Given its the new year we are kicking off with a blog post on resolutions. Enjoy.
Many people see the New Year as a time to make big changes and take that last step to something you’ve been putting off for a while. Whilst quitting that vice, losing some weight or going to the gym are all admirable resolutions, making and sticking to a financial budget can offer some long term solutions to your finances and your peace of mind.
Worryingly, the failure rates of resolutions are very high. Resolutions are normally public and carry the added strain of telling your friends and family that you will do something positive. This leads to more stress; in the case of smoking or dieting this pressure can easily lead to relapse. Another aspect to this social pressure is the specific date: “I will quit smoking on the 1st of January”. Realistically, the 1st of January will be the day after a party; not the best day to consider quitting anything. How many of you, just one week on, will have failed in your resolve? Surely a more arbitrary date set by you personally is better as it indicates willingness and a want to make a change, rather than a forced position.
So how can a budget resolution become a lifestyle choice?
Well, taking control of your finances will make monetary matters much less stressful and may help instill a bit of self-discipline that we all tend to lack; this peace of mind can help you attain your other resolutions that a new year tends to dredge up.
Drawing up a budget shouldn’t take too long, it is as simple as listing your income and outgoings on a monthly basis. Your outgoings should include only the essential bills; rent, utility bills, food and some general living costs. Anything you tend to spend on top for entertainment and other luxuries should not be included.
Once you have worked out what your expendable income (income less outgoing) is, you can start to decide how to best use it. Expatriates tend not to have much personal debt, so the focus will be on how to invest this extra income to pay for the future.
Part of the budgeting process is to get you thinking about your financial security in the future. It is never too early to think about retirement planning, estate succession and wealth management. There is every chance, however, that it will be too late if you choose to avoid these decisions. The good news is help and support is easy to get.
An independent financial adviser will be able to discuss, advise and implement your financial strategies. They will discuss what it is you want; be it income for the future, capital growth or merely a tax efficient structure to pass on your wealth to your children or dependants.