New Years Resolutions and Financial Planning
For many people, financial planning does not feature in making New Year’s resolutions. They are more inclined to focus on the obvious, such as diet, fitness and a vague resolution to make lots of money. Another reason people don’t often consider financial planning as part of their new year’s resolutions is that financial cycles don’t necessarily correspond to the start of a new calendar year. They may be working according to financial year ends, quarters, and tax deadlines.
One can argue that it is always a good time to make sound financial resolutions based on professional financial advice. Consulting a Certified Financial Planner (CFP) or one of the Partners from StoneHouse Capital can thus lead one to analysing your financial needs and goals on which you can base your personal financial plan.
Ask the Right Questions
The best financial resolutions are based on a comprehensive and accurate assessment of one’s financial position. Questions not only cover financial survival, but also growth and prosperity. While the questions below are posed to gain a simple “yes†or “noâ€, it is the information which confirms the answer that can be put to the most constructive use.
Is Your Financial Survival Under Threat?
o Am I living within my means? This requires budgeting as well as cash flow analysis. Cash flow analysis provides insight into whether or not you’ll have enough money to meet financial commitments at any time required.
o Am I still in control of my debt? In some cases debt is inevitable. Assessing one’s position means looking at all of your debt and investments and determining whether or not you are gaining or losing ground.
o Do I have enough reserves? No one argues the necessity for financial reserves. The debate is about how much one needs. What people say is that one needs to be able to cover any period from three months to one year without income.
o Is there sufficient provision for my dependants? Answers to this question can include issues such as educational planning for your children and the type of insurance you have as cover for when you are no longer alive or able to provide.
Is Your Financial Future Planned for Prosperity?
o Do I have sufficient provision for my retirement? Retirement planning has become much more complex and difficult. Human health has improved, leading to an increased life expectancy to the point where longevity is almost a given.
o Is my investment portfolio sufficiently diversified and balanced? The investment landscape is in a state of continuous flux. New options become available while existing ones lose their lustre.
o Do I have the right kind of exposure to investment risk? Can you afford to make more risky investments or should you withdraw certain investments in order to cut down on your risk exposure? Answering questions on investment risk will also help to bring about portfolio balance and diversification.
o Are my financial goals clear enough? Financial goals are dreams translated into specifics. Setting SMART goals means you have a clear understanding of your needs and wants and how to translate them into reality.
o Do I have a good financial plan? Good financial planning takes good financial resolutions and translates them into a feasible investment strategy. It is a way of bringing together all the building blocks which fulfil one’s personal financial strategy.
In financial planning there is no ready made recipe for answering these questions. It also goes beyond a case of “different strokes for different folksâ€. The same questions often have different answers, depending on one’s personal circumstances. You need to ask these questions on a regular basis to keep your financial planning up to date and relevant to your situation. That is why the objective and independent insight of the Partners at StoneHouse Capital proves to be invaluable.
Simply asking these questions can lead to much information that you were not aware of previously. After having done all this, one needs to be careful not to fall into analysis paralysis. The guidance of a StoneHouse Capital Partner can not only help to bring about a clear understanding, but also create perspective of one’s financial position. With the help of a CFP one can take the important step of setting the plan in motion in such a way as to move from survival to prosperity.
For many people, financial planning does not feature in making New Year’s resolutions. They are more inclined to focus on the obvious, such as diet, fitness and a vague resolution to make lots of money. Another reason people don’t often consider financial planning as part of their new year’s resolutions is that financial cycles don’t necessarily correspond to the start of a new calendar year. They may be working according to financial year ends, quarters, and tax deadlines.
One can argue that it is always a good time to make sound financial resolutions based on professional financial advice. Consulting a Certified Financial Planner (CFP) or one of the Partners from StoneHouse Capital can thus lead one to analysing your financial needs and goals on which you can base your personal financial plan.
Ask the Right Questions
The best financial resolutions are based on a comprehensive and accurate assessment of one’s financial position. Questions not only cover financial survival, but also growth and prosperity. While the questions below are posed to gain a simple “yes†or “noâ€, it is the information which confirms the answer that can be put to the most constructive use.
Is Your Financial Survival Under Threat?
o Am I living within my means? This requires budgeting as well as cash flow analysis. Cash flow analysis provides insight into whether or not you’ll have enough money to meet financial commitments at any time required.
o Am I still in control of my debt? In some cases debt is inevitable. Assessing one’s position means looking at all of your debt and investments and determining whether or not you are gaining or losing ground.
o Do I have enough reserves? No one argues the necessity for financial reserves. The debate is about how much one needs. What people say is that one needs to be able to cover any period from three months to one year without income.
o Is there sufficient provision for my dependants? Answers to this question can include issues such as educational planning for your children and the type of insurance you have as cover for when you are no longer alive or able to provide.
Is Your Financial Future Planned for Prosperity?
o Do I have sufficient provision for my retirement? Retirement planning has become much more complex and difficult. Human health has improved, leading to an increased life expectancy to the point where longevity is almost a given.
o Is my investment portfolio sufficiently diversified and balanced? The investment landscape is in a state of continuous flux. New options become available while existing ones lose their lustre.
o Do I have the right kind of exposure to investment risk? Can you afford to make more risky investments or should you withdraw certain investments in order to cut down on your risk exposure? Answering questions on investment risk will also help to bring about portfolio balance and diversification.
o Are my financial goals clear enough? Financial goals are dreams translated into specifics. Setting SMART goals means you have a clear understanding of your needs and wants and how to translate them into reality.
o Do I have a good financial plan? Good financial planning takes good financial resolutions and translates them into a feasible investment strategy. It is a way of bringing together all the building blocks which fulfil one’s personal financial strategy.
In financial planning there is no ready made recipe for answering these questions. It also goes beyond a case of “different strokes for different folksâ€. The same questions often have different answers, depending on one’s personal circumstances. You need to ask these questions on a regular basis to keep your financial planning up to date and relevant to your situation. That is why the objective and independent insight of the Partners at StoneHouse Capital proves to be invaluable.
Simply asking these questions can lead to much information that you were not aware of previously. After having done all this, one needs to be careful not to fall into analysis paralysis. The guidance of a StoneHouse Capital Partner can not only help to bring about a clear understanding, but also create perspective of one’s financial position. With the help of a CFP one can take the important step of setting the plan in motion in such a way as to move from survival to prosperity.
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