“Many people look forward to the New Year for a new start on old habits.”
It’s now the beginning of a new year, and time to start setting those goals that for many, will likely have already been forgotten by now. Setting New Year Resolutions can be an excellent chance to set smart, achievable goals, but only if they’re kept front of mind and revisited on a regular basis. Personally, I would suggest ensuring that you’re checking your progress toward them and reminding yourself of what they are on a monthly basis.
Time passes us by quickly, and for many Australian expats in Singapore and across the globe with busy travel schedules, it can be difficult to find the personal time to review your goals. This week I’ve outlined some of the top New Year Resolutions that you might want to consider for 2020, and how to go about ensuring that you remain on track to achieving them.
- Save $100,000 in 2020
One of the most common goals for many Australian expats and those living and working in Australia is to save and invest, or at least save, more money than in 2019. Unfortunately, and unsurprisingly, this very rarely happens largely due to the fact that there is no system in place to track it. I have used $100,000 as an arbitrary figure, which for some will be unachievable, while for others may be below their annual target. If your goal is to save more money in 2020, ensure that you have a specific figure in mind and break it down to a monthly or quarterly figure, so that you can easily track whether you’re on target.
For many, it’s also important to have a clear message behind the ‘why’ you’re trying to save more money. Is it to buy a family home or upgrade your current property, to start a business, or to ensure you can achieve your goal of an early retirement..? Whatever the motivation, ensure that it’s clear for everyone involved as it will make the journey far more fulfilling.
The How: In line with Occam’s Razor, the simplest explanation is usually the right one. Achieving your goal of saving more money in this case is no different. It’s important to have a system, whether it’s an app on your phone, an Excel spreadsheet or a notebook, to track how much you’re saving each month and to automate this as much as possible. The old adage of paying yourself first becomes incredibly important here, as it will often avoid that urge to over-spend on unnecessary items, and allow you to remain on track to achieve your goals. Whether you’re directing this money into an alternative bank account, a portfolio of equities or managed funds, or otherwise, ensure that it takes place shortly after your pay hits your bank account.
You may also want to consider the compounding effects of your savings strategy with regard to how it’s invested. This is outlined in the chart below:
- Buy a new investment property in Australia in 2020
Many Australian expats use the opportunity of working in Singapore or elsewhere abroad as a great chance to save up their property deposit to build their portfolio back home in Australia. The lower tax environment in Singapore, and the weak Australian Dollar (at present) create a good opportunity for those looking to buy property back at home. If your goal is to buy an investment property, it’s important to set a clear goal of the deposit amount and purchase costs, and outline a clear strategy of how you’ll get there.
The How: Similar to the first goal, the two important steps are to track your progress on a regular basis of how much you’ve saved towards your goal, as well as automating the savings strategy. If you’re planning to purchase the property in the short-term (1 – 3 years), you will want to give some serious thought as to how much risk you take on with where these funds are held. For example, if you’re looking to purchase a new property in 12 months’ time, investing all of these funds into the stock market may not be the right option for you.
- Review my family’s personal insurance coverage
The new year resolution to review your family’s personal insurance should be on far more people’s minds than it will be. The statistics for the number of people, particularly families with young, financially dependent, children that have an appropriate level of cover is alarmingly low. Here we’re referring to Life, Total & Permanent Disability, Critical Illness or Trauma and Income Protection cover, in addition to your private health insurance. It’s important to review your cover on a regular basis with your Financial Planner to ensure that you have the right level of cover in place.
The How: There are many online insurance needs calculators that you can utilise to determine if you have the right amount of cover in place. This can be an excellent starting point, but I would certainly recommend speaking to a qualified planner who can review your own situation and provide you with some guidance on the types and amounts of cover to have in place. Once you’ve set up your cover, I would recommend reviewing it on an annual basis to ensure that it remains appropriate for you and your family.
- Ensure that emergency fund is in place
Each time the statistics are released for the percentage of people that could not find or access $1,000 in the event that an emergency hits I feel slightly ill. While I recognise that there are many living pay check to pay check, for a large number of households setting aside the emergency fund is very achievable, it just takes some time and planning. For households without financially dependent children, I would recommend setting aside three months’ of your household expenses, while for those with children, I would recommend setting aside 6 months’ of expenses.
The How: The first step is to calculate your household monthly expenses, even if it is only an estimate. If you’d like a copy of the monthly household expense tracker that I use, feel free to reach out to me. Once you’ve determined your monthly expenses, multiply this figure by 3 or 6 depending on your household situation, and then you have your target emergency fund. If you don’t already have this cash set aside, the next important step is to start planning (as per the first resolution steps) to save up this amount as quickly as you can.
- Create an additional income stream
One of the most common traits revealed about many millionaires and billionaires is that they are not just reliant on one source of income. They have multiple streams of revenue being generated across their investment portfolios, as well as other businesses that they’ve established. For you, this could mean setting up an online store, reselling items on eBay or Amazon, or setting up a consulting business that you can conduct as a ‘side hustle’ while you’re still working full-time. Obviously, if you’re an Australian expat in Singapore, you will need to check with your employer to ensure that this isn’t a breach of your Employment Pass (EP) conditions or your employment contract.
The How: There are many books and online resources for how to establish your own ‘side hustle’, so I would certainly recommend checking these out as a great starting point. It’s then important to consider your own skill sets, and what you would enjoy doing to bring in a second stream of income. Will it be something that you’ll work on as a family and get the kids involved, or will it be your own project? There are many considerations here and there is no ‘one-size-fits-all’ answer, however adding an additional income stream can be a great way to achieve your savings goals for 2020.
- Learn a new personal skill
Guitar, horseback riding, muay thai…whatever the skill may be that you desire to learn in 2020, I would certainly recommend that you have at least one in place. Achieving goals and mastering new skills outside of our daily job can be incredibly rewarding and fulfilling, as well as being a great way to unwind. It can also be a great opportunity, particularly for Australian expats in Singapore, to meet new people and make new lasting friendships.
The How: Perhaps you already have a skill in mind, maybe it’s something that you’ve started recently or are continuing to master, or maybe you have no idea where to start. Whichever category you fall into, do your research, consider your options and ensure it’s something that you’ll enjoy. Once you’ve identified it, the next step is to start scheduling time every week to continue to improve that skill. Perhaps it’s adding martial arts classes or guitar lessons to your calendar, or agreeing with your family that every Saturday you’ll be playing goal. Whatever the skill may be, ensure you block out the time in your calendar in advance, otherwise it will quickly become another activity that gets tossed aside because you’re ‘too busy’.
- Overcome an unhealthy addiction
Nobody is perfect and we all have habits or addictions that we’d be happy to get rid of. The hard part is figuring out exactly how to kick the habit for good. Whether it’s losing weight, drinking less, quitting smoking or something else, the first step is to identify the habit and ensure that it’s something that you actually want to quit, or at least reduce and be clear on the why. After all, if the ‘why’ isn’t big or important enough, then the ‘how’ becomes irrelevant.
The How: I’m certainly no psychologist or expert in this field, so all I can share here is the toolkit that I personally use to kick such habits. For me, the two most important steps are tracking and celebrating (not with the bad habit I’m trying to quit). Firstly, the tracking – I use an Excel spreadsheet (I’ve tried a number of apps but I’ve just not found one that I’m really happy with but I’d suggest using an app if that’s your preference) to set weekly goals and then review every week and month if the goal has been achieved. At the end of each month, then comes the celebrating. If I’ve achieved the goal over the course of the month to kick the bad habit, then I make a point to celebrate with my partner with a nice meal or some other activity that we both enjoy.
- Discuss personal finance more as a household
One of the most common traits of financially successful people across the world, particularly in Australian households, is to ensure that they discuss personal finances with their children. Whether it’s reviewing the monthly electricity bill, discussing how they’re planning to save up for a family holiday, or reviewing their superannuation portfolio and discussing their retirement goals, they ensure that they’re children are constantly learning about personal finance on a regular basis. While our education systems have made some progress in this area, they are still alarmingly poor at equipping our children with personal finance knowledge, so it is up to the parents to step into this role.
The How: The how is surprisingly simple for this new year resolution. It’s about setting aside some time each week or fortnight, to discuss the personal finances as a household. If you have children, then get them involved, and if not, ensure that you set aside some time on a regular (weekly preferred) basis to discuss your finances with your significant other. With one of the great relationship stresses and contributors to divorce and separations being personal finance, this is an incredibly important step to ensure that there is transparency and joint commitment to your financial goals.
If you have other new year resolutions that you’d like to add, feel free to share them in the comments section. We’d love to hear what other Australian expats are looking to get out of 2020 to ensure that it’s a happy, healthy and prosperous new year ahead.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.