New year, New resolutions

As we get closer towards the start of a brand new year, are you thinking about your new year resolutions? Is better managing your finances one of your goals? While you may not be in debt or planning to buy a new house, having a review of your finances for this year and setting new ones for next is highly recommended for anyone who is part of the working population.

Cash Flow

First up, take a look at your current year finances. Not sure where to start? If you haven’t been keeping track of your spending and savings, make a point to start next year. If you find it too much of a hassle, here are some simple tips:

1. Withdraw a set amount each week from your ATM so that you limit your budget (no cheating by using credit cards!)

2. Put all other expenses on your credit card except your daily food expenses. You will then be able to track your spending via your monthly card statement

For those who have already had the habit of tracking your expenditure, good for you! You should then look at whether you are satisfied with your current saving levels. The best way to ensure you pay yourself first is to set up an automatic savings account which deduct part of your salary into a separate savings account.

Some goals for better managing your cash flow includes setting a goal to have at least a 6 months emergency fund in which you can draw upon during bad times such as sickness or retrenchment. If you are already saving religiously, how about putting some extra fund into a fixed deposit/investments to make your money work harder for you?

Assets and Liabilities

Other than your liquid assets, look at other assets as well. These include your house and stock holdings. Note that a car is considered a liability because it does not put money into your pockets.

Any debts you are servicing will go into liabilities. If you are in debt, devise a structured plan where you put away a fixed amount each month to pay it off first. Remember, paying off your debts should take priority over savings because you incur interests on debts.

Review your Investments

If you are already an investor, review what your returns have been in 2014. Are they making money? Have the returns underperformed what you had expected? You may want to make some decision to switch out your investments if they have not made money after many years. Many investors are resistant to the idea of cutting loss, and hope that one day their investment will reverse from a loss-making position. Speak to your financial advisor or trading representative to have an extra perspective on what you should do with your current investments.

If you have not started investing and have some extra cash, then you can look to start getting educated about investments. Even though bank deposits are almost riskless, their returns are miniscule. Going with current rates of inflation, your savings in banks are actually making a loss! So take charge and make your money work harder in 2015!