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The Finder 10-Point Year-End Financial Planning Checklist

Congratulations! 2019 is almost over and you’ve made it!

The year-end is usually the time when we spend our money a little bit more happily. However, it’s also the time of the year that we should review and assess what you’ve been doing right – and what you could do better – before you head into a brand new 2020.

Every Malaysian’s financial situation is different. With this in mind, we will cover some of the basic concepts that are applicable to most Malaysians here. At GoBear, we are not financial planners, but there are many guidelines you can follow to ensure that you be even better at your finances!

If done correctly, the Bear can assure you that 2020 will offer you even more to spend to celebrate your end of year.

1. Review your spend

In short, you need to reflect on your spending and develop a budget for the coming year. Think about it, how will you be able to put together a budget if you don’t know how much you have already spent? Put aside some time during this holiday season and get this done!

Once you have completed this, eliminate any further pressure by automating your savings to your other funds that have been set up.

A clearer picture will emerge showing you which areas you can save or cut costs to anticipate on your future spend. The Bear also advocates performing a mid-year review too.

2. Get a head start on your tax returns

You know what they say about death and taxes. If you are a resident of Malaysia earning more than RM34,000 a year after EPF deductions (or RM38,200 before EPF deductions), you will need to e-file your taxes to LHDN come May 2020.

Gather your receipts and other tax-deductible payments and store them in a folder for easy reference – if you have not done so. Keep in mind that certain charitable donations you may have made will entitle you to tax benefits; tax-deductible means more cash in your wallet at the end of the day.

3. Review your debts

Most working adults will be carrying some form of debt. Being debt-free is a goal to look forward to, but until then it’s just as important to know how to manage your debts.

Credit card debts are most common, so if you have any outstanding balances, do pay down on it as much as possible. Have you considered other banks who might be able to offer you a competitive balance transfer facility to lower your interest rates?

Alternatively, how about a personal loan to consolidate your credit card debts? If you have plans to pay off all your credit card debts in the coming 12 months, some banks can offer you a low, low interest rate personal loan to manage this.

And don’t forget, get your CCRIS or CTOS credit report to see where you stand!

4. Review your insurance policies

The function of any insurance is to provide some form of economic cushion against the losses that may be incurred due to unfortunate events. Are you at the stage of life where you should consider getting better insured?

Health insurance: Have you started a family recently? Did you know that some e-medic cards can insure those from as young as 15 days? If you now have more dependents, you might need to budget higher to cover this cost.

Car insurance: With the liberalisation of insurance tariffs, have you started shopping around if a different provider might offer you cheaper premiums for the same coverage? Keep in mind that you can renew your car insurance as advanced as 60 days before expiry.

Travel insurance: If you are a frequent flyer, you should consider investing in an annual travel insurance policy that may not only be cheaper, but offers the convenience of only making one purchase for the entire year.

5. Set up or top up your emergency fund

Did you know that three out of four adult Malaysians find it a challenge to even raise RM1,000 in times of emergencies?

Maintaining an emergency fund is part of #adulting101. In the good ol’ days, some of our grandparents would’ve put aside their emergency stash in Milo tins, under the wooden floorboards, or even inside pillows. These days however, a savings account will suffice. If you already have one, think about whether it needs to be topped up.

Everyone’s needs are different, but the Bear thinks that three to six months of your monthly pay represents a safe sum to be stored as emergency.

There’s a reason why it’s an emergency fund – it’s strictly for emergencies only. So do not TOUCH or INVEST this honey pot.

Before setting up a savings account, be sure to compare different banks in Malaysia.

| See also: How to build a nest egg for your children |

6. Assess your investment portfolio

Assets that have been underperforming – or even outperforming – can leave you with an unbalanced portfolio. Take note of any clear capital gains or investment losses as this can help you form your future investment strategies.

As the Malaysian fintech movement continues to flourish, there are now many platforms that allow you to dip your toes into the investment world – very gently. How about taking a small step towards P2P financing? Fundaztic lets you invest from as low as RM50; top up as your risk appetite increases and as you gain a better grasp of the investment landscape.

7. Review your retirement savings

Remember this golden rule: your retirement savings is for retirement! Keep it separate from your regular savings because you’ll never know if you have a strong source of income in your golden years. EPF also recently revised the basic savings target to RM240,000 by the age of 55 for each Malaysian to be able to live comfortably.

If you are still a young working adult in Malaysia, there’s a clear advantage to saving for retirement in your early years – you get to take advantage of some of the amazing tax benefits offered by the government.

Take the time to get to know KWSP a bit better; sign up for an account if you have not done so yet, and take stock of what you have saved so far. Consider any other alternatives that can help you grow this nest for your later years.

8. Estate planning

In a recent survey by estate planning specialists Rockwills International Group, 63% of more than 500 respondents have not written a will or set up a trust for future estate planning. While young Malaysians may not consider this to be a top priority, those with spouses, children (and businesses) ought to give this serious consideration. Do not be fooled by the impression that estate planning is a tool for the wealthy, as family feuds over assets can happen to almost anyone!

Review your current estate plan and ensure that your documents clearly reflect your wishes, as well as any changes that may have taken place over the past year to avoid any confusion or misinformation.

9. Calculate your net worth

In the same way that the Bear advises you to assess your debt, you should assess your wealth too. Have you seen this list of Malaysian billionaires? To find out your net worth,

Net worth = Total assets – Total Liabilities (or debt)

As a quick and easy guideline, your assets are cash savings, retirement savings, investments, your car, and other personal properties. Your liabilities on the other hand, consists of loans, credit card debts, and even a house mortgage if you have one.

There’s no harm in setting a target and if you are successful in increasing your net worth for 2020, you definitely deserve to reward yourself! Speaking of targets …

10. Embark on a savings challenge!

What are your mega plans for 2020? Are you planning to get married? Starting a family? Buying your first house? Those are great reasons to push yourself towards a stronger savings strategy and see just how disciplined you can be financially.

It doesn’t have to be entirely about hiking up your monthly savings and depriving yourself of the life you still desire to live. Consider all the different ways you could still top up your savings, such as mastering the kitchen to cook better home meals, or take advantage of the government’s RM100 unlimited RapidKL rides.

Most importantly, instill a positive mindset and don’t let these greater savings you’re endeavouring to be a squeeze in your lifestyle.

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