Continuing with our series of addressing one of the biggest myths about managing money that is, managing money is all about returns on your investment. Whilst returns are no doubt an important component of managing money, we believe it is critical to take a more holistic view on finances. A quick recap on what we have already covered as to do items for quarter 1 and 2
January – Put it all together
February – Question what you really want your money to do for you
March - Keep what matters, let the rest go
April – Plan for emergencies and contingencies
May – Put your risk control mechanisms in place
June – File your taxes correctly and diligently
July – Use technology to improve the management of your finances – There have been significant enhancements on monitoring and managing finances in the last few years. Technology benefits can be gained through your mobile phone, computer or tablet. From online information on taxes deducted on your account or tax refunds processed, to investing surpluses in your bank accounts to earn superiors returns, to alerts on specific transactions that have taken place on your accounts, to maintaining digital records of all your important documents, technology allows tracking and transaction on your finances far more easily than ever before. You should actively consider the use of a software that allows you to track all your finances and assets in a single place, so that your updated finances are available as and when required. You could check on solutions from your financial planner about the same.
August – Build a team of trusted advisors – Most individuals today need the services of a financial planner to oversee their overall finances, a tax advisor to file and manage their taxes on an ongoing basis and a legal advisor to guide them through matters related to succession and real estate. Whilst it is possible to work with each of the above professionals on a transaction by transaction basis, increased complexity and integration on all aspects of your finances requires you to build longer term relationships so that decisions on your overall finances are taken in a more holistic manner. Whilst it is always possible to find an advisor for a specific transaction, building a team that understands your world view is critical for success on an ongoing basis.
September – Build your succession plan – There may be multiple dependents on you – your spouse, your children, parents, a sibling or his family. If you need to support each of them differently, ensure that your finances are arranged in a manner that this can happen smoothly. Whilst a nomination is a good starting point, it is unfortunately not the solution to all your succession issues. First of all, remember you are never too young to die. Once you accept that reality, you can begin work to make a checklist of all your physical and financial assets, your thoughts on how you would like them divided ( remember that it is not easy to divide a physical asset like a house into half easily), and then putting it down on paper so that there is no possibility of an incorrect interpretation. Remember, the draft of someone else’s will is very unlikely to work for you, so get it customized to your requirements.
I will complete this calendar in the next column. I look forward to hearing from you on what you believe is an ideal calendar for the fourth quarter of 2012. You can write to me with your wishlist on vishal@planaheadindia.com or by leaving your comments
This article was written by Vishal Dhawan, CFPCM
