Concerned about rising prices? It’s time to update your personal finance checklist. According to the most recent Endowus Wealth Insights survey, the cost of living and record-high inflation are now the primary concerns for investors. With 41% of Hong Kongers not confident about having sufficient funds for retirement due to inflation eroding the value of their savings.  Let's look at some ways to ease these worries and help future-proof your financial plans.

Why a personal finance checklist is important

To stay on track with your financial goals

You may have goals such as saving for your mortgage down payment, kid’s education or the next Niseko ski trip. Accomplishing these goals will require planning and ongoing monitoring to ensure you are on track to fulfilling them. Your financial checklist is a roadmap for reviewing your financial achievements, progress, and setbacks, enabling you to pinpoint any areas that may require adjustment or improvement.

If you wish to learn more about how to prioritise your financial goals, click here.

Your annual personal finance checklist

Here are six aspects of your finances that you can look into, to help you get started on the yearly money review. They include personal expenses, debt management, savings, insurance, investments, and retirement planning.

This list is in no way exhaustive, so feel free to build on it when creating your own checklist.

Your personal expenses

The past few years have been a whirlwind of changes when it comes to our spending. As more of us started working from home since the pandemic days, our weekday lunches with colleagues were replaced with home-cooked meals or food delivery expenses, purchases of new clothing were replaced by new electronics, and transport costs likely went down.

As we enter into the post-pandemic era, with international travel picking up pace once again, and inflation remains elevated, there is potential for significant changes in our daily expenses and big ticket purchases. 

With numerous changes that might have occurred this year, it might be time to re-evaluate where your money is going. 

If you had a personal budget or tracked your spending in 2023, you can review these expenses and find out whether you had stuck to your budget, or if you had actually overspend or underspend in certain categories. If you have yet to establish one, creating a personal budget for 2024 can help with controlling your spending, tracking expenses, and saving more money. Utilising spending data from the previous year can assist you in devising a more effective budget for the upcoming year. 

Of course, it is also important to find ways to decrease unnecessary expenses whenever possible, particularly during times of high inflation. The money you save from reducing any unnecessary spending can also be invested, added to your emergency fund, or contributing to our retirement savings.  Expenses that are commonly overlooked, such as unused subscription services, can impede your progress in saving money. Therefore, it is wise to regularly review your expenses as part of your financial checklist, enabling you to begin reducing unnecessary spending.

Your debt

It is important to have a clear understanding of how to effectively allocate your money towards saving and investing for your various life goals, such as saving for retirement, your mortgage payments, while simultaneously managing debt. 

In today’s climate, managing debt has become an increasingly pressing issue. It is a good idea especially to carefully assess your larger and long-term debt commitments such as car loans and home loans, particularly as mortgage rates continue to rise.

The end of the year or the start of a new year is usually a great time to evaluate all your outstanding loans. This will enable you to consider the most effective means of repayment and determine the appropriate time frame. Take a look at our comprehensive guide on how to develop and adhere to an effective debt repayment plan.

Remember, too, that not all debt is bad. Differentiating between good and bad debt can prevent you from taking on an unnecessary financial burden. Good debts are ones that can increase your net worth or have future value, while bad debts are ones that don’t and you don’t have enough cash to pay for them.

Your savings

Have you accumulated sufficient funds to cover any upcoming big-ticket expenses? Major life milestones, such as a wedding, purchasing a new house, or sending your child off to university, would require a large sum of money. By reviewing the amount of savings you have and the required amount for these larger expenses, you can be better prepared to pay for them when the time comes.

Pick up these five tips to help you save more money and move you closer towards your financial goals.

Other than regular savings, it is also critical to have an emergency fund. Even the most prudent person cannot avoid an unexpected crisis such as sudden injury or illness or an abrupt loss of income. Your emergency fund should cover at least three to six months of basic living expenses. It should also be kept highly liquid because you would want to have immediate access to it if you suddenly need the money. Having an emergency fund can provide you with peace of mind, and prevent you from going into debt arising from unexpected expenses.

Read more: Optimising your savings: money market funds vs time deposits

Your insurance policies

Insurance acts as a financial safety net that helps you take care of yourself and your loved ones when you need it most. With the right insurance, you can have peace of mind knowing your loved ones would not end up burdened with debt should any unfortunate circumstances arise. 

Some may regard insurance policies as an unnecessary expense because they believe adverse events would never happen to them, or that they have saved up sufficiently to pay for any potential bills. 

As you go through different milestones in life, the protection you require will change as well. Reviewing your insurance coverage every year will ensure that you are constantly adequately insured — not over-insured and paying premiums through your nose, nor under-insured and unable to claim your full loss.

When it comes to insurance, it is important to be careful with your choices as it is a long-term commitment. Changing or ending a policy too soon can incur high penalties. If you are not knowledgeable about insurance, seeking professional advice could be helpful. 

Your investments

It is also important to review your investment portfolios periodically to ensure they continue to reflect your financial needs, goals and risk tolerance.Overtime, your portfolio will naturally get out of balance as prices of underlying investments fluctuate over time. Rebalancing your portfolio ensures that your portfolio adheres to its initial investment objective, that you are not carrying too much risk and improves portfolio diversification by selling overpriced assets and buying underpriced ones. 

The costs of managing your portfolio should also be assessed. Costs can come in the form of fees, time, or effort. If the cost of investing is too high — for example, if you are paying too much in fees, or if managing your own investments is taking up too much of your time — you might want to consider other means of managing your portfolio to cut costs. One way is to switch to low cost portfolios or you may wish to start dollar-cost averaging, to ride out the volatility in the markets.

Your financial needs and risk tolerance levels may change over time as well. For instance, you may take on more risk when investing for your retirement fund decades away, while for your child’s education in three years' time you might opt for a more conservative investment option. Reviewing your investment plans at least once a year can ensure that your investments are still matching the timeframes or the specific goals you have in mind.

Understand goal-based investing and learn why it's important to stick to an investment plan. Find out how you can set up recurring investments with Endowus here.

Explore Endowus Insights for more insights and tips on investing or discover investment strategies to grow your wealth.

Your retirement plan

Retirement is the financial be-all and end-all for many. All that saving and investing and planning is ultimately to enable you to enjoy a comfortable retirement.

Naturally, your personal finance checklist should track your retirement planning progress and outline the main considerations for your golden years. No matter how old you are, it is never too early to start planning for retirement.

Aspects of your retirement checklist you can review every year include:

1. The amount you want to contribute to your retirement fund each month
2. The mode of your contribution — personal investments, MPF and/or Tax Deductible Voluntary Contributions (TVC), Qualifying deferred annuity policies (QDAP)
3. The ways in which you will grow your retirement wealth or manage your retirement portfolio
4. When you want to retire
5. Your expected monthly retirement expenses
6. Your expected monthly income from investments, MPF payouts and government allowances

Start retirement planning as early as possible, so you can beat inflation, reap the benefits of compound interest, and save yourself the scramble of trying to build your nest egg shortly before you retire.

If you have not begun planning for your golden years, here's a simple retirement checklist to kickstart the process.

Tidy up your finances yearly

Go over your personal finance checklist as often as you would like, but make sure to review it at least once a year.

Make it a habit to give yourself a financial checkup to keep your expenses and savings on track, and then review them again in the following year to see how you have fared this year.

At Endowus, we always believe everyone’s financial situation and investment goals are unique. Individuals at different stages of life will have different financial priorities. To get started on your investment journey with Endowus Hong Kong today, click here.  Or you can schedule a 1-on-1 free consultation with our SFC-licensed client advisors for any questions you might have.

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