Financial Health Check

While its common that we hear people visit their doctors to do their annual health check, its another thing to some of us that we should do a FINANCIAL HEALTH check at all! In fact the general response we get is...Huh! apa itu ~!! 

 

Just like the results of your blood test, which indicates the present state of physical health by which your doctor will review and diagnose your condition and subsequently prescribe the necessary remedy, the FINANCIAL HEALTH check does about the same but it is diagnosed by your qualified and competent FINANCIAL PLANNER (FP). Another way to explain this is...if you are on a long road trip heading to somewhere, you'd usually make stops to look into the map or perhaps even stop to ask for directions  to ensure that you are going the right way. An annual financial checkup serves the same purpose. It's an opportunity to review how you've done financially over the past twelve months and make sure you're still headed in the right direction, whatever you financial goal may be!
 
A good time to do your annual financial checkup is before the end of the year or if you find that is too much of a disruption to your holiday plans or partying moods...then make a note in your calender to do it as soon after the new year comes in. 
 
Here's what you should do...
Reveiw your Goals
The first step in your financial checkup is reviewing and evaluating your financial goals and objectives. If you are one of the smart few who have engaged the services of a financial advisor or financial planner (FP) to assist you with your wealth managements matters, make an appointment with him/her to speak about this. Please ensure that your FP is LQC i.e LICENSED, QUALIFIED and COMPETENT! Some important Qs to ask and discuss with your FP may include, have you made any progress with your objectives this year, if not..why? have any of the financial objectives change at all that requires resetting of your financial plans...have there been changes in your own personal situation that requires alterations to your financial objective.


Identify changes in your own Personal Situation
These personal situation changes can be anything from...a new job, a divorce (or for the guys...kahwin satu lagi!!), another baby (or babies...on account of the first and second wives delivering the same time), a new car, or even a disposal of one of your many cars, a passion in a new found hobby. Whatever these changes are, definite alternations in financial goals and objectives are necessary and you need to highlight this to your FP to make the necessary recommendations.

Asset Protection Review
We are most fimiliar with the term insurance but many of us fail to realize that insurance review is an important part of financial check up. Speak to your FP to review your asset protection situation on account of your changes in situation which includes houseowner's  insurance, health insurance, auto insurance. Don't forget to protect the greatest asset of all - your income earning ability - with long-term disability insurance.

Review your WILL / WASIAT 
Again this may relate to the changes in your personal situation...that pesky younger brother has finally gotten too much...he sneaked into your room to flick your INDIANA JONES COLLECTORS DVD and sold it to buy  tickets to TONY ORLANDO's concerts in GENTING!!!...and you no longer think he deserves mention in you WILL....REVIEW TIME!...Well you can catch my point here...if there are any particular changes that has taken place and require updating....discuss this with your FP.

Reveiw and Evaluate Your Investments
Are they meeting the targets and are you satisfied with their performance? If you are not sure of the direction, get your FP to share with you the market outlook and invite him to make recommendations.


List down and Evaluate Your "Hutang Piutang" (Debts) 
When you do a FINANCIAL HEALTH check, one of the important ratios to review is the debt to income ratio. This ratio tells you how much of your income goes to settling debts. How are you doing in this area? Is it within control? Has that credit card debt balance outstanding decreased or increased over the last 12 months? If it has been increasing, its best to figure out why? Remember, is important to plan for FUTURE CONSUMPTION too and this is difficult to do when most of your income is used for CURRENT CONSUMPTION. How else are you going to fund for that retirement?
Spend time too to review your housing loan mortgages and see if your FP has any idea about a new mortgage plan that can reduce your monthly commitments and perhaps at the same time reduce the tenure.

Prepare for the APRIL tax month...
During this month, you dread the nights when you are constantly jolted in your sleep with shouts from inside your head..."THE TAXMAN IN COMINGGG! THE TAXMAN IS COMINGGG!"...It makes Freddy KRUEGER run for cover too!!!"
This is a good time to plan for next year's tax commitments. What can you do to minimize them? Start to collect you reciepts of allowable deductions and put them in order for your LHDN submissions. It pays to be  organize. 

Review Your Retirement Plans
How much has the EPF fund grown over the 12 months. Is this sufficient for your retirement? Do you need an additional investment plan? Again you FP should be able to help you on this.
 
At the end of this check up you'd be in a better view of your FINANCIAL HEALTH...so how did you do? If your financial health is in good shape,  good on you!!!...if otherwise then you need help in your wealth management matters!