Securing a Solid Financial Foundation
 New
Year's Day is a time for making resolutions. People often commit to shedding
pounds or taking other actions to improve their lives. Why not start the
year off right by adding a comprehensive financial review to your list?
Reviewing your finances annually can help give you the confidence to know
you are building a solid foundation. It also provides an opportunity to
make any necessary changes for the year. Here is a brief description of
some basic areas to check:
Stem the Flow of Red Ink
If your income exceeds your expenses,
you have a positive cash flow. If your income is less than your expenses,
you have a negative cash flow. If you are "in the red" with a negative
cash flow you may want to reorganize your budget to minimize any unnecessary
expenses. Check with our Cash Flow Calculator.
Protect Against Unexpected Risks
Life can sometimes throw you a "curve
ball." An unexpected event, such as a sudden disability or untimely death,
could leave your family facing serious financial hardship. Adequate insurance
is the cornerstone of most financial plans. It offers protection to help
cover life's unforeseen risks.
Build a Retirement Nest Egg
Most people will need to supplement
pension and EPF with personal savings in order to maintain their lifestyles
when they retire. If you have not yet estimated your retirement needs,
now may be a good time to do so. It is never too early to begin a disciplined
savings program to help ensure you will have sufficient funds to enjoy
a comfortable and secure retirement. Check with our Retirement
Planning Calculator.
Earmark Funds for Special Goals
To increase your chances of success
in achieving your financial goals, it is important to prioritize them.
For every financial goal you set, develop a plan: 1) project the cost;
2) estimate how long it will take to reach the goal (your time horizon);
and 3) identify how you will fund the goal (usually by scheduling savings,
liquidating assets, or taking a loan).
Beat Inflation
In order to maintain your buying
power, your income must increase at least as much as the rate of inflation.
To really get ahead, your income must outpace inflation. If inflation starts
to beat you, your standard of living will decline. As you review your finances,
it's important to understand the impact of inflation on your spending and
saving.
Financial Review
It takes time to build a secure financial
foundation. By including a comprehensive financial review in your list
of New Year's resolutions, you can take action to make the most of the
coming year. By faithfully tracking your progress in these areas, you will
be well on your way to achieving your dreams. |
