6 steps to a year-end financial stock-take

Fatima and Saeed are doing well in their careers, and have a supportive family. They save a little, spend a little, and are able to live within their income. However, while Saeed wants to plan ahead for the next five years – supporting their new business venture and working towards buying their first home – Fatima is content to live from day to day without worrying about tomorrow. Research shows that individuals who proactively set financial goals see better performance and adaptability to market fluctuations. However, only 36% people have a written financial plan to review.

Here is what you can include in a stock-take of your finances.

1. Earning and spending assessment:

Work out how much you earn each month, and what are your expenses.
Why: Knowing sources of income and spending patterns can help you figure out where you can save.

2. Debt assessment:

Review outstanding debt, whether it’s from covered card payments, or vehicle finance, or personal debt.
Why: If you know how much you owe, a repayment plan can keep you on track to becoming debt-free.

3. Emergency fund assessment:

Do you have enough money to cover any emergencies or daily expenses in case of loss of income? This needs updating based on your latest debt and income assessment.
Why: Ideally, an individual needs to have funds to cover unexpected expenses for six to 12 months, updated for the current cost of living, including any repayments.

4. Takaful assessment:

Not only health, life, vehicle, and property takaful, safeguarding against risk includes newer products based on newer needs.
Why: Insurance can act as a cushion between you and an emergency. As your life circumstances change, takaful needs to be updated.

5. Investment assessment:

If you have a new addition to the family, a new business venture, or new financial goals, the investments you make need to adapt to remain relevant.
Why: Your investment portfolio needs to be periodically updated to match market reality and your goals.

6. Goal assessment:

A stock-take requires not just an assessment of where you are at, but also where you want to be.
Why: Fatima and Saeed need to update their financial targets, cushions, and outlook because they are new business owners and their life plans have evolved.
An honest review or stock-take can help you prepare for the year to come. Here are 5 ways to review and resolve for better financial health.

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