Oran Hall | Time to take stock

It is time to take stock of your financial situation to determine where you are in relation to where you set out to be in 2024 when you assessed your position at the end of last year. There is much that could have made it difficult to be where you want to be – the economy, financial markets, family issues, health issues and but some of these could have also created opportunities for you.

Some areas worth looking at are your budget, net worth, savings and investments, basic lifestyle, insurance coverage, estate plan, retirement plan, and how realistic your plans for 2024 were. How effective your assessment of your situation turns out will depend heavily on the extent to which you have been keeping accurate and comprehensive records, and how well you have stored them.

Perhaps a good place to begin is the budget you had crafted with the input of your family members, which would have given them an opportunity to buy in to the plan and commit to make it work. How is that looking? Did you – and the rest of the family – generate the level of income you had budgeted for? How did your spending go? If you earned more, did you spend it, save it, invest it, or use it to reduce debt? If you earned less, did you cut spending, reduce savings or investments, or did you borrow?

While you are looking at your budget, with over two weeks to go before the year ends and the spending frenzy in full swing all around, it is imperative to be cautious to protect against a good position up to now going off the rails.

To help you keep your feet on the ground, use a shopping list and stick to it, buy only what you need, hold on tightly to your credit card, use your debit card if you find it easier to manage than the credit card, save extra funds, such as bonuses, and manage discretionary spending like gifts and entertainment.

Look at your net worth. Ideally, you want it to increase, either by the value of assets increasing, liabilities decreasing, or a combination of both. Look, too, to see if it increased primarily because of an increase in the value of personal assets, such as motor vehicles, furniture, or our residence. To the extent that the value of such assets increased, are they insured adequately?

Ideally, you would want the growth of your assets to be driven by your investment assets, but this does not always work as well as desirable , because economic conditions can make it difficult to do so, considering how they affect the financial markets and investments.

The stock market did not do well this year, and some unit trusts and mutual fund investment portfolios followed suit. More recently, interest rates on interest-earning securities have been trending down of late, and the exchange rate has deteriorated this year. It has not been easy to make money, so you should examine whether you should stick to your strategy or change it in 2025.

Remember your liabilities. Check that you are current with loan payments and take steps to bring them up to date if you are in arrears. Where necessary, reach out to the lender to put a plan in place to correct the situation. With rates likely to fall, will there be opportunities to lower the cost of your debt?

Look at your insurance coverage. Determine if your life coverage is adequate. Have there been any changes in your family situation, an addition to the family, for example, or the death or incapacity of a breadwinner, which have caused you to have more responsibilities to shoulder? Look also to see if your policies are in good standing by requesting status letters from the insurance companies, and satisfy yourself that they align with your own records. Look, also, if you have kept your word not to encroach on the cash or investment values of your policies.

Is your estate plan reflecting your true wishes? Check that the assets you want to distribute are included in it and that all beneficiaries are clearly identified, whether you are using a will, a trust, or any other means. Satisfy yourself that you have undisputed title to the assets you call your own, and that you have discharged all your tax and other liabilities. Determine if you need to make changes, and do what you have to do.

Although you can expect fluctuations in the performance of your approved pension arrangement, it is worth getting a statement to see how it is doing. Take a glance, too, at any subsidiary retirement portfolio you may have, and check that your National Insurance Scheme and National Housing Trust contributions have been remitted to the relevant agencies.

It is prudent to check periodically during the course of the year to see how your financial plan is shaping up to improve the chances of realising the goals set for the year, thus making it less challenging to make changes later in the year, if necessary. Upon completing your annual assessment and satisfying yourself that changes are necessary, set out the action steps you will follow to create your plan for next year.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com