As the excitement of the festive season settles, and we start contemplating the year ahead, it is a good time to also take stock of your financial situation. It is also a good time to start setting objectives for what you would like to achieve in the next year.
A fine balance
The first exercise I go through is to update my balance sheet. I do this on an annual basis, and compare it to my balance sheet of 12 months ago. Secondly, I have a look at what my monthly costs are, and compare them to my costs a year ago. This helps to highlight wasteful expenditure, and where I possibly need to be more vigilant.
For younger people, the focus is then to reduce debt, specifically expensive debt such as credit card and motor vehicle debt. Interest rates have started increasing, and are expected to continue to do so, and this kind of debt will start to bite shortly.
Investment markets are volatile at the moment, and we are not sure of what is ahead of us. However, the important thing is to sit tight and not start making irrational decisions now, and focus on the longer term. We get lulled into a false sense of security when investment markets keep on giving us above expectation returns, and are then brought back to reality when the returns are more subdued. If you are worried in anyway, rather contact your financial planner to discuss the potential impact this may have on your financial plan, and together with them make any adjustments that may be necessary.
Where there is a Will … and a Legacy
The next thing I do is to review my Will. Is it still in terms of my wishes, or are there certain changes that need to be made? Very often, we forget that life changes have a knock-on effect on our Wills.
The last thing that I do on an annual basis is to ensure that my Legacy file (“in case of death” file) is up to date. This file should have all your updated information: your original Will, or a note of where your Will is; certified copies of your ID/passport; updated balance sheet and details of your monthly debit orders; bank details and PIN details of your accounts; if you are still employed, updated details of your retirement fund and life/disability cover; motor vehicle details; life insurance details; and whatever information you deem important enough to include. This file should be able to be picked up and handed to your Executor, should something happen to you. This may not be pleasant to think about, but can save your loved ones hours of frustration trying to find certain information.