Plan ahead.....


Plan Ahead

The budgeting process should not only be done once every Christmas. Most probably, many families would not be able to last more than a few months should something unexpected happen which stops them from earning a living. If you are one these people, maybe now is the time to make some money resolutions to put yourself in a better position for 2017.

The first part of our recommendations deals with the “savings” aspect.

Get into the savings habit

Putting a little money away regularly is the best way of saving up for expensive things, like a holiday, furniture, or a special family occasion. If you put aside a little each month it will soon build up. True, as the going rates on local savings accounts are rather low, don’t expect your savings to balloon. However, rates may go up in the future so don’t despair!

Always set yourself a savings goal which usually falls in three distinct categories; emergency fund, short term savings goals and long term savings goals.

Whatever stage of life you are at, your first priority for savings should be an emergency fund. This is money you can draw on to meet unexpected expenses, without having to borrow. As a guide, aim to approximately save to cover your expenses from one to three months. Remember to keep this money for real emergencies and see that you top it up as soon as possible after use.

Short-term savings are for things you want to achieve within the next couple of years. These goals could be to pay off your credit card debt, buy a new TV, go on a holiday or buy a car. Try and set yourself a realistic timeframe without too much cut-back which you might not achieve.

Long-term savings are plans you want to achieve in around five years or more. This could include buying a home or paying off your home loan, paying for your private schooling or retirement planning.

You must then find the best way to save depending on your goals. Savings accounts are for times when you may need to access your money quickly (such as the emergency fund and short-term savings) whilst term deposits and investments are for the longer term. You may wish to keep separate accounts, especially for short terms savings goals.

Saving and investing is a complicated area and decisions that are right for one person may not necessarily suit another. Our website has a dedicated section about investing and investments. Click here if you want to read more.
Plan for your future

Set yourself one or two realistic financial goals to achieve in 2017.

These could be paying off or reducing your debt, saving for something special or planning for your retirement. There’s no beating round the bush: you have to save and plan for your own retirement if you wish to continue enjoying a lifestyle to which you were accustomed during your working age. Unfortunately many people feel that they simply don’t have enough money left over each month to save.

Some banks may even offer that you automatically set aside a small amount from your monthly wage which would be invested in a product of your choice. These might be ideal if you are finding it hard to save up that little something for your future.

Retirement savings needs to become a priority instead of an afterthought. Doing a little research and getting prepared early is better than not being prepared and not being able to enjoy retirement.

We should be proud of the fact that the Maltese are a nation of savers. So let’s carry on with such a noble tradition.

Last updated: Nov 18, 2016

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