When was the last time you did a thorough spring clean in your house? Perhaps just before any festive seasons, like the coming Lunar New Year. Clearing our clutter once a year gives you a sense of well-being, clarity and brings freshness into our homes.
The same goes with our financial lives. We need to spring clean it at least once a year. It does not just include filing up our bank statements or throwing away old cheque butts, but also removing unwanted mess in your financial life.
Your cash flow: What are the leakages in your pockets? Is there any unconscious spending for example, automatic payments for services you no longer need? What about too much interest payments on your unsecured loans?
Your savings and investments: Are they allocated in the right proportion? Are your savings stored for the shorter term needs while your investments are for much longer- term ones? What about savings which are totally forgotten and dormant? Do you own stocks or funds you have neglected or given up on?
Your Will: Do you need to update your Will? Is it still located in the same place or it may have been moved accidentally elsewhere? Is there a personal situation which may void your Will, for example marriage or conversion to Islam?
Your insurance: Are you underinsured? You may have been sufficiently insured years ago but due to medical inflation, the insurance coverage amount may no longer be enough to meet the high cost of hospitalisation and treatment.
Your tax files: Are your financial statements and receipts properly filed in case there is a tax audit? Are you aware of your tax reliefs which you can claim each tax assessment year, for example the RM3,000 PRS relies? Have you fully claimed on a business asset for capital allowance, which may be beneficial to replace the old asset soon?
A financial spring clean brings clarity and control into your life just as a house spring cleaning can do. So, the next time you plan to spring clean before the Lunar New Year, remember to spring clean your financial life as well.
