculate your monthly income and outgoings so you end up with a realistic monthly budget.
When doing this you might like to sort out a regular filing system so you keep all your financial papers in one place. This will make it easier to manage your money in the future.
Emergency fund
It is important that you keep a significant amount of cash on deposit should you encounter any financial difficulties. There is less job security in the Middle East and no safety net so I would suggest that people build up and maintain an amount on deposit equivalent to three to six month’s outgoings. These monies should be immediately accessible.
Arrange wills
Even if you have relatively little in the way of assets at the moment, surely you are planning on building them up? If you have children it is important that provision is made for them. A will ensure that in the event of your death your assets end up where you want them to be, not according to the rules of where you are living or are from. Do use an experienced lawyer.
Arrange medical insurance
Some people have this provided by their employer, but even then should check that cover is adequate as all plans are not equal. If your employer does not offer a group scheme, then you should make your own arrangements as treatment can be very costly.
There are numerous providers operating in the region, each with several different plans, so it makes sense to take independent advice to ensure you get the right plan for your circumstances and budget, especially as this will not cost you any extra.
Arrange life assurance
If you have debts or financial dependents, then you need life cover. Simple cover for most people is not costly and provides peace of mind. You will want to ensure that in the event of your death your family is not left with debts that they cannot pay or without sufficient income to live on.
Many plans have the option to add critical illness cover and that should also be considered.
Review banking
Is your bank offering the service that you want? Are you happy with them and their charges? If not, you can usually change banks, although it can be a frustrating and time-consuming process. Changing credit cards can be a little easier. See the Souqalmal website for full details of your options www.souqalmal.com The difficulty in the Middle East is that if you have a loan with your bank you will have signed an agreement to say that your salary will be paid to them for the duration of the loan, so bear that in mind.
Plan for your financial future
Even if retirement seems a long way off, the sooner you start saving for the later years, the less it will cost you in the long term. With ever increasing life expectancy, the onus is on us to make substantial provision to provide for ourselves as few of us will receive much support from governments. There are various options and ways to save or invest, but the most important thing is that you are saving substantial amounts. Take advice to ensure that you are saving in the most efficient way.
Review existing investments
If you have existing investments are they being managed properly? One of the main reasons why investments do not perform well is that they are not reviewed on a regular basis. Are your monies still invested appropriately taking into consideration the current market situation and your own circumstances? Do you have pension schemes from previous employers and don’t know what to do with them? All investments should be reviewed annually.
Much of financial planning is simply about being organised. Get your papers in order, work out what you need and then take independent professional advice, from someone who is qualified and experienced, to ensure that you can achieve your financial goals. As an experienced Independent Financial Adviser I can be objective about someone’s situation and my role is to guide people to make the most of their finances in the way that best suits their personal situation and requirements.
Do you need a review of your finances? Contact me on keren@holbornassets.com to arrange a no obligation meeting.
