The year is halfway over at the beginning of July, so now could be an ideal time to assess your finances, review financial objectives, and make any necessary changes to keep on course. Write out your goals, no matter how unattainable they may seem: pay off debt, review your property plan, send a child to college, or retire early.

Alternatively, you may focus on a theme for example, retirement, financial independence, volunteering, self-employment, or anything else that inspires improved financial practices as your money target.

Apply these seven-point checklists to your accounts on a casual Sunday morning to find areas that require improvement and fortify your finances before the year ends.

 

1. Check your cash flow

Making a list of all your assets is a smart place to start. This will assist you in determining precisely what you have to leave to your heirs and in recording important details so that your family has a record of your assets. Contact our financial advisors if you would like to review your cashflow to make sure you are up to date and you have access to your various savings pots.

Indicate which of your possessions like a house, car, or bank accounts are owned jointly and which are under your name alone. A big first step could be to talk to your partner, if you have one. Work through this process and decide how you wish to leave assets.

 

2. Review your debt balances 

Achieving financial success might be challenging if you have credit card debt or high-interest loans because they consume a significant portion of your income. Therefore, resist the urge to accept high-interest credit card debt as a way of life or to let it prevent you from investing and saving money.

If your lifestyle is being financed by debt, consider delaying purchases for a little while longer, adhering to a budget, and concentrating on paying off debt to enable increased your financial security.

 

3. Strengthen your savings 

Having a cash cushion eases your financial difficulties, keeps you out of debt, and reduces stress. Examine your requirement for liquid funds and whether you have enough in a high-interest savings account.

Stress-test your monthly contributions to your savings account. If you feel you can increase your monthly savings contribution without having to make ends meet, speak to your financial advisor.

Create an emergency savings pot by setting up a separate direct deposit to deposit a certain amount or a portion of your salary into the bank, if necessary. You may wonder how much you need to save for a rainy day. This will vary from person to person but the general ball-point figure is around saving 3-6-12 months of your monthly salary, depending on your monthly outgoings.

Alternatively, if you work for yourself, set up a regular transfer that deposits funds into a savings account either weekly or monthly from your bank account.

 

4. Estimate your retirement contributions 

Examine your annual contribution amount if you have a workplace retirement plan. To make changes to your contributions, you can access your online retirement account or contact your HR department. Make sure you are investing in the right funds. Make sure to read what you are investing in and don’t tick the default option. Make sure your investments are aligned with your investment goals. Your financial advisor should guide you in the right path.

In Hong Kong, be sure to make the most out of tax-deductible voluntary contributions and for UK expats living in Hong Kong, paying national contributions abroad while in Hong Kong will give you an extra income stream when it at retirement. Check out our article here for a more in-depth read.

Don’t make the error of believing that you’re too young to begin investing for retirement or that you’ll make up the gap in the future. Because of the power of compounding, young people can accumulate a fortune for significantly less money than someone who starts investing later in life.

 

5. Plan for estate taxes 

Your assets may be liable to taxes after you pass away, depending on the size of your estate. There is often confusion around who is liable for UK inheritance tax, it is vital you seek clarification on this aspect as it could cost your estate up to 40% and possibly more.

You might want to consider the following tactics in order to reduce an estate tax burden:

 

I. Spending 

A good cashflow forecast can show how much you are able to spend in retirement and can show you how much you are able to gift away at any given point in time.

II. Gifting 

Giving away assets while you’re still living can lower the amount of your final estate and save estate taxes in the future.

III. Philanthropy 

Giving assets to foundations or charities enables you to lessen the size of your inheritance and, consequently, any future estate tax, while also supporting causes close to your heart. These contributions might potentially reduce your estates liability to this punitive of taxes.

 

6. Make the most of your health insurance 

Benefits and deductibles from your health insurance are subject to a yearly timetable. Hence, it’s a good idea to check your deductible amount in the middle of the year. If you currently have or will soon have private health insurance, make sure to pay for it by the end of the year or keep the amount payable in a separate savings pot.

If your employer doesn’t provide medical insurance and you wish to explore options for medical insurance to cover you and your family, speak to our insurance team at PCL Insurance Services.

 

7. Refresh your emergency documents insurance 

Make sure you have your emergency documents at hand before you experience any major life changes. Sit down with your partner and review who has access to your emergency documents.

These documents could consist of a lasting power of attorney, a health and welfare proxy, property and financial affairs proxy and a will. Make an appointment with a trusted advisor who will be able to recommend solicitors they have worked with over many years to set up your emergency paperwork as soon as possible if you don’t already have any.

Avoid DIY wills or will writers, solicitors don’t spend many years being trained for nothing.

Additionally, confirm your beneficiaries on important financial accounts, like bank accounts, life insurance, and retirement plans. Retirement assets normally belong to a spouse if you do not designate one, even if that spouse is currently your ex-spouse. The concept of pensions in HK being effectively in trust as per the UK is not as many people believe, therefore, if you would like the money to go to the right person at the right time (think Trusts) please update them.