Year-End Financial Review Checklist: How to Review Your Money Goals for a Successful 2024

You know that friend who’s always making new year's resolutions and getting a brand new planner each year to pen those resolutions down?

I was that friend until five planners later, when I realised it wasn’t working for me.

Here are five tried-and-true finance tips I've gathered and reflected upon from Singapore’s personal finance community. Some of these may or may not be useful to you, but I've found them personally to be helpful in terms of navigating through a volatile and inflationary economy.

If you need some guidance on your insurance coverage, SingSaver's insurance specialist Low Khoon Wah recommends “protection first, then wealth accumulation".

Here is a lowdown on the key insurance plans to keep you covered:

• Health insurance - A priority, and an Integrated Shield Plan (IP) is a must. As all insurance goes, the moment your health status changes, it becomes a pre-existing condition. Potentially suffering 60 years without adequate hospital coverage is insane on your finances, not to mention your family's.

• Life insurance - It's good to start young when the premiums are cheaper. A fixed term of 15-25 years payment period means you won't be paying even after you retire and can focus on other protection or just your life.

• Critical illness insurance - Generally, it should cover at least 5-10 years of your income.

• Endowment - Before signing up, always have a goal in mind so you don't let the plan lapse by thinking it's a waste of money. e.g. for your future child's education fees. 

Rather than a fixed amount for your coverage, it’s more important to commit to what you can afford and not to lapse plans, as getting covered depends on your prevailing health status. This scenario is surprisingly common, so don’t get caught off guard.

For instance, you could have gotten an Integrated Shield Plan (IP) from a private insurer to top up your MediShield coverage. If the IP lapsed and subsequently you contracted high blood pressure, the insurer will deem your high blood pressure as pre-existing and may not accept you to do regular insurance reviews.  

With your pay increments and increasing liabilities, your life goals will change and so should your insurance coverage. Hence the importance of doing regular reviews with a trusted advisor.

Clueless about how you should get started with your financial planning? 

MoneyOwl has a Comprehensive Financial Planning service which focuses on designing a holistic financial plan that covers your key life aspects. This includes growing your income, being sufficiently insured, and retirement planning. It also helps you to take control of your daily financial situation and work towards your other financial goals.

The Comprehensive Financial Planning is a chargeable service of S$99 (valued at S$535, NTUC members enjoy 75% off at S$24.75). As part of the partnership between SingSaver and MoneyOwl, they are offering a 100% discount on your Comprehensive Financial Planning report when you check out with the promo code SAV422. There is also a S$10 voucher that eligible clients will receive as part of the promotion. The 2-hour consultation costs S$49.

From January 2024, the Basic Healthcare Sum will be raised from S$68,500 to S$71,500. 

I didn't use to think much about Medisave until I paid for my parent’s hospitalisation using my Medisave savings. After more than a decade in the workforce, the consistent “forced” savings have accumulated into a tidy sum, thanks to the 4% annual interest. That really took the financial load off me during a pretty taxing time. 

While topping up Medisave is only available in cash, I do think it’s a worthwhile investment as hospitalisation expenses can be unpredictable. And it’s something that could affect anyone, not just seniors. And the worst thing is to have to worry about affording medical bills when you’d rather focus on getting the best treatment available.

Apart from getting hospitalisation insurance, topping up your Medisave could be the next best thing to do with your cash. In any case, once you reach retirement age, the three CPF accounts will merge into a Retirement Account so whatever’s left is still yours to spend.

Are you planning to buy a home when you turn 30? Will you be buying it as a single or couple? These are some big questions for which you may have a vague idea of how you’re going to execute your plan.

When a goal seems daunting, e.g. building a 6-figure investment portfolio, one way to think about it is to reverse engineer the process. This concept was highlighted by blogger Money With Katie, who illustrated how allocating S$100 every month on “miscellaneous spending” can mean when you realise how much you’ll need 20 years from now to produce that S$100.

Private investor Max Koh, whose investment portfolio crossed the S$1-million mark when he was 29, finds this approach helpful and is something he adopts too.

The 32-year-old shares, “I start with how much money I would need to comfortably sustain my expenses yearly. Then I work backwards to shoot for a net worth goal. That’s how I started my investing journey.

“The only issue with the 4% rule is that one must be comfortable with volatility. Because during drawdowns like now, taking out a % of your net worth can still be a scary thing when you’re selling your ETF shares that have been corrected.

"So yes, it's a good rule. But I need to add in some active income to help give more buffer."

What does it take to be successful with your investing goals, then?

To build the ability to stick with investing in the long run, Max says it’s crucial to understand what the stock market is and how it works so you'll have the confidence to stick to your plan.

It’s also important to know how the 4% withdrawal rule originated, what has changed about the economy since then, and the backtests of the data. Knowing that information would be a good starting point as you evaluate your options for wealth planning and accumulation.

Whether you are a F.I.R.E. believer, living from pay-check to pay-check, or both, it’s inevitable to make some mistakes on the way to achieving financial independence.

The cautious optimist in me says: Make peace with yourself and start cleaning up your slate.

This is the time to unearth your bank statements, receipts, and bills and put them on a table (either literally or in Excel). Split them into two categories:

• Core fixed expenses (bills, food, transport)

• Variable expenses (shopping, travel, entertainment, dining out)

Under the “variable expenses'' category, after factoring in self-care, flexibility and creativity will come in handy. For instance, I find more and more of my friends are starting to use car-sharing services instead of ride-hailing. This helps to save transport costs, especially when prices can surge quite scarily in ride-hailing apps.

Another way is to search for the right cards to earn rebates on your expenses, whether it’s cashback or miles you’re after.

Here’s where your little exercise earlier would be helpful. Do you spend mostly on daily essentials or online shopping? Or are you a wanderluster planning frequent trips throughout the year?

Whichever your choice of credit card, make the most out of the rewards by paying off your monthly bill.

I have to be honest - when it comes to setting and achieving goals, I need someone to hold me accountable. And it’s not just one person, depending on the type of goals.

From a good friend to your spouse, I find the conversation works best when it’s open and non-judgemental. At least you would hear a different perspective, not to mention capture some blind spots. 

It’s a sentiment echoed by David Wu, author of Minimalist in The City.

Having experienced financial setbacks and running his own company, both he and his wife take a prudent approach when it comes to managing household finances.

“We usually discuss and keep each other updated on anything financial. For us, we always base our planning and budgeting on one’s salary (e.g. buying a new home.) So, the idea is to spend one salary only and save the other.

“This is so that we do not overcommit on big item purchases and that we can still run the whole household with one salary, should one get retrenched or wish to take a break from work for any reason. This will also ensure that we save more than 50% of our combined salaries which will speed up the rate we save and invest."