Insurance: Is It Worth It?

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I first heard this story when a friend of mine posted about it the other day: The All England Lawn Tennis Association, which organises the Wimbledon tennis tournament, has been paying pandemic insurance for the past 17 years at a cost of around £2 million per year. That’s a pretty hefty premium for what people are calling a “black swan event”. My friend wondered if there was a person in their annual budget meeting who had to fight to get that paid every year.

Many people face a similar dilemma. Paying for insurance every year to cover an unlikely event can seem like a waste of money. The Japanese even have a term for someone who buys more insurance than they need and ends up poor for it: 保険貧乏 (hoken binbou)

Of course there are some risks that really do need to be considered. You are not even allowed to drive your car without proper insurance. The types of insurance that are important from a financial planning perspective are:

  • Health insurance
  • Income protection insurance
  • Critical illness insurance
  • Life insurance

Health insurance – if you pay into the Japanese national health insurance system, you are covered for 70% of the cost of medical treatment in Japan. That’s enough for visits to the clinic for a sniffle, but may leave you with a larger bill if you are hospitalised for a long period. Private health insurance is a good way to cover the other 30%. It can also be useful when you travel overseas, and could even end up covering totally unforeseen treatment later in life – see here.

Income protection insurance – what if you were sick or injured and unable to work for a long period? Your company may look after you for a while, but after that you are on your own. With income protection, you can cover up to 75% of your current income up to age 65 if you are unable to work. This is especially valuable when you think that the loss of your income would also prevent you from saving and investing for your future, making life even tougher after retirement age.

Critical Illness Insurance – unlike income protection, which pays a regular income, CII pays out a lump sum on diagnosis of a critical illness (cancer, heart attack, stroke etc). This money allows you to take time off, get treatment and get well again. We are lucky to live in an age where we are likely to make a full recovery from a serious illness and be able to go back to work, but it’s important not to go broke in the process.

Life Insurance – do you have any loans / liabilities? Life insurance makes sure you don’t leave those behind for your family if something happens to you. It also means you can continue to provide income to your family after you are gone. Health and income protection come first, but once you have a family and a mortgage, life insurance becomes an important part of your protection strategy.

If you are a short-term expat, it’s best to look for insurance with companies in your home country, or via an offshore provider. If you are long term, it would make sense to get something local. My experience with insurance in Japan is that the products are all very similar, so finding a salesperson who you get along with who isn’t pushing you to buy cover you don’t need is the most important thing.

If you think you might be missing some important coverage, it may be time for a protection review.  You never know when something unexpected might happen.

And by the way, when they cancelled Wimbledon this year, the payout to the Lawn Tennis Association for £34 million in pandemic insurance premiums over 17 years?

£141 million!!! 

If you insure yourself smartly, it’s worth the money.

2020 Investment Outlook

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And just like that, another year is gone! After a long wait for the 2019 Rugby World Cup to get started in Japan, the six-week tournament went by in a flash. And now here we are looking forward to the Olympics. I hope 2019 was a rewarding year for you.

When it came to markets, it was one of the best years for risk assets since the Global Financial Crisis with the S&P finishing +30.7%, MSCI Europe +27.1%, MSCI UK (despite Brexit) +16.4%, Japan Topix +18.1%, MSCI Emerging markets +18.4%. Crude oil was +22.7% for the year and Gold +18.3%. This appetite for risk meant that safe haven government bonds were subdued, while US High Yield and Emerging Market bonds returned +14.3% and +12.6% respectively. Bitcoin once again refused to die and posted an impressive return of +95% for the year.

Looking forward to this year “Don’t expect a replay of 2019” seems to be a recurring message, particularly when it comes to equities. Once again Bloomberg have compiled a thorough Wall Street round up for people who have the time:

For those who like to keep it simple, here is a list of key themes to look out for:

  • The end of the bull cycle is getting nearer, but it is still not here yet…
  • Equity and bond market valuations are significantly higher than they were a year ago.
  • Central banks are likely to continue pursuing ultra-loose monetary policy.
  • Smart investors remain invested but are staying alert and perhaps reducing risk.
  • The recent escalation between the US and Iran highlights the potential for sudden geopolitical shocks.
  • There is still potential upside for gold if/when things get rough.
  • Don’t let the US election distract you too much. Politics are not necessarily a good indicator of market returns.
  • Trade is again likely to dominate headlines and unsettle markets from time to time.
  • The Bitcoin halving occurring in May is likely to dominate crypto talk – here’s a detailed and rather bullish post on that for those interested.

At risk of repeating myself year after year, planning and strategy don’t need to be complicated:

  • Have a plan! Read this post if you don’t have one.
  • Stick to your guns. Don’t let the noise divert you from your commitment to saving and investing. (the Japan market made most of its returns in the last third of 2019. If you weren’t buying in the first two thirds then you missed it)
  • Diversify and rebalance – particularly if you are heavily invested in stocks and coming off a good year.
  • Max out tax advantaged investments such as NISA.
  • Look for Japan stocks that are likely to benefit from the Olympic buzz (see what happened to The Hub stock price around Rugby World Cup time)
  • Keep an eye on what the bank of Japan are buying – see post here.

With that I wish you all the best for 2020 and hope you enjoy the Tokyo Olympics!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

International Health Insurance

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If you live and work in Japan, you are probably quite satisfied with your health insurance coverage. The Japanese national health insurance system is super-efficient and covers 70% of medical costs. Unless you have a serious injury or illness, you are unlikely to get any nasty surprise medical bills.

This is how I’ve thought of my own health insurance until recently. I bought a little extra cover in case of an extended stay in hospital and figured I’m good.

Then a friend of mine got a critical illness. Without going into too much detail, the doctors in Japan told him to get his affairs in order, there’s nothing they can do. He then returned to his home country and found that actually there is an option to undergo immunotherapy. The cost, however, is around 2 million yen equivalent per month…

Thankfully, many years ago he took out some international health insurance with a UK insurance company. He faithfully paid his premiums for years and now, when he actually needs it, they have agreed to cover the full cost of his treatment.

I don’t think I need to spell this out much further. Google international health insurance, do a bit of research to find a policy that fits you, and sign up. If you are choosing from a well known provider the terms and costs are likely to be pretty similar. The one choice you will need to make is whether you want US cover or not.

You may pay your premiums for years and feel like you are wasting money. Hopefully you’ll never need the cover. However, like my friend, there may come a time when you will be glad you had it.

Investment Fees – Am I Paying Too Much?

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I came across an interesting article this week – see here. JP Morgan are launching a US Equity ETF with a fee of just 0.02%. That makes it the lowest fee ETF available at the moment, beating Vanguard, Schwab, and iShares on cost.

This is great news for long term investors, as long as they make money. Now why wouldn’t they make money with a fee of only 0.02% you ask? With the rise of ETFs, there’s a lot of talk these days about how much investors are paying. Fund managers and financial advisers are frequently criticised for charging too much.

But here’s the thing: it doesn’t matter how cheap your investment is if you buy it when the market is doing well and then sell it during a downturn. You are going to lose money!

Here are a couple of excerpts from Tony Robbins’ “Money Master the Game” book:

For the 20 year period from December 31,1993, to December 31 2013, the S&P returned 9.2% annually. However the average mutual fund investor averaged just over 2.5%, barely beating inflation. They would have been better off in US Treasuries.

Another fascinating example is that of the Fidelity Magellan mutual fund. The fund was managed by Peter Lynch, who delivered an astonishing 29% average annual return between 1977 and 1990. However Fidelity found that the average Magellan investor actually lost money over the same time period. How can that be? Well, quite simply, they bought and sold the fund at the wrong time!

So what can we learn from this? Simply that if you focus too hard on fees, be careful not to lose sight of the big picture. If you are prone to making emotional investment decisions when markets are swaying, maybe it’s worth paying for a good adviser who can help you make sound decisions?

If you are able to buy that JP Morgan ETF, hold it forever, and add to it when markets are bleeding, then good for you! You are going to be very happy with the result over the long run.

If watching your investment value go up and down makes you nervous, maybe you are better off paying for a diversified managed fund with a blend of asset classes that is adjusted tactically by the manager. Then you don’t have to worry about buying and selling at the wrong time.

I guess what I am saying is; if you are a disciplined investor you should absolutely be conscious of fees, and minimise them where possible for best results. If discipline is an issue for you, or you simply don’t have the time, it may be worth paying for some help.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Japan Inflation Watch

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It’s been a long time coming… 27 years in the case of a well known soft drinks company. Japan’s top Coca-Cola distributor recently announced that they will be increasing prices by between 6% and 10% as soon as April this year. (article here) They are certainly not the only ones, as spring will see price increases in many of your favourite restaurants, as well as on specific foods such as instant ramen, canned mackerel and even ice cream! Coupled with the planned October increase in sales tax from 8-10% this means that your yen isn’t going to go as far as it has for the last three decades.

This will come as a shock to the Japanese public and long-time Japan residents. We’ve all got used to the size of food and drink portions getting incrementally smaller, so called “shrinkflation”, but it’s really quite a jolt to see the actual price of things going up. Even my barber is raising his prices from next month!

What is this going to mean for us all financially? Well, put simply, the massive debt bubble created by the Bank of Japan means we are unlikely to see a rise in interest rates any time soon. So, money languishing in our Japanese bank accounts is going to be losing spending power. I have talked about base currency over and over, but it still bears repeating: If you are planning to spend the money you make in Japan in the UK, then UK inflation is your minimum benchmark for investments. Holding cash in JPY at zero interest in this case means you are not only losing spending power in your base currency, but taking currency risk as well. Up until now, if you were planning to spend the money in Japan, then holding JPY cash was both safe, and good enough to at least preserve your spending power. Regardless of what government inflation statistics might say, this is clearly no longer the case.

So what action should Japan residents be taking here? Here are a few things you can do:

  1. Review your base currency / currencies – if you are saving to pay for your kids education overseas, or your retirement abroad, you should be saving and investing in the currency you are planning to spend the money in. JPY cash is not the place to be.
  2. That said, if you live and work in Japan, your emergency cash reserve should be in JPY. (unless losing your job would mean leaving Japan immediately)
  3. If you have a future need for JPY as a base currency, you are going to lose spending power in JPY cash / bonds – this means you will have to take some risk with some of your money.
  4. One way to do this would be to look for dividend paying stocks / ETFs. Here is an interesting list of dividend paying ETFs in Japan. Google translate does a pretty good job on this. Remember that you should be looking at the Japan stocks / REITS – anything that invests in overseas assets, like emerging market bonds, carry currency risk that could wipe out your actual return.
  5. You could also consider a diversified Japan fund manager. I invest part of my NISA in Rheos Hifumi Plus, which is one of the most popular NISA investment funds in Japan. (this is not a sales pitch – just what I do)

I hope this helps. Please do get in touch with any interesting price increases you notice here in Japan.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

2019 Investment Outlook

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Wow is it February already? Apologies that this is a little late, but after a family holiday it’s been a slow start to the year. 2018 marked the arrival of our first child, so it’s been easy, and fun, to take my eye off the ball a little. However, it is time to get back to business, not to mention getting the house in order! I’ve seen a lot of talk recently about the Netflix series “Tidying Up With Marie Kondo”, so perhaps we should make de-cluttering our theme for this post.

So how was 2018 for you? From an investment perspective there was little joy being sparked no matter where you looked. In a year where much of the talk was about the prospects for a continuing bull market in stocks, actual returns were rather bearish. We never really got the crash that many predicted, but we saw a significant correction in February, and a rather painful last quarter where most stock indices dropped double digits.

Some rough numbers for 2018: The S&P 500 finished -6.2%, Euro Stocks were around -13%, Japan -12%, Emerging markets -17%. Gold ended the year strongly but was still down around 2% for the year. Oil fell some 40% from its previous high, losing almost 25% for the year. Furthermore, as interest rates rose, bonds prices fell too. There were not many places to hide in 2018. (let’s not even talk about that crypto portfolio…)

So what can we expect in 2019? Depending on how much information you are able to digest, Bloomberg has compiled a monster article of Wall Street predictions here.

Sticking with the idea of de-cluttering though, here is a short list of key themes:

  • The end of the bull cycle is getting nearer, but it is not here yet.
  • Investors, however, are likely to behave as if the end is right around the corner (this means continued volatility)
  • The US Federal Reserve will continue to normalise rates.
  • The Bank of Japan will continue its accommodative monetary policy.
  • The outcome of trade negotiations with China will be the main driver of USD strength / weakness. (perhaps we’ll see a weaker USD vs. JPY?)
  • Brexit will not have as big an effect on global markets as many commentators make out. (just my personal opinion here)
  • There is, perhaps, excessive pessimism with regard to Japanese stocks. With the end of the Heisei era, and subsequent celebration of the new era, a growing influx of foreign tourists, the Rugby World Cup later this year and the upcoming 2020 Olympics, we could see a real buzz that will be good for business.

So how should you plan your personal investment strategy for 2019? Again let’s keep it simple:

  • Have a plan! Read this post if you don’t have one.
  • Stick to your guns. Don’t let the noise divert you from your commitment to saving and investing.
  • Diversify and rebalance – review your asset allocation.
  • Max out tax advantaged investments such as NISA.
  • Look for Japan stocks that are likely to benefit from the buzz of the next two years.

With that I wish you all the best for 2019. Hope it is filled with things that spark joy!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

 

What’s the Plan?

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Looking back, I have posted on a wide variety of subjects over the last year or so. It’s interesting to note that the posts that get the most views are almost all related to specific investment products.

I found this out years ago when we were doing financial planning seminars. Often we would spend 20-30 minutes on a specific financial planning issue, and then for the last 10 minutes we would have a guest from an investment company talk about an investment product or fund. All of the enquiries after the seminar were related to the product, not the planning process. I concluded that people find it easier to examine a product and decide if they like it or not, than to think about long term planning.

Maybe planning is just too hard? Certainly many people are busy and pushed for time. For that reason I’ve decided to boil it down to its simplest form. Financial planning in three quick steps. Here we go:

  1. Have a plan!
  2. Cover the basics
  3. Think about where you will spend the money

If you do nothing else then at least spend some time on these three points.

Have a plan – are you more likely to succeed if you have a clear goal and a simple step by step plan how to reach it? Of course you are! Where are you going to be in 10, 15, 20 years? What do you want to have? About how much do you need?

“I should save money for my daughter’s education” is not a plan. “I need $80,000 in 18 years time for my daughter’s education, and I’m going to start investing $200 a month from now in order to get there.” – now that sounds more like it! (calculated on average return of 6.5% p.a. by the way)

Ask yourself some simple questions and at least get a basic roadmap. The plan can be adjusted as you go.

Cover the basics – read this post, take action on these three points and breathe a sigh of relief! (Emergency cash reserve, basic insurance, some kind of pension)

Think about where you will spend the money – Are you staying where you are now forever? Are you likely to return to your home country or go somewhere else? Go with the most likely outcome and save in your base currency. Also, think about the most tax efficient way to get the money you save now back there. You may need to get some advice on this but at least start thinking about it.

And that’s it! If you get to work on these three points, you have probably done more financial planning than most people do in a lifetime!

Financial Planning for Babies

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You may have noticed that there have been no updates on here for over a month. Apologies for that – our first son was born in early May and we are just getting into the swing of things!

As some of you will know, having a new born baby is very exciting, but also exhausting. Going from a solid 8 hours of sleep a night to waking up every 3 hours is a shock to the system. However, after a couple of months the little one starts sleeping longer and the brain starts to return to something approaching normal functionality. That’s when you may start thinking, “So what do we need to prepare financially now we have a new baby?”

Before I get into the financial planning stuff, I found an excellent blog: 2020 Mum in Tokyo – the “baby admin” section here is really helpful when it comes to working out what paperwork needs to be done to register your baby’s birth in Japan and overseas. It’s particularly useful if one or both of the parents is British.

So what kind of financial review should you conduct after a new addition to the family? Keeping it simple, I would look at two things: Insurance and Savings.

Insurance

Assuming you have already covered the basics and have an emergency cash reserve, basic medical cover, and income protection insurance in case you are sick or injured long term, the main thing to address after the birth of a child is life insurance. You may not have thought about it this way, but life insurance is really about replacement of income – if you were no longer around, what income would your family need to have the lifestyle you want them to have and be able to do the things you want them to do?

It’s also important to cover any liabilities. Do you have any debt that you would want to have paid off if something happened to you? If you have a loan on a property in Japan in your name, you will almost certainly have adequate life cover to dispense of this loan in the case of your death. If the loan is in your spouse’s name only, you may need additional cover. If you have loans on property overseas you need to check if they are covered. Do you have any other liabilities? Make sure you get an accurate total.

On to income – what income would your family need monthly if you were no longer there to provide it? If both parents work, keep in mind that if one of you is no longer around, the surviving parent will need to take care of the kids and may not be able to earn at the same level they do now. Do you want your child / children to go to university? What would that cost per year? Many Japanese life insurance policies can be set up to pay out an income rather than a lump sum – you may find something like this easier to plan with. (talk to an insurance professional to make sure you understand the options)

If you are looking at a lump sum payout, here’s how to calculate what you need:

If annual required income is $50,000, for example – at an interest rate of 5% per year you need $1,000,000 in order to generate the income without spending the capital. If you calculate at 2.5% you need to double that. If you are assuming zero interest rates, a million dollars will last 20 years. It’s up to you how conservative you want to be.

So if you need $1,000,000 to cover the income and you have uninsured loans of $280,000 (for example) you need $1,280,000. If you are adding in 4 years of university at $25,000 per year, then you need $1,380,000 in life insurance cover.

Obviously if you have significant assets already that could cover some of these costs, you can reduce the amount of life cover accordingly.

Savings

A new baby can be a great motivator for saving money! What is interesting is that I often find that people are less willing to take risk on money they save for their kids. They take it so seriously that losing money is not an option and they become overly conservative. While I understand why someone would feel this way, it’s a little counterintuitive. The time when kids really start to cost money is when they go to college / university, and that’s still 18 years away. Saving money in cash for that time frame means you will barely keep up with inflation. Also, the dollar cost averaging effect of regular saving means you can afford to take some risk in the early years.

It’s a good idea to start with a target in mind, so do some research on what school costs today. Don’t forget to factor in that higher education costs are rising faster than inflation year on year. This article may help get you started.

Once you have a target in mind, work backwards to how much you need to save each month. Use a simple online savings calculator to help figure it out. Here’s a simple one you can try.

In terms of investment vehicles, look at tax advantaged investments first. Japan’s Junior Nisa is a good example, allowing parents / grandparents / guardians to make contributions on behalf of children under 20 up to ¥800,000 per year. (the UK has a Junior ISA, while the US have 529 College Savings Plans)

Lastly, you may find you are entitled to reimbursement of medical costs related to the birth / child benefit in Japan. This can be a good way to kick off a savings account for your new family member!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

2018 Investment Outlook

 

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“Prediction is very difficult, especially if it’s about the future.” – Niels Bohr.

People interested in investing typically find themselves deluged with forecasts at this time of year, and a look back at investment professional’s predictions from this time last year will tell you just how difficult it is to be right. So, I’m going to be careful here! The purpose of this post is not to make bold predictions for the year, and it is certainly not to be considered investment advice. However it is interesting to take a look at current trends, along with results from last year, and consider how things might develop in 2018. So here we go…

2017 was supposed to be the year of the crash. This time last year every forecaster worth his salt was telling us that winter was coming. The Trump rally couldn’t last, central banks had to taper their stimulus programs, and the party was going to end. It was going to get ugly…

Well… S&P 500 +21.8%…. MSCI Emerging Markets +31%…. MSCI Europe +14.5%…. UK FTSE 100 +11.9%…. Japan Topix 22.2%…. even Japan hit 26 year highs!

Oil came back strongly at year end, gold was up double digits, even pound sterling recovered somewhat. Not to mention the surge in Cryptocurrency! 2017 was not a good year to be holed up in your bunker, hoarding cash and waiting for the sky to fall. What was perhaps most surprising was the lack of volatility through the year – the US stock market hasn’t seen a major pullback since the election, and volatility metrics have hit record lows.

So the party goes on, right?

Well, we will see. The fact remains that we are living in an unreal world economically. Negative interest rates are not supposed to be a thing, but they are currently reality in several countries. Moreover, negative real interest rates (when taking inflation into account) have been the norm in the developed world since October 2016. On January 9th the Bank of Japan announced that it was reducing the rate of bond purchases as part of its quantitive easing program. This reduction was relatively small, and well within the BOJ’s stated goals. It was really a non-event. However, as soon as it was announced, the Yen spiked up and markets shuddered. So imagine where we’ll be if something really happens…

The US Federal Reserve has gradually increased interest rates, and so far managed to do so without slowing the stock market’s bull run. Japan, however, is another matter. The run up in the Nikkei at the end of 2017 / early 2018 owes a lot to loose monetary policy, not to mention massive ETF purchases by the BOJ. The Abe administration doesn’t want the run to end, but it can’t go on forever.

Sorry if this is too much detail, but what I’m really saying is the crash / correction is still coming. It’s just a matter of time.

Given what happened last year, this doesn’t necessarily mean you should liquidate everything and crawl into your bunker right now. We have no idea how much longer the party will run before the inevitable end. The important thing is to know the end is coming and to plan accordingly. Here are some ways we can all do that:

Diversify – if you are 100% in stocks today, you are perhaps overexposed. It could be a good time to move into a more diversified asset allocation.

Rebalance – if you are already in a diversified allocation but have not made any changes recently, you may find that the stock run-up has left you overweight equities. You may have started with 40% in stocks but now that weighting is over 50%. Rebalancing back to your original asset allocation is a disciplined way to buy low and sell high.

Consider getting some gold – if you haven’t already, you may want to make an allocation to gold, which tends to perform well when panic sets in. Also commodity prices seem to be turning around in general, which is good news for metals.

Expect a strong Yen – we’ve seen time and again that the Yen is seen as a safe haven in times of trouble. If you live in Japan and send money home, there may be a big opportunity coming your way.

Stick to your plan – if you are relatively young and investing for the long term, you don’t need to worry too much about market downturns. Remember why you started in the first place and don’t panic.

Keep some powder dry – a crash is a fabulous opportunity to buy cheap. Have some cash at the ready and be greedy when others are fearful.

Consider inverse ETFs – if you are particularly aggressive and have a high level of conviction that the market will go down, then inverse ETFs are a simple way to short the market. Inverse ETFs use derivatives to profit from a decline in an underlying benchmark. Be aware that many of these ETFs are leveraged, and not only magnify returns, but can double or triple your losses if you are wrong.

Finally, a word on Cryptocurrency: After the incredible run of Bitcoin and numerous other coins last year, more and more people are getting into crypto trading and investing. The digitalisation of money is just beginning, and there are fantastic opportunities out there, but do your own research. Buying Bitcoin with no knowledge of how it works, just because it’s going up in value, is pure folly. I’m not going to tell you Bitcoin is or isn’t in a bubble, or that Ripple or Litecoin are going to take over. If you are interested in the concept of cryptocurrency then study it, invest a little to get some skin in the game, and study some more. Only invest according to your level of knowledge and don’t get caught up in herd mentality.

With that I wish you all the best in 2018. Let’s hope winter doesn’t come too soon.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

 

Planning for the New Year

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First of all, Happy New Year! If you have been following this blog in 2017, thank you very much for reading. Starting from mid-May last year I managed a total of 55 posts. I hope some of them were useful. Now to try and keep up that pace in 2018…

A New Year, of course, means New Year’s resolutions. Some people are very good at making and keeping resolutions, and some people let their gym membership lapse in February. Often, when you look back on resolutions that didn’t work out, you will find that it was the initial goal that wasn’t clear enough, not just a lack of discipline or willpower. So here are some simple tips for setting financial goals for the year:

Be realistic – we’d all like a million dollars in the bank, but if the number is unreachable it will be easy to give up.

Be clear – “Save more money” is not a clear goal. “Pay my credit card down to zero and have an emergency cash reserve of $10,000 by June 30th” is much better. Write it in big letters and stick it to the fridge if you have to!

Start with something you can do immediately – open excel and start a budget spreadsheet, download an app, open an account, fund an account. Find something you can take action on right now to get you started.

Stick with one or two major goals for the year and track them – if your list is too long it can become overwhelming. Start with one or two major goals, make them as realistic and specific as possible, take action immediately, and review every month.

If you are running short on ideas, here are some examples:

Track your money – if you are not clear on your income and expenditure then this is a priority. It doesn’t matter if you use a spreadsheet, an app or a blank sheet of paper. Spend the first two months of the year tracking all incoming and outgoing money so you know exactly where you stand.

Prioritise debt – make a list of your liabilities and prioritise them by interest rate. Pay the most expensive ones down first.

Cover the basics – emergency cash reserve, basic insurance cover, some kind of pension. Take care of these three things before moving on to loftier goals. Automate as much as you can.

Set a savings goal – how much are you going to save this year? What accounts are you going to max out? Start by maxing out any tax-advantaged accounts like an IRA or NISA.

Identify bad habits – are there things you need to stop doing? Whether it’s online shopping binges or overpriced lunches, see if there’s any financial fat you can cut out.

Start a side project – is there something you love that you could turn into a side business and increase your income? You never know, one day you might be able to quit the day job!

Invest in knowledge – find a book you want to read, sign up for a course, follow a blog! Educating yourself is a low-cost, high-return way to improve your financial situation. Share what you find with like-minded friends.

I hope this gives you some actionable ideas. Thank you again for reading and please feel free to comment, share and get in touch.

Wishing you all the best for a successful 2018!