With just three weeks of 2020 left, it’s that time of the year when many of us look back at what we have achieved over the last 12 months. Given that 2020 has been the most challenging and unpredictable year that many of us have ever experienced, last year’s resolutions might have been tricky to keep, or perhaps you have been one of the lucky few who has thrived this year.
Whatever your situation, here are four financial checks to carry out in the next few weeks to get in great shape for a prosperous 2021.
1. Review your budget
This has been a year of massive changes for many and that could mean that your budget needs tweaking (if you don’t have a budget, then now’s the time to do one!).
Perhaps you’ve become a great cook during confinement and will be dining out and ordering fewer takeaways going forward. Maybe you prefer your free, online yoga classes to the expensive ones you used to take at the gym. Or have you switched to homeworking for good and eliminated your commuting costs? Small changes like these will enable you to increase the amount of your salary dedicated to saving so don’t miss the opportunity. Alternatively, you might have seen a drop in income which requires you to shave money off your budget it some way.
The end of the year is always a good time for a budget review and tinker so you can start 2021 off on the right foot but this seems even more important after this tumultuous year. Get those bank statements out, have a look at where your money is going and get your budget in order.
2. Check your savings are in the right place
One of the positives many can take comfort from in 2020 is that enforced lockdown has meant less opportunity to spend – whether on shopping, meals out, holidays or cultural activities like concerts, the theatre or the cinema – and savings have increased as a result.
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If you’re in the increased savings gang, you need to ensure that you ringfence the savings for something worthwhile and don’t just fritter it away. If you have debts, prioritise those and get them paid off. If you don’t, second priority is to put your savings towards an emergency fund which is liquid and easily accessible. After that, it’s time to consider investing your money so that it is working as hard as it possibly can be for you. And that won’t be in the bank. Perhaps this is the moment to jump into the wonderful world of investing with the help of a professional financial adviser?
3. Revisit your long-term financial plan
The end of the year is always a good time to review your long-term financial plan. We’re not just talking about savings and investments but also your life and health insurance policies, critical illness cover and estate planning. If there have been any big life changes in 2020, or you’re planning any in 2021, (marriage, divorce, babies etc) then chances are your financial planning will definitely need tweaking.
4. See a financial adviser
If you don’t already have an adviser, it’s not too late to make an appointment to see one this year. Expats in Asia can contact us to be put in touch with one of our highly knowledgeable advisers near to where you live. That would be an extremely positive way to end the year and set some concrete goals to start working towards in 2021 – no need to look any further for your New Year’s resolutions!
If you do have an adviser, they can help you review your situation as per point 3 above and reset your financial planning goals for the new year. As ever, an objective viewpoint on the situation is always useful.
The countdown to 2021 is on. Give it the best chance of being a year to remember for all the right reasons by running through this useful checklist.
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