We all lead busy lives, but it pays to find time to keep on top of our finances. Here, Andrew Talbot of Avrio Wealth highlights some things we should take note of when managing our money.
While many people make financial plans in time for the start of a new year, it should really be an ongoing process. Such a plan can act as a road map for your money – and, like a map, it’s helpful to look at once in a while to ensure that you’re on track. Lifetime financial forecasting is a way to help you examine how your spending, savings and investing will affect your plans for the future. It can help you see how much you need on hand to live comfortably and, most importantly, prepare for the ongoing costs of your lifestyle and any unexpected expenses.
#1 Start crunching the numbers
You should envisage a range of “what-if” scenarios. For example:
- What if I pay off my mortgage in 10 years’ time using my investments? How will this affect my future finances?
- What if I use my inheritance to purchase a rental property when I retire? How will this affect my retirement income?
- What if I take a lump sum from my savings to build an extension on my house in five years’ time? Can I still afford to retire at 60?
Running through the numbers allows you to see how much you need in order to achieve your financial objectives. The plan can be based on your own timeline and inputting real-life events relevant to your own circumstance. You can get financial planners to help you with it. These calculations will help to bring money to life and, in turn, help you manage expectations. You don’t need to create an incredibly detailed plan with profit forecasts for your household, but you should create a set of financial objectives for the coming year.
#2 Scrutinise your spending plan
It may sound incredibly tedious and boring, but if you get your budgeting right, you’ll have more money available to enjoy yourself. The biggest issue you could face without planning is having a lifestyle that doesn’t match up with the amount of money you’re earning. Often, when we take a good look at our finances, there are always things we can forgo to save money.
#3 Get insurance
Home insurance is one thing and car insurance is obligatory. But for many people, that’s as far as they get when it comes to ensuring their assets in life. Failing to insure your income, life or health could cost you a lot more than you expect if anything happens. Consider getting income protection and critical illness cover and, if something unexpected happens, it’s likely to be more worth it than you think.
#4 Write a will
Many of us don’t have a will, but by neglecting to make one, we’re leaving behind a major headache for our loved ones if something happens to us. Writing a will doesn’t have to be complicated, especially if your financial affairs are relatively simple.
#5 Giving to charity
If you make a contribution to a registered charity in Singapore, your donation will be tax deductible. Furthermore, your donation will be deductible at two-and-a-half times the original amount. For example, a $300 donation means that $750 will be deducted from assessable income. The amount will be automatically deducted from income assessment at the time of your income tax submission in April each year.
Note that cash donations must be made to an approved Institution of a Public Character (IPC) or the Singapore Government for causes that benefit the local community. Not all registered charities are approved IPCs. Therefore, donations made to a charity without approved IPC status are not tax-deductible.
Set up an online consultation to see if Avrio may work out a long-term solution for you.
This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation. The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association. All efforts have been made to report or share true and accurate information. However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/ and the SEC Website at www.adviserinfo.sec.gov. For a copy of the firm’s ADV Part 2 Brochure, please contact us at email@example.com