At this time of year it is popular to make New Year resolutions, but how many of those are about our finances? Making sure you are financially fit is as important as vowing to visit the gym regularly but once you’ve taken the initial steps is less time-consuming and you can do most of it whilst sat comfortably on your sofa.
We all have to spend money but can you do it more smartly? Invariably we could all spend less and save more and a little focus rarely goes amiss. With that in mind here’s a list of 10 steps you can take to get yourself financially fitter in 2019.
Sort out your paperwork. Put all relevant financial papers in one place. That includes bank statements, information on accounts, life assurance and savings policies, copies of wills. A safe is ideal but a large box or folder will do.
Many documents are not required in hard copy so you can cut down on the paper by keeping soft copies. Do back up properly though and send copies of important items to a secure email account that you can access from anywhere.
Keep a budget. This is especially important if money is tight as until you know what is coming in and at least as importantly, going out, each month you won’t be in a position to improve your situation. Too many people wonder where their hard-earned income went each month, so for a few months you need to keep a log of every Dirham that you receive and every one that you pay out, no matter how little the bill. If you feel you are frittering cash away, note what you are spending it on. At the end of the month tally each column and you will see not only what is left over, but also where you can make savings.
Set yourself a monthly spending limit. Once you have paid your rent or mortgage, your utility bills, loans and essential bills, give yourself a set amount to spend each week or month. Your pocket money if you like. If it helps, pay yourself an allowance in cash and leave cards at home as that way you will be far more aware of where the money is going.
Shop around. Shopping wisely can lead to significant savings. The costs vary hugely between supermarkets so taking a little more time can lead to big savings on your grocery bills. Buying seasonally and locally, or regionally, can also be cheaper.
We have many online options these days too and you will find that savings can be made that way too.
Address those credit card bills. Paying the high rates of interest on a credit card balance is a waste of money. Paying the minimum amount each month will not reduce the balance so must pay more than that amount each month to make any inroads
If you are building up debt on a card you need to stop using it for daily expenses. That only leads to problems. Remove temptation and put the cad away – leave it at home, out of sight.
For useful information on dealing with debts take a look at this article: 10 tips for dealing with debt in the UAE
Build up an emergency fund. Ideally, we should all have money equivalent to three to six months’ outgoings to fall back on, whether due to redundancy, illness or to cover flights to visit ailing relatives.
You never know when the rainy day will come so best to be prepared and there is a great deal of comfort in knowing that you have a financial buffer.
Get insured. People don’t think twice about insuring their cars but what about the person who is paying the bills? What are they worth if no longer around, or seriously ill and unable to earn?
If you have dependents or a mortgage, you need to make sure you have enough life assurance to protect your family. It is the kind thing to do and it isn’t expensive to arrange simple life cover.
Start saving. Even if you start small, it is still a start. If you need discipline, set up a standing order to move money to a saving account after you get paid so can’t spend it. Put coins and small notes in a jar each day, but get started. It soon becomes a habit and the amounts will build up.
Plan for your future. The earlier you start the better and compound interest/growth can make a big difference. There are a variety of options to suit different budgets and circumstances but make sure you get professional and unbiased advice.
Your existing investment may also need reviewing in light of current circumstances. We are in ‘interesting’ times in terms of global stock markets but if properly invested and managed it shouldn’t be cause for concern.
And last but not least:
Set yourself goals It is important that you set yourself goals as without them you cannot measure your success.
If the priority is to pay off your credit cards, set a monthly payment goal and a deadline to have a zero balance. If you need to build up cash savings, decide how much you will aim to save each month and have a target that you can review every six months.
A proper financial review to check that you are on track, to review any existing policies, and to discuss how you can achieve your goals can be highly beneficial.
Make 2019 the year when you really make a difference to your financial situation and seriously plan for your future. It doesn’t have to be painful but it really matters.
Happy New Year!
Should you have any queries, want to start planning for your future, or would like to review your finances, contact me at keren@holbornassets.com to arrange a meeting.