As the year kicks off, there is lot of chat around resolutions or goals for the year. What are your financial goals for 2022?
Measuring your finances is not about comparing yourself to your friends, colleagues or anyone else for that matter. Its about putting measures in place to assist in being in a better financial position tomorrow, next week, next month and by the end of the year. Tick off the small boxes initially and the bigger picture will take care of itself.
Everyone’s financial circumstances are so different. Our family structures, our history, our believes around money, savings/spending habits all have an impact of how we manage our own money.
Focus on what is important in your life and focus on what will put you in a better financial position come end of 2022.
Here are some suggestions that may assist with getting you going:
Understand your investment portfolio
I have often got caught up in a hype or craze and invested in something I never really understood, or I took advice from a friend at a braai on a late Saturday afternoon. A few years later, thinking back, this might not have been the best decision for me. Take the time now, to review your investments, do some research on them, make sure you feel comfortable with the structure. Have a look at the fee structure and value you are getting.
Budget
This is something we should do once a year or when we go through a financial transition. Now is a good time to set out your monthly budget, find areas where you can save potentially and then stick to your allocated amounts. Becoming financially secure is not about what you earn, its all about what you spend.
Long term savings
Why are you investing? Whatever this answer is, make sure your investment portfolio talks to this. For a lot of us it will be around financial freedom in our later years. Doing what we want to do on our own terms, that’s financial success. Research compound interest and the massive benefit this has on your investments in the long term. Please see this article from Capitec on compound interest: why time is literally money.
Emergency account
This is all about ensuring you don’t need to dig into your investment portfolio for emergency expenses. Have a pocket of cash, usually 3 to 6 months’ worth of expenses in cash that you can access in times of need, rather that withdrawing from a solid investment.
Diversification
While reviewing your investments, make sure you are spread between different asset classes, economies, currencies, and sectors in the stock market. Do not over diversify but gaining access to these different structures is important for long term investment success.
Let 2022 be the year where you take control of your finances and come end of the year, we want to see your improvement and share in the joy.