Autumn has arrived! And how?! We started the new season with some stormy weather. Do not let these Autumn storms be a metaphor for the new year and your own financial situation.
You have another good month before the holiday season starts, when your attention will be swallowed up by Sinterklaas, Thanksgiving, Christmas and New Year’s preparations and parties, and you will definitely not want to spend that time on “boring” new year’s financial planning. So, now is the time to take action. Stop procrastinating and start making your 2020 financial plan today. Beacon Financial Education offers you these 5 tips to get started.
Where are you currently, and – more importantly – do you feel comfortable with that situation? Are your income and expenses balanced? Have you been able to pay off debts? Were you able to save for a car, a home, retirement? Do you have an emergency fund? Do you keep a budget? Have you set financial goals? What could you improve, so these future goals will be met?
Chances are you answered “NO” to one or more of these questions. After all, we all get caught up in our day-to-day lives and do not take the time to sit down to review our financial situation and discuss family finances with our spouse or (fiscal) partner. So, let’s go over the next few steps and turn around this process of delaying and procrastination.
If you have not already got a budget, it is time to create one now. You might think it’s too basic or simple, but a budget will give you a complete overview of your income and expenses, so you know exactly where your money goes and what your end-of-month balance is. Basic and simple in theory, pretty challenging in practice.
Reviewing the past year, based on your bank statement, you can create your first budget draft. Google Search provides you with Excel templates to help you get started. You can make a column for projected costs (based on your 2019 income and expenses) versus a column for actual costs.
The most common categories are:
| Housing | Loans |
|---|---|
| Insurances | Taxes |
| Transportation | Savings and / or investments |
| Food | Legal |
| Personal care | Charity, gifts and donations |
| Entertainment | Irregular expenses |
| Pets | Miscellaneous |
These can then be further broken down into multiple subcategories. Having a budget or spending plan will ensure that you have money for the things you need, to keep you out of debt or help you get rid of debt, and to save for future life-changing events.
If you have not already started, begin saving now. Start with setting up an emergency or so-called “rainy-day fund”. According to last year’s FINRA U.S. Financial Capability Study, less than half of Americans have set aside enough money to cover three months of expenses in the case of sickness, job loss, economic downturn or another emergency.
In the Netherlands, NIBUD (National Institute for Family Finance Information) recommends saving at least 10% of your monthly net income. They have a handy tool to calculate how much money you would need as a buffer for unexpected larger expenses based on your personal financial situation.
Your budget will allow you to determine where in your spending pattern there is room to save money and cut costs, and how much money you can start putting aside right now. Set an end-of-year savings goal, and simply work towards that.
Get organized before the holidays. Tax season seems so far away right now, but before you know it, it’s January and you might have missed out on tax-saving opportunities. Make a list of – and if already available assemble – all the financial documents and statements you need to file your income taxes, both here in the Netherlands as well as in your home country, so you have easy access to them when you need them.
Get organized before the holidays. Tax season seems so far away right now, but before you know it, it’s January.
Bank statements with beginning and end-of-year balances, payslips and annual income statements, mortgage information, an overview of your investments (don’t forget to review and re-balance your investment portfolio before the end of the year) and retirement plan(s), your savings, et cetera. Anything that has an impact on your income taxes.
Not exactly sure what you need? Start researching (international operating) tax and financial advisors to help you, especially when you need to file taxes in multiple countries. After all, you do not want to pay too much money, and these specialists will be able to inform you about possible exemptions and deductions.
Now you have reviewed and evaluated your current situation, it is time to look a bit further ahead. What are your future goals? Depending on your current age, those goals will differ – from saving for your own home, your children’s education or retirement. Write down your goals and make a plan that will help you achieve those goals.
Being a cross-border professional, you might want to consider some help. An independent financial advisor can help you to create your plan and – based on your own personal tax and financial situation – create an investment portfolio that will assist you in obtaining financial freedom.
Beacon Financial Education has access to a global network of financial advisors. You can sign up here for a free consultation with one of their preferred partners in the Netherlands.
In December and January, they will host another set of webinars “Get Your Finances Ready for 2020”. Sign up for their newsletter and check out their event calendar to sign up for one of these webinars, so you come financially prepared in 2020.
Beacon Financial Education does not provide financial, tax or legal advice. None of the information on this site should be considered financial, tax or legal advice. You should consult your financial, tax or legal advisers for information concerning your own specific tax/legal situation.