The Expat Investor Podcast - Ep 12

Episode Description

We take a look at six mistakes you may want to steer clear of when making new years resolutions.

‍Transcription

A New Year? A new you! Six mistakes you might want to steer clear of when making those New Year's resolutions on this week's The expat Investor Podcast.

Welcome I’m Tom Pewtress, Head of Global Partners here at Skybound Wealth Management and after a busy spending season it's that time of year again when we make our New Year's resolutions.

Well as a colleague of mine once said Jonathan Lumb, thank you very much, he once said intentions and I'm going to use the word intentions for today's podcast.

So we start to think about the goals we want to set and accomplish this year. Right now, is a great time to start fresh and learn from the previous year.

Achieving certain financial milestones like eliminating debt, investing, purchasing a home all require thoughtful planning and dedication. Both of which are essential ingredients for a successful New Year's intention. So, I'm going to go through six common mistakes you should probably avoid when trying to create a better future.‍

Unrealistic Goals

The first one is just not setting realistic goals. When you're crafting your intentions for the year be sure to set realistic and achievable goals. One of the biggest mistakes most people make is being way too ambitious, far too ambitious. Your intentions shouldn't be too challenging.

Similarly, they shouldn't be too easy. You have to find that sweet spot somewhere in between. Failing to stick to an intention can often leave people feeling discouraged, motivated. So, trying to not bite off more than you can chew is a real key mistake to steer clear of this year.

Making too many intentions.

I see many people come back to the offices every year and we go through New Year's resolutions or New Year's intentions and people will give me a long list. Well quite frankly you're trying to do too much at once. Having simple goals is great but working from a huge list of them is going to be far too overwhelming.

What I suggest is go through those that you've written down so far and choose the most important ones that you want to focus on and make those your primary intentions. You'll likely find more success in tackling one or two important goals than trying to accomplish ten more ones.

Once you've got those in place and you know what your intentions are, not having an action plan to go with it is going to lead to failure.

Lack Of A Plan

So not having an action plan for me is the third mistake you probably want to steer clear of. After deciding what your intention is, create just a step-by-step guide of how you're going to achieve it. This can include setting goals and deadlines for yourself along the way so that you just stay on track with your progress.

It's easy to get caught up in the moment and make lofty promises only to realise that don't have a plan for achieving them. Before making any commitments for the New Year though, take some time to think about what it would take for you to reach each of these goals and create that action plan.

That way you'll know exactly what a step you need to take throughout the year and for you to be able to stay on track with it.

Be Specific

I think one thing, and this is probably one that most people miss is just not being specific, really vague with a goal. I'd like to save more… It's not really that effective when you say you're going to save more.

If you say something like I'd like to save $100 or £100 or 100 dirhams or $100 euros or whatever the currency may be, a hundred of something more every month in my retirement account, in my future home account, in my children's education account, be really, really specific about your goal and what it's going to do for you and where it's going to be directed. So, it's easier for you to follow through with them.

Set number targets so that you know exactly what it means to have met your goal. Your intention should always have specific objectives that you can measure against and that are achievable given your resources and timeline. Setting vague goals are ones that end up being far too ambitious. You set yourself up for failure. It's always going to be too big a picture for you to be able to achieve.

So put numbers to things, put objectives to intentions, marry those two together and that will just allow you to take that next step and being successful with your new year’s intentions.

Don’t Lose Track

So, you've made a list, you've got your primary intentions, you know

now what you're going to be shooting for, you've come up with an action plan, you've not been to vague, you've been specific, you've got what you're going to do and know how you're going to do it, you're on your journey. So over the next couple of months as you

progress, let's think about tracking your progress. Not tracking your progress is not going to help you. You need to use a calendar or a journal or an excel sheet or a black book or whatever it may be in order to track that progress with yourself.

Create a scoreboard, rate yourself, whatever it may be, make sure that you're tracking that progress. Studies show that we are motivated to win, so a scoreboard or mini goals or winning or getting over the line every so often is the perfect way to help you stay on top of your big picture goals.

It'll also give you an idea of how far along the way you are in achieving that goal and take time each week, each month to reflect on what went well, what didn't go quite as well, and this allows you to make the necessary adjustments for your future success.

Don’t Go It Alone

Set yourself up for success by keeping a journal or finding an accountability partner, somebody who's in it with you who can keep you motivated throughout the entire year. Even small steps like checking in with you each week, just go a long, long way, helping you stick with your intentions over the course of the year.

When it comes to keeping you accountable for financial goals obviously, Skybound Wealth are always here, all you have to do is ask!

So, there are the six common mistakes I'd certainly say clear of this year and try and avoid. The financial intentions that you set for yourself now can help set the tone of your financial future. The key to hitting those goals is to set a plan in motion now, even if you have

to make changes later. Deciding on a few key goals, determining how those goals fit into your budget and setting a flexible deadline for yourself can help you hit the ground running in 2023.

So, with all that in mind, what sort of goals should you be setting for 2023?

Well, it's really down to you in trying to understand why. Why you make in the intention. If you understand your motivation and why these goals are important to you, you will be able to stay dedicated and not lose sight of things when they get difficult. You want these intentions to be your intentions, not anybody else's. By taking ownership, you will have a clear and meaningful reason for your intention, as that will help keep you on track and stay focused.

All that said though, the following are two really important goals that I think you probably should consider this year given the current economic climate.

Pay Down Debt

The first would be paying off short term debt like credit cards.

Around the world, we've seen interest rate rises and, in some countries, quite significant ones and this will just be making your short-term debt more and more expensive. So, if you can get rid of it, get rid of it.

Have An Emergency Fund

And the second one I'd probably say is building that emergency fund. A recent survey in America found that 30% of Americans across all age ranges have prioritised either increasing their emergency fund or building that emergency fund this year. 2022 was a difficult year for global markets and sometimes the end result of a difficult year for markets is what we've seen just this week from a company called Salesforce. You may be familiar with them, which is job cuts. And that is an unexpected circumstance and an unexpected event that may happen and those happen in people's lives.

This week Salesforce announced that they're cutting their workforce by 10%. That's I think it's seven or eight thousand jobs. There's an interesting website out there actually, it's layoffs.fyi. They've recorded over a thousand tech companies have cut over 150,000

jobs in 2022. So, these things do happen. They are happening right now and therefore building your cash cushion should help you quite a lot in an unexpected event like this. It's there to be on hand, it's there to cover those expenses whilst you are finding the next role in your career.

On the flip side that, if you live in the UAE right now, the government has actually launched a workplace insurance to protect against salary losses in the event of job loss. And this is a mandatory requirement anyone listening today and anyone living in the UAE. This is a mandatory requirement and if you are employed, you must be enrolled. I think it's by June. So, this is definitely worth speaking to your HR about because I believe there are fines imposed. Should you not be enrolled. So definitely check that out.

But again, that's another thing that is good as part of financial planning, taking into consideration, making sure that you've got all these mechanisms around you to protect you in unexpected financial events. That's all from me this week. As always, it's been a pleasure. Just remember what it takes to make those financial intentions successful and have a great day.