“Discipline is just choosing between what you want now and what you want most”

New is the Year, new are your aspirations, new are your financial goals, and new are the hope. Since we are still in the beginning of the year, most of us are still starting to plan or reorganize our wealth and health to be better than last year. With each passing year, we become a year older and should be wiser, wealthier and healthier from last year. Therefore, let’s discuss how we can construct this New Year to be better, wiser and meaningful.

Personal Finance Reflection

The end of the year marks a threshold and invites a pause for reflection. It's a great time to take a view of the year behind and look ahead. Each year, this time will be a good time to evaluate what we have done during this past year. We always say “forward looking” is the key to success but in order to create the future, we must first look back and identify our strengths and weaknesses. Some questions to ask to reflect, what went well on my finance would be; How did my assets perform? What was the best decision? What is not working? Let’s walk purposefully, with clear financial goals into the New Year, guided by thoughtful insights from the past.

Financial Goals

Regardless of what life stage you are in, you are likely to have some short and long term personal financial goals. Setting tangible and realistic goals, following them, and tracking your progress is the key to success in achieving financial wellbeing. Setting financial goals also helps you to keep the big picture in mind rather than getting bogged down with day to day expenses. In addition, it's easier to avoid impulsive purchases.

Track income and expenses

It is really important to keep track how much is your total income and how you are spending your money. It is the first step to understanding how you are managing your money, and taking control of your finances. The real reason for you to track your expenses is to create financial awareness. If you don’t know where your money goes or how you spend it, you won’t know what habits you can change in order minimize the leakages or wastages.

Emergency Fund

Emergency situations arrive uninformed and need immediate action. There could be a setback to one's earning capacity due to a temporary disability, there could be a job-loss, unexpected home repairs, car repairs, unexpected travel and etc. Emergency fund is not about meeting your planned goals, but only to act as a safety net.

Stop creating debt

When you have a lot of liabilities, it can be challenging to make any real progress on your wealth.  Forget one payment and you’re hit with a late fee and perhaps even a penalty rate, sending you deeper into the debt hole. This alone won’t get you out of debt, but at least your debt won’t get worse. When you continue adding debt while you’re paying it off, you won’t make much progress.

Financial Plan

A financial plan acts as a guide for your financial journey. Imagine yourself trapped in a maze filled with twists and turns, blind alleys, and dead ends. Wouldn’t exiting it be simpler if you had a map and compass to guide you? Your financial life can be a maze, and a personal financial plan is the map and compass that can help guide you through that maze. Financial plan helps individuals and families reach goals that require money to achieve, such as having adequate retirement income, children education fund, tax planning, insurance protection, wealth distribution and etc. With good planning, most people find they can achieve their desired standard of living and meet their financial goals in a timely manner.

Engage a financial planner or advisor

A good financial planner is one who has the expertise to help you meet your financial goals. It’s difficult to be unemotional about your own money. That’s the real purpose of having a financial planner or advisor. You don’t hire a financial planner or advisor because you’re not smart enough to do this yourself, you hire one because they’re not you. When looking for financial planner or advisor, choose one who is giving you advice, not selling you something and one who prioritises your interest first.

Financial management, just like the physical or mental kind, takes time and effort. It doesn’t happen overnight. You don’t have to understand everything about personal finance at once. No matter what your past financial life looks like, recovery is possible. When it comes to managing money, feeling a sense of power or control over your situation is crucial. A good way to start is to stop beating yourself up over your past money mistakes and move forward. Lastly I wish you all a great year ahead and Happy New Year.

Gunaseelan Kannan, CFP, a Financial Adviser Representative by Bank Negara Malaysia and a Licensed Financial Planner by Securities Commission (CMSRL/B4198/2013), is currently pursuing his Doctorate research on entrepreneurship, financial planning and financial technology. He also lectures on accounting, finance and business fields in Asia Pacific University of Technology and Innovation (APU). He is the Winner of Malaysian Financial Planner of the Year 2020, from Financial Planning Association of Malaysia.

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