3 Year End Actions to Put One In a Better Shape Financially


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With 2018 approaching an end it is time to stock-take,close the year on a good note and look forward to a better 2019.

Many would reflect on 2018 to see what were the highlights and what went wrong, and try not to repeat the same mistakes next year. It is even a more structured process in one’s work where the appraisal/performance review with bosses take place.

It shouldn’t be any different when it comes to one’s financial health as well. In fact, it is even more important for the journey of wealth growth and management should be worked on consistently, regardless of one’s life and work circumstances.

Here are four actions one can do to set him/herself on a healthier financial path going forward.

Measure Your Investment Performance
Investment entails putting your funds into instruments/assets that can possibly earn you returns above inflation rate so that your purchasing power is maintained, or enhanced, if your performance is good. But the catch is we are taking on risks of loss, as those potential returns may not materialise after all.

So it is important to look back at this one year to determine if the investment funds set aside actually achieved any growth. Get that percentage, and compare against past years. Have a sense of how bad/well the year went through.  No doubt this year has been bruising for most investment assets. So do not be surprised if your funds had low returns, or are negative for the year.

What matters is to reflect and go deeper into where had gone wrong and how can they be improved. Is it any particular stock that dragged down your returns? Or certain trade position that veered from your trading rules? Or emotions took over and prevented you from stopping loss?

Its a grave mistake in investment to not measure one’s returns. Yet its so common among retail investors judging from the many blank stare that I received while talking to clients.

So do start measuring your returns today. It is absolutely critical, and helpful when you can put a number to your investment performance. What gets measured, gets improved.

Tally Your Net Worth
Next, you can tally your net worth. Do a simple exercise to compile the latest value of your assets including investment funds (earlier section), deposits, cash, gold holdings, value of residence. Minus off your car loan and housing loan (credit card loans too if you have) from there, which can be obtained from bank or CPF statements. This would represent the actual worth of your life thus far, in monetary terms.

It would be better if you have been doing this in the past, which enables one to plot a chart to see the growth in net worth over years. Visually, this would be a powerful motivation to compel one to work harder on growing your net worth further.

Use this to strive to reduce your debt annually and grow your assets by a larger margin. Net worth would show increasing trend year after year.

Allocate Your Year End Expenditure
Year end is the time when there is usually higher expenditure. People would revel in the year-end party mood, attend Christmas gatherings, buy gifts for family and friends, and the year end overseas holidays.

And barely one and a half months later, we are into the Chinese New Year season with probably another round of spending coming up.

This is where one’s year end bonus comes in handy, to cover that additional but necessary spending. Do conduct some blanket budgeting to portion your year end bonus into several segments such as holidays, festival celebration (includes partying, gifting etc), ang pow for parents. Try to ensure there is a good 20% – 30% leftover, to be channelled into your investment funds as it is a prudent move and year-end season is not a reason to spend all.

If done right, the year end additional inflow should be able to cover both xmas and CNY season expenditure.

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