Oran A. Hall, Contributor
This is a good time of year to do a financial check-up to see where you are in relation to the goals you set late last year and put into effect at the beginning of this year.
You should be able to determine what to do to realise your goals if you are not where you should be.
Let us start with your budget. How has that been going? Is your monthly income covering all your monthly expenses and your savings? Did you follow through with your plan to start an emergency fund made up primarily of safe short-term interest-earning instruments?
How did you use the unexpected funds that came into your hands? Lucky you! Did you save, invest, or use them to reduce or pay off a debt?
Perhaps you were not so fortunate; your income declined or you had no employment income because your employment status changed. On the other hand, you probably still have a job but your budget is out of balance.
If you cannot increase your income, you need to reduce your expenses. This can be hard. Try nonetheless.
Plan your spending and resist impulse buying. Shop around. Is it not amazing how prices differ when you take the time to check? Your telephone can be a great help. Have you been taking advantage of discounts? Are you wasting electricity or water without noticing it? How much do you spend on telephone calls? Are you satisfied that you are buying only what you need?
Remember to put aside funds systematically for periodic expenses such as school fees and insurance premiums. Save further by managing your debt. Reduce expensive debt first and as fast as you can.
look at your portfolio
How have your investments been doing? Take a close look at your portfolio. If it is not doing well, it does not necessarily mean that you do not have the right portfolio.
Ultimately, its performance will depend on your asset allocation, the proportion of your funds in the various asset classes.
There are some situations in which one asset class will do poorly but will do well in other situations. Remember that your investments are for the long-term. You may not have any good reason to panic.
It is important that your portfolio is appropriate for your goals, risk tolerance and risk profile. Do not invest funds long-term if they are ear-marked for short-term obligations. Make sure your portfolio is diversified to spread risk and to satisfy a wider range of investment objectives.
Look closely at your insurance coverage — life, health, disability, motor, property. Check that you are covered adequately and that the type of coverage you have is appropriate. Get a trusted professional to assess your situation if necessary. If you are not able to correct your situation immediately, make a start.
Are your savings and investments, including your retirement portfolio, tax-efficient? Make full use of instruments that earn tax-free or tax-deferred income. Long-term savings accounts are still available, as are unit trusts and equities.
Remember some life insurance policies also earn income that is not taxable to the policyholder.
Look now at your estate plan. Do you have all the required documents: will, power of attorney? Is your trust agreement safe? Check that these documents are current and in a secure place.
For jointly owned assets, savings accounts, for example, has any event made it necessary to change these arrangements and have you done so?
check for errors
Check on the documentation relating to the ownership of your assets to ensure there are no omissions or errors and do not forget to see if your all documents are organised and in a safe place.
Is your retirement programme on track? If you are not making the maximum contribution to your employer-sponsored pension plan, you should consider doing so.
There are tax advantages, which also apply to retirement schemes for individuals who are not members of a superannuation plan or are self-employed. You also need to have additional resources to supplement your pension. Some life insurance policies may be useful in this regard.
Make note of any significant developments in your life since the last time you took stock of your position. Marriage, divorce, the birth of a child, the death of a family member, retirement, change of employment status, or change of health status can impact your financial plan in a significant way.
See where changes need to be made and take action.
Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of "The Handbook of Personal Financial Planning", offers free counsel and advice on personal financial firstname.lastname@example.org