Many people striving for financial freedom struggle with saving. By making a few simple changes, you can avoid common mistakes and start building a better financial future.
Many people associate financial planning with a complicated concept – one that requires a lot of time, effort and expertise. This technical term tends to mean different things to different people, depending on their age, lifestyle and personal ambitions.
For example, paying off student debt is a common financial goal for young and single professionals, while older adults with families tend to put more focus on investing in a property and saving for their children’s future, as well as their own retirement.
Breaking down the concept into simple terms, financial planning is essentially an understanding of basic concepts such as budgeting, setting financial goals, paying bills, saving money, and managing loans, mortgages, credit cards, credit scores and retirement funds, among other finances. Think of it as a skillset that has to be learned over the years through education and experience.
The savings shortfall
Although most people strive for financial freedom, a vast majority actually struggle with saving and managing their money. More than eight in 10 residents in the UAE admit that they are not saving enough money for their future, according to National Bonds’ 2018 Savings Index, which also revealed a modest drop in the number of respondents who are planning to increase their savings in the near future.
So, what are the main factors creating this savings shortfall? Several recent studies attribute the problem to a general lack of financial knowledge and skills needed to help people manage their money smartly. Many people today have all of the resources they need to manage their finances, however, it is important to remember that this responsibility starts and ends with the individuals themselves.
It is interesting to see that millennials today are saving more than Generation Xers did when they were young professionals. Recent US government statistics show that millennials’ inflation-adjusted per capita financial assets amounted to $17,366 in 2018, compared with $14,015 for Generation Xers in 2002. The data also indicates that most of millennials’ savings are being directed towards property and retirement investments - two financial goals that younger people can work towards, even during the early stages of their careers.
How to do Financial Planning
Set your financial goals
By following a few simple steps and committing yourself to change your money habits, slowly but surely you can get on the right track. A good place to start is defining what your financial goals are. Again, these targets will depend on your age, lifestyle and personal ambitions, however, your goal should be to set aside as much of your income as possible with the aim of gradually building up your savings and diversifying your investments over time.
Once you have realistic goals in place, you should make it a point to stay informed about financial matters and opportunities. Company quarterly financial reports, analyst reports, market outlook newsletters and financial news programs are all common sources of information for investors. Bear in mind that these sources provide opinions, so there are always risks when it comes to acting on such information.
Use financial tools
There are several free and useful tools and apps that help you track and make sense of your finances. The budget tracking service Mint is a very popular and practical option as it links your checking, savings, credit cards and mortgage accounts into one platform, making it easy to view and manage your personal finance.
The Citi Mobile® apps is a great option worth checking out as the platform is designed to help you manage your finances in just a few taps. Among the best features of this app are the notifications which alert users about their account activity in real time, such as when transactions are made, when a check clears or when a payment is due.
Consult Financial Advisor
Seeking the advice of an experienced personal finance expert is another way to go, however, getting this type of guidance and support usually comes at a high cost. If you are someone who has built up a decent amount of savings throughout your career, but feel unsure about how and where you should be investing your money, it may be wise to consult a financial advisor who can work with you and help you reach your financial goals.
Citigold and Citigold Private Client are both Wealth Management propositions Citi offers. These services give individuals access to wealth products and solutions across Singapore, London and the UAE. Also, Citigold clients have a dedicated advisory team led by a Relationship Manager, who is supported by an insurance specialist and treasury expert. To find out more, click here.
Build a better financial future
The benefits of being financially savvy are far reaching and should not be underestimated. It is worth mentioning that there is no quick fix for getting smarter about managing your money. By following the above-mentioned tips, staying informed and keeping track of your spending and saving, you can make steady progress in managing your finances.
In today’s digitally connected world, we fortunately have access to valuable financial knowledge and tools at our fingertips, so why not take the first step to financial freedom?