The new year is a time when many people consider what changes they would like to make in their lives. Common resolutions include losing weight, getting fit, drinking less or spending more time with family.
However, in this era of inflation and rising consumer prices, improving your financial well-being is a resolution that could lay the groundwork for a happier, healthier and less stressful life.
Trevor Spinney, head of Premier Banking at Cayman National, explained how “unnecessary, frivolous spending can lead to financial ruin and severely impact a person’s ability to have a good level of long-term savings.”
Avoiding just $25 of unnecessary spending every week would add up to $13,000 over 10 years, and if that amount were increased to $100 per week, the savings is $52,000. If those savings were invested wisely, the amount would increase even more.
Credit card debit is another area that is a common problem following the holidays, Spinney said.
“If an individual has a loan or credit card debt with high interest, they should do themselves a favour and pay it off as quickly as possible,” he said. “Credit cards carry high interest rates and can be difficult to repay. One option is to consider looking at the consolidation loans that banks offer, which will provide more manageable monthly payments and lower interest rates.”
Spinney also encouraged people who want to make changes to do a “temperature check” on their financial well-being.
“Start with a net worth statement looking at all assets you hold and all liabilities owing," he said.
Assets include things such as account balances, fixed deposits, investment accounts, vehicles, property, pensions, insurance policies with cash surrender values or investment components, valuable jewellery and artwork. Liabilities would include loans, credit card balances, mortgages and any other debt.
“If an individual has a negative net worth, then it’s best to make a plan to work hard to pay off the debt first and get this into a positive position, starting with repayment of the highest interest rate debt.” Spinney said.
He also recommends creating a budget.
“This can be a worthwhile exercise as it will highlight where hard-earned money is going, but also where cutbacks can be made,” he said. “If an individual finds they are spending more than they are earning, then they will need to find ways to reduce expenditures and get into a positive monthly position.
“If people need help with their financial planning, they can also reach out to Cayman National Bank for assistance,” Spinney said.
“We offer fixed deposits and investment solutions to match goals, time horizons and risk tolerance,” he said. “Fundamentally, it’s also important for people to identify their financial goals and what is most important to them. Then find a trusted financial advisor to work with and put a plan in place to meet those goals,” he said.
To help, the bank has created a “My Budget” template, which can be found on the Cayman National website.
This article was originally featured in the December 2023/January 2024 print edition of Camana Bay Times.