Assessing your Financial Health
Review Your Income and Expenses
Start by looking at how much money you’re bringing in and where it’s going. This will give you a clear picture of your cash flow. Take the time to review the last 3-6 months of your bank statements.
- Fixed expenses: Mortgage, insurance, car payments, etc.
- Variable expenses: Shopping, entertainment, dining out, etc.
- Savings and investments: Contributions to retirement accounts, emergency savings, or other investments.
Emergency Fund
This fund should cover three months of living expenses in case of unexpected events like job loss, illness, or urgent repairs.
To check if your emergency fund is adequate, compare it to your monthly expenses. If your emergency fund is below your target, focus on building it up over the next few months. Having this safety net will give you peace of mind and protect you from financial stress.
Set Financial Goals
Reflect on how you can improve your current financial circumstances
- Income: Are you earning what you expect?
- Expenses: Are you consistently sticking to your budget?
- Savings: Have you been saving consistently for short-term goals, emergencies, and retirement?
- Investments: Are your investments growing as planned or do you need to adjust your investment strategy?
Review and Prioritise Your Goals
- Save for Retirement: Set a goal to increase your retirement savings.
- Save for Specific Goals: Whether it’s a down payment for a house, saving for a holiday, or building a fund for a child's education, set specific targets for these savings goals.
- Increase Investments: If your goal is to grow your wealth, consider setting a target for increasing your investment portfolio.
Investing for the Future
Whether you're saving for retirement, a major life goal, or simply want to make your money work harder, review and optimise your investment strategy.
- Retirement: You might want to add more to your savings.
- Wealth Building: You might invest in a diverse range of assets.
- Major Purchases: You may want to focus on more conservative investments with lower risk, such as bonds or short-term savings accounts. If you have more time (5+ years), you might consider a higher-risk investment strategy.
Assess your Investments
- Asset Allocation: What percentage of your investments are in stocks, bonds, funds, housing or other assets? Ensure your allocation aligns with your risk tolerance and long-term financial goals.
- Diversification: Are your investments spread out across different sectors, industries, and geographic regions?
- Performance: Are your investments performing as expected?
This article is for informational purposes only, this should not be taken as advice.
Past performance is not a guide to future performance, nor a reliable indicator of future results or performance.
The value of units can fall as well as rise, and you may not get your original investment.
