Have you made the standard health/diet/personal growth resolutions this year, or are you one of the growing number of people who are making resolutions targetting finances? According to a Fidelity survey, 67% of those interviewed were looking to make a financial resolution as the new decade dawned – a 6% increase on last year.
The start of a new decade is the perfect time to reassess your relationship with money and take control of your finances. With that in mind, we’ve pinpointed three habits to break and three more to adopt in order to do just that. Focus on one, two or all six if you can and you’ll be sure to end the twenties in a much stronger financial position than you are now.
Three financial habits you need to break
- Spending more than you earn
Unchecked spending is a major barrier to being in financial control. Last year the average UK household clocked up record debts of £15,400 which means that there are an awful lot of people living beyond their means. If you’re a slave to debt you’ll never be financially secure so you absolutely need to reduce spending or increase income to better balance your books. Even better if you can do both.
- Winging it without a budget
This goes hand in hand with spending more than you earn. Overspending is often a result of poor money management and a failure to get to grips with what is going out of your bank account each month. Just as no business achieves success without keeping a tight rein on finances, no household will ever be truly in control without a budget. Make 2020 the year that you start to budget and you’ll be amazed at how life-changing it can be.
- Impulse buying
We’ve all been there – the sales are on and that jacket you’ve had your eye on is reduced by 50% so you’d be crazy not to snap it up. You can’t really afford it but that’s what credit cards are for, right? And so you end up with yet another item of clothing that you don’t really need and more debt, all for the sake of a fleeting buzz which is quickly superceded by another pressing desire. A recent study calculated that the average Brit spends £144,000 on impulse purchases over the course of a lifetime. Discretionary spending on things that we don’t really need is responsible for many people living in a precarious financial situation. Learn to override the impulse for immediate gratification and start saving your money instead. Imagine how much more wisely that money could be used.
Three financial habits you need to adopt
- Makingsavings a priority
It might not be sexy or cool and certainly doesn’t give you the high you get from an afternoon of retail therapy but in the long run saving will have a much more transformative affect on your life. Saving is an extremely powerful tool because the money you put aside can fulfil many peace-of-mind giving functions including equipping you with an emergency fund to avert financial crisis when the unexpected happens and enabling you to attain important financial goals such as buying a house or building a good-sized retirement fund. Getting ourself into a position of financial strength builds a sense of security which clients tell us time and time again is priceless.
- Investing wisely
Once you have money to invest, it’s essential to become a savvy investor. Many people find it hard to cast themselves in that role, indeed a survey by Ally Financial Inc, revealed that 65% of Americans find investing in the stock market scary and/or intimidating. We get it, there’s a lot to be fearful of. Yes, you could make wrong calls, fall prey to untrustworthy advice or spend too much time agonising over when to buy and sell investments but all these problems can be avoided by working with a financial adviser. Find a reputable one who can talk through your concerns and ensure that the investments you make fit with your overall situation and your appetite for risk.
- Protecting your wealth
Building wealth is one thing but if you fail to protect it you could find everything you have built collapsing before your very eyes. Imagine for example that you have no health insurance and get cancer – that’s some very expensive treatment coming out of your pocket if you’re an expat living in Asia without access to state-funded healthcare. And what about your family? If you are the family breadwinner do you have a life insurance safety net in place to maintain their standard of living if you were no longer around to support them? Health and life insurance are the minimum protections you require in terms of what we at Infinity often dub peace of mind insurance but you may also want to consider critical illness and income protection cover.
If you’re turning over a new financial leaf this January and you’d like help with defining financial goals, putting together an investment strategy and protecting your wealth with insurance, one of our qualified financial consultants would love to be your guide. Please contact us to be put in touch with someone close to you and get your decade off to a flying financial start.
A leading provider of expat financial services and wealth management services across Asia.