Looking ahead

Last week we appraised our stewardship this year. This week we will look ahead and prepare for 2019. Whether we’ve been financially responsible in 2018 or not, we can do much better in 2019. However, for next year to be better than this year, we need to identify where we may have missed our own expectations and put in structures that would aid our performance in the New Year.

Some were not faithful in saving; which we have learnt in previous articles, is the foundation for investments and wealth creation. How then can we be more consistent in saving? It all goes back to having a good budget and sticking with it. Have you downloaded a personal finance management (PFM) app onto your cellphone? That’s the first sign of seriousness. Use the app’s features to develop a budget and then stick to it. A good app has many ways of reminding you about your savings obligations. Also remember the first rule of savings – “Pay Yourself First.”Don’t save what is left after spending. Spend what is left after saving.

Secondary school closed after students held wedding ceremonies among selves

Next comes the financial plan – this is where we establish our financial goals and create action steps to achieve them. Did you have one for 2018? Did you stick to it? Have you uploaded the plan into your PFM app so as to the enjoy the free financial advice that the app would give you? If you don’t have a plan with its targets and benchmarks what are you measuring your performance by? Before we go into the New Year, you should have your financial plan in place. It would include the life events that you expect to enjoy in 2019 e.g. new baby, children’s admission into private university, wedding of a daughter, etc. All these have financial considerations and must be adequately provided for in our financial plans. Thus, the plan would be an effective spending and investment guide and the basis of determining how well we are progressing towards our financial goals.

Another thing to review is the Return on Investments (ROI) because this determines if your investment decisions were optimal. Did your net worth grow? Are you wealthier? Begin to explore ways to improve ROI in 2019. Which banks give higher interest rates? Are you better off investing in government securities than in bank products? Which public companies are positioned to perform well and pay high dividends to shareholders? Which insurance products have additional benefits? As financially intelligent people, we should always be looking for ways to improve ROI that fall within our risk appetite, investment timeline and ethical considerations.

Another matter to double check is the issue of beneficiaries. As our personal circumstances change, our beneficiaries would change too. The story is told of a young man who joined a blue-chip manufacturer as a 25-year-old bachelor and put his younger brother as his next of kin. Sadly, he died on-the-job at 37 leaving behind a wife and 2 young children. He did not update his next-of-kin. The company had no choice but to pay his N14m group life insurance benefits to his brother (and next of kin), who at age 35 had done nothing for himself and was in fact living with his brother when he died. Upon collecting the N14m, he moved out and neither the widow nor the fatherless children benefited from the insurance payout. All entreaties from his aged mother to give his brother’s family their dues fell on deaf ears. So, let’s update our records so that it’s the people we choose who would benefit from our hard work.

As we go into the new year, we should also review the performances of our service providers – stockbroker, banker, financial adviser, estate agent, mutual fund manager, PFA, insurer etc. Did they provide value for money? How do their services compare with their competitors’? Could you get better value elsewhere? Even the PFM app should be appraised, but only if you have used it for up to one year, to determine how efficiently and effectively it has been in helping you achieve your financial goals.

A new year brings with it the opportunity to start afresh or improve on past successes. But only those who are prepared can take advantage of the opportunity. Let’s be proactive and create the future we want – a happy and prosperous 2019.