I am on leave, but I am not…besides having to wrap-up a few last bits and pieces, before I can truly start unwinding for the year, I find my mind wandering. In the last month alone, a number of global economic indicators were released, and our financial press was filled with yet another colossal financial investment collapse (FTX), fears of US interest rate hikes and a predicted recession.
Closer to home, our electricity service provider is failing, and our president is embroiled in an ongoing scandal. The country is in dire need of jobs, investment capital, leadership and I think safe to say, hope. What are we to make of all of the negativity around us? How do we chart a new course in this coming year?
As I was packing my bags and loading up my car, I kept on thinking about the year ahead. As an independent financial advisor, I need to constantly assess and advise my clients to best adjust to their changing familial and financial landscapes, as their needs and resources expand and retract.
This then is my last blog post for 2022, and these are my 5 best practical pieces of advice for you to think about while you take a well-deserved break:
1. BUDGET IS KING
Carefully review all your budget line items; there is a difference between “wants” and “needs”. Reduce the wants until you can match what you can afford. It’s hard and tough (especially with Christmas just around the corner), but a little scarcity now, will serve your long-term financial goals, I promise. Seek for more cost-effective alternatives e.g., a picnic with the loved ones as opposed to a pricy three course lunch at a family restaurant.
2. BEWARE THE INTEREST RATE MONSTER
A tried and tested method of reducing debt is to start with the smallest debt amount on your budget and double that repayment amount. Once that debt item is settled, add that amount to the repayment amount to the next debt line item. Continue with this strategy until all your immediate debt have been settled. Keep a visible track record on your fridge to visibly note your progress and be sure to keep those success stories top of mind.
3. UNICORNS AND POTS OF GOLD
Once you have managed to settle your main debt line items; don’t be tempted to add that excess money back into your budget. Keep that amount separate and start building the elusive flexi fund. A monthly contribution linked to a high interest-bearing investment account with little to no risk is a sure way of building up a useful fund with liquidity on hand, especially to cover those unforeseen expenses.
4. YOU ARE WHAT YOU PAY
Set up an appointment with your financial planner and review all your life insurance products and investments. Make sure you completely understand what you pay, what you have accrued in savings, and how each of these fit into your overall financial plan. Do not cancel any of your products or investments, without truly understanding the long-term impact on your finances or your loved ones.
5. BABIES AND BATH WATER
Do not destroy the wealth and funds you have created in your portfolio just because the market is in a downturn. Always remember that the market has a life and cycle of its own, try as best as we can, no one can perfectly time the market; ignore anyone who claim they can! Stay true to your financial goals and plan as best and for as long as you can. Downward cycles eventually turn upward again; it’s the nature of the beast as they say.
Please take note, as an aside, although volatility is currently rife (I wrote about this in my previous blog post), I am still truly optimistic about our ability as a country to overcome our challenges and to create a prosperous future for all. There certainly are more good and hardworking people than dishonest ones!
Let’s rock 2023 – but for now, we rest and recharge….