A New Year represents new beginnings, fresh starts, reaffirmations of love and promises for a brighter future. There are the superficial, yet purposeful, promises we make to ourselves. We resolve to get in shape, lose weight, improve career paths, and the like. Then, there are the heartfelt promises we make to others, whether aloud or in our minds.
From a financial perspective it’s a New Year with Trump in and Europe out. How do you feel about that? Good, bad, indifferent? Excited? Nervous? Whatever your point of view, there is one thing that is certain: We are heading into a new era of uncertainty. I am far from pessimistic, but uncertainty is uncertainty. Here are a few simple considerations to protect yourself as we head into the unknown.
1: Don’t take on any more debt
Borrowing money became quite difficult in the aftermath of the credit crunch. This has changed now and borrowing money is easy. Unless you are buying property however, borrowing more should be one of the last things on your mind right now. Much better to budget and save for what you want or need.
2: Cut your expenses
Everyone is doing it and so should you. The simple things will make a big difference. Walking or cycling instead of driving or using public transport, taking your own sandwiches to work – it all helps. As they say, look after the pennies and the pounds will look after themselves.
3: Boost your financial immunity
Are you insured against illness or redundancy? Would your family be financially protected if they lost you, the breadwinner? There is no point in going overboard with insurances and your financial adviser should be able to recommend the best way forward for you.
4: Start or increase the amount you save
Think of how proud you will be if you could save more money in 2017 than you managed to in 2016. A simple way to start saving would be to check to see what you have left over at the end of each month.
5: Make sense of your mortgage
With interest rates are nice and low for those with mortgages. Would it be a prudent move to get a fixed rate? Get answers to these questions by speaking to your financial adviser. Then make a decision and take action.
6: Make sense of your pension
It’s amazing how many people have pensions and never review them. If you find it all too daunting, speak to your adviser. He will make sense of it all and tell you where you are heading.
7: Make your investments work harder
Low interest rates are great for those with mortgages but a disaster for those with savings. If an interest rate of less than 1% does not fill you with inspiration, consider alternatives. A good financial adviser could help you think outside the box in terms of getting a better return on your investments.
8: Live within your means
Budget, budget and budget again. Make sure you are spending less than your income. If you are spending more, your financial 2017 will be a disaster. Be ruthless and cut out anything trivial or extravagant. The initial sacrifice and pain is worth it making for a much happier life in the long run.
* The article is written by The Managing Director/Founder of The Sterling & Law Group Plc which is an independent financial consulting firm right here in the heart of The City of London.