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Financial New Year’s Resolutions

I can’t quite believe that I’m already talking about New Year’s resolutions, but as 2018 hurtles to a close leaving us all wondering how on earth it has disappeared so quickly, we come to that time when many of us start to reflect back and ask ‘what have I actually achieved this year?’ Resolutions are popular and financial ones perhaps surprisingly so. So what should yours be for 2019? Obviously everyone’s goals differ based on aspirations for the future, earnings, liabilities, dependents, the stage of life they are at, and so on. To clarify yours, it’s important that you reflect on your own personal situation, ascertain what you need to achieve, and what is required to get there. Here are some financial resolution suggestions that will make your 2019 richer in more ways than one:

I’M GOING TO PRIORITISE PROTECTING MY FAMILY

If you do not have adequate health insurance, or you have dependents and/or liabilities without sufficient life insurance, this should be the first area you address. I often see health insurance overlooked, and life insurance even more so. Neither need to be overly expensive but it’s essential to have some form of protection in place so your family are not left high and dry if something were to happen.

I’M GOING TO GET ORGANISED MANAGING MY MONEY

There are numerous apps out there to help monitor your outgoings and identify which costs to cut back on. I often advise people to segregate the necessary costs from the luxuries and perhaps put everything down into a spreadsheet for clarity. You’ll no doubt find the exercise useful (or maybe painful!) and can use that as a basis to start planning your finances in a more effective way.

I’M GOING TO MAKE THE MOST OF MY DISPOSABLE INCOME

If you’re an expatriate living in Southeast Asia, then you really should be capitalising on this opportunity to squirrel away provisions for your eventual repatriation, or retirement if indeed you’re here for good. The cost of living in Malaysia is as competitive as you’ll find anywhere in the world but it is all too easy to fall into the trap of increasing your standard of living relative to your expatriate salary and end up saving little to nothing each month. It’s important to remember that putting provisions aside towards a pension is usually compulsory in the UK, so you need to ensure that you continue that habit off your own bat, especially if you’re not even contributing towards the EPF. Make your target specific by deciding how much you’d like to have saved by December 31st 2019, and review the situation throughout the year to ensure you remain on track.

I’M GOING TO SAVE MONTHLY

Decide what percentage of your monthly income you can afford to save and ensure this is segregated each payday so that you only spend the remainder. If you can see money in your account and it is easily accessible, you’re far more likely to spend it! Remember, what remains after you have saved each month is what you should spend, not the other way around. It’s far easier keeping up a monthly savings routine than to save sporadically as and when you feel you can.

I’M GOING TO INVEST MY SAVINGS WISELY

If you have a low tolerance to risk and you’re heavily invested into equities, then you’re probably causing yourself undue stress due to the heavier fluctuations of your portfolio. On the flip side, if you have a higher tolerance to risk with a lengthy time horizon, you’re likely to be disappointed with the performance of a portfolio more heavily invested into fixed interest over the longer term. Make sure your portfolio is well suited to your risk profile and sufficiently diversified. Your financial planner will be able to provide expert advice to ensure this is the case. Whether you pick one of these resolutions or a different one, remember, it’s all about balance. 2019 won’t be a memorable or fun year if you stay at home the whole time, survive on a bowl of rice a day and work every hour you possibly can to maximise savings whilst your friends rave about incredible meals out and weekends away jungle hiking, seeing wild orangutans, or lazing on idyllic beaches. It should be possible to save a good portion of your salary and still make the most of all that Malaysia and the countries surrounding it have to offer. You just need to reign in the spending on the luxuries! If you’d like to discuss your international protection and investment options with a highly qualified financial planner, please feel free to get in touch.

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Sam is a UK-qualified Independent Financial Adviser and strives to raise the standards of international financial planning in Malaysia. He has been based in KL since 2009 and represents Infinity Solutions Ltd in partnership with UK-based Wealth Manager – Tilney Group. You may direct any inquiries to [email protected] or call +6017.3499 686

This article was originally published in The Expat magazine (December 2018) which is available online or in print via a free subscription.

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