A new decade provides us all with a great opportunity for reflection and goal setting for the years to come. It’s really important to have goals to work towards and I hope that some of yours will be financially-orientated. Why not aim to adopt these six financial habits which will ensure that you end the 20s more wealthy than you are now?
- Look at what you have achieved to date
A new decade is a great time to take stock of your financial progress to date. If you are new to financial planning, the first step is to list your assets and debts/liabilities in order to determine your net worth (assets minus liabilities). This will give a glimpse of your overall financial situation.
If you’re already on your financial planning journey, you should also look at the goals you made for 2019 to see how you fared in order to assess which goals were met and where improvements can be made.
- Set some concrete financial planning goals
Small financial steps over the short term lead to big financial gains over the long term. If you haven’t already set financial goals, this is crucial as they will provide the guiding philosophy which dictates how you approach your financial planning in the year and decade to come. For most of us retirement saving is a financial planning priority but other areas to consider are an emergency fund, education fee planning and saving a deposit to buy a property.
- Make your goals achievable and measurable
Sure, we’d all like to have a million in the bank this time next year but for most of us that is wildly overambitious so set long and short term financial goals which are attainable based on your income level and your outgoings. This will help foster a sense of achievement when you review how you are doing – which you should do regularly (at least once a year but quarterly is the ideal). The aim is to feel satisfied at the $20,000 you manage to save over the course of a year rather than disappointment at the $1mn you haven’t.
- Set monthly savings targets
Of course we could all spend every cent we earn each month without a problem, which is why you need to actively prioritise saving and set monthly targets which are based on the long term goals you have set. Automating saving so the targetted amount is whisked out of your ‘to spend’ account and safely tucked away somewhere you won’t be tempted to raid it helps keep you on the saving straight and narrow.
- Protect the wealth you are building
All the above steps are concerned with building wealth but the other side to the financial planning coin is protecting the wealth that you are accumulating. That means insurance. I know, boring right? But it really is important to consider your life and health insurance requirements so that should anything happen to you to affect your ability to earn you won’t need to tuck into your savings to dig yourself out of a hole. Other insurances to consider are income protection and critical illness.
- Get some professional advice
Expert financial advice will make you wealthier. Yes, I know that as a professional adviser I would say that but a recent study tracking financial progress over a five year time period has proved it. The International Longevity Centre UK published a report in November 2019 concluding that ‘Evidence … suggests that fostering an ongoing relationship with a financial adviser leads to better financial outcomes. Those who reported receiving advice at both time points in our analysis had nearly 50% higher average pension wealth than those only advised at the start.’
If you are an expat in Hong Kong and would like impartial financial planning advice to help boost your pension wealth, I would love to be your wingman. New clients are welcome to get in touch for a no-obligation financial review and if you’re already a client I look forward to reviewing your goals for the new decade with you.
Financial Consultant
I am a a fully qualified international financial adviser working with clients throughout Asia and a registered member of both the Chartered Institute of Insurance (CII) and the Hong Kong Confederation of Insurance Brokers (CIB). During my nine years at Infinity I have focused on providing sound financial advice in line with my clients’ unique needs and have built up a loyal client base.
