Brian Spence*

Do you have some bad financial habits? If so, then you are certainly not alone, since a massive 78 per cent of us will admit to behaving badly with money, according to a new survey by financial services provider OneFamily.

As someone who has spent my career giving financial advice, I can certainly attest to the truth in that figure. Whether it be impulse spending, not saving enough or failing to ensure that any savings are working as hard as possible, most people could do with overhauling their financial behaviour in one way or another. Breaking bad money habits and forming new, healthy ones really is an investment in your future – and that of your family – and as we begin a new year, there really is no better time to start.

So, mark the start of 2019 by making some solid financial resolutions that will power you closer to your money goals and make sure you end the year (and every one after that) in a much better place. Whether you are focused on saving for a house, sending your children to university or increasing your retirement savings, these seven financial resolutions can really change your life.

Commit to a solid plan

Make this the year that you sit down and create a solid financial plan for yourself and your partner/family if applicable. Think short, medium and long term, and mark out what you need and want to achieve, whether that be something serious (like building a bigger pension pot) or pleasurable (such as a dream vacation).

Your financial plan is like a road map that you can follow to reach your goals, and the more detailed it is the better. You may need to make adjustments as life changes, but having a plan in place provides a solid foundation for good financial habits to flourish.

Know what you want

Have a clear, concise financial goal for the year. It isn’t good enough to say, “I want to have my credit card paid down and more money in the bank.” Instead, you should write a financial resolution that is clear and actionable like, “I will reduce the debt on my credit card by US$3,000 and increase my investment in my savings account to $5,000”.

Putting a number on your aspirations makes it easier to imagine success and also allows you to track your progress towards your goals much better. As with all resolutions, keeping your motivation up is half the battle!

Take control of your spending

A budget is the most effective tool that you have for managing your finances and it is vital to follow one each month. Your budget allows you to choose how you spend your money and you will be amazed at how much you can accomplish if you can just master budgeting.

There are an abundance of apps that can help you see exactly where your finances stand, but even if you prefer low-tech methods of keeping track, just stick with it.

Save for retirement

If you haven’t done so already, start a regular savings plan and benefit from dollar cost averaging and the magic of compound interest. Start to save now. The only guaranteed way to benefit from compound interest and dollar cost averaging is to start early. The temptation is to say that retirement is a long way off, but even a small sum saved regularly over a long period can produce a very substantial sum.

Einstein called compound interest “the eighth wonder of the world” for good reason. Harness its power with your pension pot.

Review your existing investments

Existing portfolios can “drift” over time as all the different investments held don’t all move in tandem, which can lead to a situation where the risk-profile of a portfolio mutates into something very different from what may have originally been intended. And, of course, individual investments that may have been worth backing in the past might need to be re-assessed from time to time.

For these reasons, it is vital to review your portfolio and potentially “detox” it at least once a year. If you are not already doing so, consider entrusting your investments to a private client adviser who will select your holdings, and then monitor and adjust them throughout the year to make sure they remain suitable.

Consider consolidating your investments

One of the things that can frustrate an investor’s ability to effectively manage and review their investments is having them scattered around in different accounts. This means that your portfolio as a whole is likely to have duplications or over-concentrations in certain sectors or markets.

Proper diversification among asset classes is the key to minimising risk and maximising returns, and this is impossible without the kind of holistic overview consolidating your investments will bring. You are also likely to save a huge amount in fees this way.

The importance of completing your will

If you are Asian or Western, from the UK or from Việt Nam, very few of us like thinking about the inevitability of death. Even in Western culture it is estimated that only around one third of adults have made a will, with the rest leaving their families exposed to much potential confusion and distress, especially if the deceased has business and property interests. Vietnamese culture is very different, but individuals and families still have to face similar challenges if the deceased has business interests. Make 2019 the year that you take legal advice and put your express wishes on paper.

The New Year is a great time to overhaul your life for the better and if you focus on just a few of these financial resolutions, a happier, more prosperous year will certainly be yours.

* Brian Spence is managing partner of S&P Investments. He has over 35 years of experience in the UK financial services industry as an investment manager, financial planner and M&A specialist. He is a regular contributor to the UK financial press and has a deep understanding of the financial services community. Brian’s column will reflect on all the challenges and opportunities within the Vietnamese market, bringing a fresh perspective to today’s hottest issues. The columnist’s email address is brian@sandpinvestments.com.