Financial Planning: The Foundation to your Wealth
Inextricably linked, life and money go hand in hand. But more often than not, short-term goals like purchasing a new car or buying your first property take priority over long-term objectives such as saving for your child’s education or retirement. Without a clear and overall financial picture of your present, your future may be uncertain.
Financial planning can help you prepare for important life events, ensuring that you do not struggle as you try to reach them, while it can make all the difference between placing you in control of your money instead of having your money control you. What’s more, research shows that those who plan for the future end up with more wealth than those who do not.
Yet, working toward financial security need not be an exercise in self-deprivation and there is no better time than the present to begin drafting your financial plan. So, sit down, assess your current financial situation and determine where you want to go.
How to set up an effective financial plan
A statement that outlines your long-term objectives and drafts your savings, debts, investments, insurance, cash flow and other elements of your financial life, a financial plan is crucial for helping you make the best choices, prioritise your goals and map out clear strategies for achieving them.
Such a plan though does not come as a set template. Based on your expectations, you must decide what it should include and you must remember that at the very heart of it lies clearly defined targets. For starters, you must calculate your net worth, which involves taking your total assets like your property and car, any money that you may have in a savings account and anything else you own that might be of value, minus your total liabilities, in other words, your credit card debt, your home loan and any other loans. Next, you must determine your cash flow – what funds come in and what goes out. By documenting this, you will be able to gauge how much money you need for your monthly necessities, for saving and investing.
Here are a few more things you should include in your plan that will surely set you to a path of financial success:
Eliminate debt: it goes without saying that getting out of debt should be your number one priority since there is no point of saving or investing if you are paying higher interest on the money you owe. Getting out of debt might seem too big of a feat to conquer, but with some discipline and a drastic cut on your spending, you will be able to pay off your debt relatively quickly. Once you are out of it, stick to your plan and take measures to stay out of debt.
Build an emergency fund: a personal budget set aside as a financial safety net for future unexpected expenses or mishaps, an emergency fund can act as an added cushion and as a result, you will not need to touch any savings or investments you may have. In addition, an emergency should be just that – used in cases of a real crisis like losing your job. And, if you are going through a tough time and you must dip into this fund, make sure to bring it back to its original amount as quickly as you can, otherwise you risk transforming an emergency into a total disaster.
Invest and diversify: whether you opt for mutual funds, stocks, bonds or ETFs (Exchange-Traded Funds), diversifying your investment portfolio is important and if you are careful and consistent enough with your investments, these can generate a substantial income. Our dedicated team of experienced financial investors can help you make the right choice and open the door to Calamatta Cuschieri’s full range of products. As you draw closer to retirement, you may want to make safer investments that are not as easily affected by market ups and downs.
Get life insurance: insurance is a must-have for a solid financial plan and something you should not do without since it can prepare you for the unexpected and will ensure that you can still reach your goals if you ever come across a financial crisis. In addition, it will prevent you from emptying your emergency fund, while it can protect your family should something happen to you.
Save for the future: it is never too late to save towards your retirement. Ideally, you should consider saving around 15% of your gross income, however, you should perhaps consider increasing this amount if you would like to save for future expenses like a down payment for your child’s first property or wedding, purchase a dream vacation home or embarking on that holiday to the tropics.
How to make a budget and stick to it
The bedrock of any financial plan that can push you to achieve your goals and is the ultimate key to lasting financial success is budgeting. From putting you in control of your money to tracking your spending and determining whether you are meeting your targets, having a budget will give your hard-earned euros a purpose, while it will prepare you to take certain financial steps. And while the word is often associated with restricted spending, budgeting should be seen as a tool for more efficient spending.
Whether it is a personal or a household one, a budget will reflect how much money you bring in against all your expenditures be it required expenses you cannot do without like home loan payments and rent or optional costs such as that for entertainment. Setting a budget and sticking to it might seem like a lot of work so here is what you can do to stick to yours:
Track your successes: there is no better way of sticking to your budget than tracking your successes and celebrating little milestones. In the past this was done on paper, however, today there are several easy-to-use apps that not only allow you to track your money and your financial goals but will drive you to stay on budget and automate your payments. Offering full visibility to every transaction that happens across all your accounts, you will be able to better consolidate your monthly net worth.
Allow for the occasional treat: budgeting does not necessarily mean living miserably and not allowing yourself the sporadic indulgence. If you are overly stringent, it is highly unlikely you will stick to it. Unless you are in serious financial trouble, you do not need to live too frugally. Just remember to cut back within reason.
Be realistic: at the same time, you must be realistic. Trim some areas in your budget and push yourself to spend better so that you can pay off debt and save but do not expect to live way below your means. Saving a little extra for a special occasion down the line like an upcoming vacation makes sense, but reducing your grocery budget to the point that you are eating just pasta day in, day out does not. Your financial goals should not set you up for failure.
Create a visualisation board: such a board is a powerful method for keeping you motivated since it serves as a real image of your goals and plans, while it acts as a constant reminder of what you are working towards. There are many ways of going about this, from having a physical corkboard stuck on your wall to the digital variety. As long as you have one in place and you have frequent access to it, sticking to your budget should not be a problem.
What can Calamatta Cuschieri do for you?
One of Malta’s largest independent financial services group and a founding member of the Malta Stock Exchange, CC pioneered the local financial services industry in 1972. Since then, the Group has constantly pushed forward, moving from strength to strength, gaining an excellent reputation along the way for consistently offering a bespoke and transparent service to clients at highly competitive prices. Today, CC has established itself as a 360-degree financial planner for investments, pensions and life insurance and as a result, our experienced financial planners will ensure that your plan includes all the necessary strategies to help your money grow.
As leaders in the local financial services industry, CC understands that when it comes to investing, one size does not fit all. Following intensive, in-house, market-leading research, clients are offered specialised advice and tailor-made investment portfolios suitable to meet their objectives. We invest directly in the markets and provide access to a wide spectrum of top-performing local and global assets such as Bonds, Shares, ETFs and Funds. The Group serves as the representative and distributor for UBS Funds locally, whereas through its subsidiary CCFunds Sicav plc, it currently has €120m spread over 8 sub-funds. Investment portfolios are monitored by our specialists, while clients benefit from periodic reviews of their financial plan.
Although we cannot control the unexpected mishaps that happen in life, we can manage our finances to better prepare for them. As you grow and move through life setting off to get married, buy a home, build a family, grow your business and plan for retirement, life insurance can provide you with peace of mind that you, your family and your business are protected. CC offers a wide range of insurance coverage ensuring long-term, tax-efficient capital growth ranging from protecting your family and home to covering your funeral costs and safeguarding your business in the event that you or a key individual within your company dies.
Growing old is an inevitable fact of life, however, if you are looking to maintain your standard of living in the later years of life, having a retirement plan is a must. The Lifetime Private Pension Scheme has been set up to help individuals save for retirement by building a pot of money to be invested which will provide clients with an income throughout retirement. In contrast, the Lifetime Occupational Scheme is designed to manage schemes on behalf of employers that wish to contribute towards a pension scheme for their employees.
Both pension plans enable clients’ pension pots to grow at an unrivalled rate with added security from a diversified nature of investments. A tax-efficient solution, you may enjoy up to €500 per year in tax credit, whereas at retirement age you can withdraw up to 30% of your sum, tax-free.
Do you need financial planning help?
A financial plan will vary from individual to individual, so if you are unsure as to how to go about having one, a financial advisor can help you solidify yours and offer personal and highly customised guidance. Qualified and boasting a wealth of experience, CC’s advisors can address clients’ unique needs and draft a customised financial strategy, whilst acting in the best interest of clients. At the same time, our investment advisors have access to a full range of investment products which means that they can directly invest in the markets.
Picking the right financial advisor for your situation is crucial otherwise you risk ending up working with someone who is not a good fit for your needs. Here are some benefits of enlisting a CC advisor’s help:
Bespoke advice that matches your personal financial circumstances
Whether you are looking to invest, plan for your retirement, manage your assets or create an estate plan, our advisors guarantee unrivalled regular and personal interaction so that their advice directly aligns with your needs. By actively taking into consideration the complexities of your finances, your personal circumstances, as well as your short and long-term objectives, they can provide the necessary advice and work with you to establish investment decisions with your best interest in mind.
Peace of mind
With our financial advisors you are safe in the knowledge that an experienced professional is taking care of a wide range of challenges on your behalf, keeps close tabs on the markets, while conducts thorough research to identify the best investment opportunities. What’s more, we use world-leading custodians to hold and safeguard your shares, ETFs, Bonds and Funds so you are fully aware where your assets are.
Transparent and clear
At CC our fee structure is not only simple and easy to understand so you know exactly what you are paying for, but it is also highly competitive and transparent. We do not charge annual management fees, custody fees or any other hidden, recurring fees.
Have a look at these 10 reasons why you should choose Calamatta Cuschieri.
Getting your finances in shape is a crucial step for a better future. A financial plan can help you manage your income more effectively, increase your cash flow and enhance your financial security amongst other things. But it shouldn’t be static. It should track your progress over time and adjust as your needs evolve.
Don’t put your finances on the back burner. Visit one of CC’s local branches situated in Mosta, Fgura, Sliema, Qormi and Birkirkara for a free financial health check which includes a review and consultation session of your current financial situation with one of our qualified advisors and a customised financial plan tailored to your needs. Get in touch with one of our advisors.