Time to take stock of your finances

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Time to take stock of your finances

As the year draws to a close, it is useful to evaluate your personal wealth and make plans

Published on Dec 29, 2013
By Jessica Cheam


I used to raise my eyebrows at a friend who told me that he and his wife hold regular quarterly financial meetings to discuss the state of their finances.

Items on the agenda would include their combined net worth, how their investments were doing, whether they were adequately covered with insurance and whether they needed to re-evaluate the financial strategy for their family.

The process always sounded over the top and onerous to me.

But as I grew older and started a family, I realised that it wasn't a bad idea after all since your wealth should accumulate as you grow older and increased responsibilities also require more forward planning.

Instead of quarterly discussions, however, my husband and I decided that having the conversation once a year was enough, and we always do it at the year end to ride on the fresh burst of motivation that typically accompanies New Year resolution-making.

As we approach the end of 2013, I thought I'd share a list of things to consider when doing this annual personal finance review.

It functions like a "stock-take" list by which to view how your personal wealth has performed and what you could do to prepare for the year ahead.

1) Check your net worth

What was your total income this year?

Make a tally of all that you own - cash, equity, property and so forth - minus what you owe. What are the numbers compared with last year? Are you satisfied with them?

This provides a good baseline for comparison over the years and also prompts you to evaluate whether your financial strategy for the year has been effective.

2) Pay off or pay down your debts

That 13th-month bonus that you just received could be put to good use by paying off outstanding credit card or unsecured debts. There is nothing like starting the year with a clean slate.

If you have some spare cash lying around, you could consider paying down hefty loans such as mortgages, which will reduce the overall interest you pay.

3) Check your credit

If you have not already done so, it is worth checking your credit report once a year.

It costs just $6 to download the report from the Credit Bureau Singapore. It is an indication of your financial health, and banks and finance companies use such data as part of the assessment process for any new loans you apply for, so it makes sense to know what is on your credit file.

4) Rebalance your portfolio

This is a good time to look at your asset allocation and rebalance your investment portfolio to ensure that you are not becoming too weighted in one asset class because it has done particularly well this year.

Decide if you would like to stick to your asset allocation and make adjustments accordingly.

Personally, I had neglected to research an asset allocation strategy in the past year and invested 100 per cent into equities with dismal results.

I was time-strapped for most of the year, and was unable to monitor stock prices to take advantage of market movements, and I certainly will not be repeating the same mistake in the year ahead.

5) Think about your retirement accounts

My colleague Goh Eng Yeow has been a strong advocate of the benefits of the savings programme known as the Supplementary Retirement Scheme (SRS).

He has pointed out that by depositing your year-end bonus in it, you can enjoy tax savings for that year as money put into the SRS account is tax-free, so every dollar put into the SRS reduces your chargeable income by a dollar.

6) Budget for the year ahead

To do this effectively, you should have some form of tracking of expenses.

Look back at the past year and identify areas in which you could have saved more, for example, and use that to help set realistic targets for the year ahead.

Some elements to consider include short-, mid- and long-term savings goals, which are urgent or non-urgent and can range from saving for emergency situations, a future car or home purchase, or a desired holiday.

7) Review your insurance policies

Look at your existing policies and evaluate whether you are adequately covered for your current situation.

For example, did you leave a company recently and therefore need more hospitalisation and medical coverage?

Or did you welcome a new family member?

This requires thinking about whether their interests are protected if something happens to you.

Are you getting the best rates in the market?

Insurance companies change their premiums regularly and repackage insurance products to attract more customers, so you might find it worthwhile to see what else there is in your market that suits your needs.

8) Rate your level of happiness for the year

Of course, this is a subjective and philosophical exercise but I have found it useful in taking stock of the year that has just passed beyond viewing it in dollars and cents, to ascertain if what I have achieved is meaningful.

Some questions you could ask yourself:
•Did I get a good work-life balance this year?
•Did I enjoy working?
•Was this a healthy year for me?
•Did I spend enough time with friends and family?
•Did I give some time or money to charities or good causes?
•Did I make a contribution to society?
•Did I achieve what I had set out to do in the previous year?
•What plans do I have for the year ahead and beyond?

This list is obviously not exhaustive, but I think it is a good starting point.

Here's wishing all readers a great year ahead.

http://www.straitstimes.com/the-big-stor...s-20131229
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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#2
(01-01-2014, 10:44 AM)Boon Wrote: Time to take stock of your finances

As the year draws to a close, it is useful to evaluate your personal wealth and make plans

Published on Dec 29, 2013
By Jessica Cheam


I used to raise my eyebrows at a friend who told me that he and his wife hold regular quarterly financial meetings to discuss the state of their finances.

Items on the agenda would include their combined net worth, how their investments were doing, whether they were adequately covered with insurance and whether they needed to re-evaluate the financial strategy for their family.

The process always sounded over the top and onerous to me.

But as I grew older and started a family, I realised that it wasn't a bad idea after all since your wealth should accumulate as you grow older and increased responsibilities also require more forward planning.

Instead of quarterly discussions, however, my husband and I decided that having the conversation once a year was enough, and we always do it at the year end to ride on the fresh burst of motivation that typically accompanies New Year resolution-making.

As we approach the end of 2013, I thought I'd share a list of things to consider when doing this annual personal finance review.

It functions like a "stock-take" list by which to view how your personal wealth has performed and what you could do to prepare for the year ahead.

1) Check your net worth

What was your total income this year?

Make a tally of all that you own - cash, equity, property and so forth - minus what you owe. What are the numbers compared with last year? Are you satisfied with them?

This provides a good baseline for comparison over the years and also prompts you to evaluate whether your financial strategy for the year has been effective.

2) Pay off or pay down your debts

That 13th-month bonus that you just received could be put to good use by paying off outstanding credit card or unsecured debts. There is nothing like starting the year with a clean slate.

If you have some spare cash lying around, you could consider paying down hefty loans such as mortgages, which will reduce the overall interest you pay.

3) Check your credit

If you have not already done so, it is worth checking your credit report once a year.

It costs just $6 to download the report from the Credit Bureau Singapore. It is an indication of your financial health, and banks and finance companies use such data as part of the assessment process for any new loans you apply for, so it makes sense to know what is on your credit file.

4) Rebalance your portfolio

This is a good time to look at your asset allocation and rebalance your investment portfolio to ensure that you are not becoming too weighted in one asset class because it has done particularly well this year.

Decide if you would like to stick to your asset allocation and make adjustments accordingly.

Personally, I had neglected to research an asset allocation strategy in the past year and invested 100 per cent into equities with dismal results.

I was time-strapped for most of the year, and was unable to monitor stock prices to take advantage of market movements, and I certainly will not be repeating the same mistake in the year ahead.

5) Think about your retirement accounts

My colleague Goh Eng Yeow has been a strong advocate of the benefits of the savings programme known as the Supplementary Retirement Scheme (SRS).

He has pointed out that by depositing your year-end bonus in it, you can enjoy tax savings for that year as money put into the SRS account is tax-free, so every dollar put into the SRS reduces your chargeable income by a dollar.

6) Budget for the year ahead

To do this effectively, you should have some form of tracking of expenses.

Look back at the past year and identify areas in which you could have saved more, for example, and use that to help set realistic targets for the year ahead.

Some elements to consider include short-, mid- and long-term savings goals, which are urgent or non-urgent and can range from saving for emergency situations, a future car or home purchase, or a desired holiday.

7) Review your insurance policies

Look at your existing policies and evaluate whether you are adequately covered for your current situation.

For example, did you leave a company recently and therefore need more hospitalisation and medical coverage?

Or did you welcome a new family member?

This requires thinking about whether their interests are protected if something happens to you.

Are you getting the best rates in the market?

Insurance companies change their premiums regularly and repackage insurance products to attract more customers, so you might find it worthwhile to see what else there is in your market that suits your needs.

8) Rate your level of happiness for the year

Of course, this is a subjective and philosophical exercise but I have found it useful in taking stock of the year that has just passed beyond viewing it in dollars and cents, to ascertain if what I have achieved is meaningful.

Some questions you could ask yourself:
•Did I get a good work-life balance this year?
•Did I enjoy working?
•Was this a healthy year for me?
•Did I spend enough time with friends and family?
•Did I give some time or money to charities or good causes?
•Did I make a contribution to society?
•Did I achieve what I had set out to do in the previous year?
•What plans do I have for the year ahead and beyond?

This list is obviously not exhaustive, but I think it is a good starting point.

Here's wishing all readers a great year ahead.

http://www.straitstimes.com/the-big-stor...s-20131229

I do this with my wife once a year and we cover most of the steps above. You need good data - I am one of those crazy people who records everything I spend (I don't use any special apps, just on iOS notepad).

Some couples I know find it hard to discuss money openly (even just between them). It is interesting because money/money matters can be a huge source of friction in a marriage.
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