In a fast-paced world, we have less time for everything than before. That's why it's important to regularly stop and think about where we are going and whether that direction is really in line with our personal and financial goals. We are exposed to hundreds of influences and advertisements on various online platforms, from which it is very difficult to filter out the useful ones, and very easy to fall into the traps set by advertisements.
Whether you already have financial investments and savings, or are just planning to achieve financial stability, you need constant self-examination and self-awareness.
Below, I would like to share with you some easy steps that that can be useful in increasing the value of your own savings. Whatever you do, keep in mind that it is important to set your financial goals as soon as possible.
1. Assessing savings potential
Apart from extreme situations, all active earners have savings potential. As a financial advisor, I recommend that everyone should set aside the amount of their monthly income that they do not need to cover their daily expenses and that they can live without until the next payday. To maximise your savings potential, it is very important to constantly review your frequent spending and related habits. Be constantly aware of the sources of income you can expect to receive.
2. Keeping expenses under control
In addition to regular income, we have plenty of payment obligations (rent, insurance, mortgage repayments, family expenses, etc.) and some expenses related to our lifestyle that are driven by our desires. Try collecting all your expenses for a month or two, summarising them in a spreadsheet or using online tools. You'll probably be surprised how much money you've spent on things you didn't really need.
Here are some links to help you sum up your spending, income and other elements of your wealth. It's worth experimenting with them and taking the time to do this, as a quantified picture of your situation and habits can help you achieve your financial goals.
Mint's online budget planner:
Budget Pulse online:
ClearCheckbook Money Management:
Your eBanking might have the same features, go and have a look and assess your income and assets!
3. Investor self-assessment
Once you have assessed your income/expenditure balance above and have a clear idea of how much you can save each month, complete some tests to find out what kind of investor you might be. This is necessary to be aware of your own investing habits, risk-reward limits to avoid sleepless nights and unnecessary losses.
Investing habits can vary widely depending on your family circumstances, life situation, personality and wealth.
It is therefore very important that you feel comfortable in the capital markets and that you include in your portfolio assets that you can understand/evaluate.
Some banks and investor protection agencies offer a range of online tests to help your self-assessment, even without having account with them. I suggest you fill in a few to get an objective picture of what type of saver you really are.
I have put together a short list of some of those tests to help you put your investment habits on a fictional scale and test your market knowledge. These results can go a long way to getting you started in the right direction in managing your investments.
InvestRight Test
The InvestRight website provides investors with online tools and information to help them make wise investing decisions and protect themselves against unsuitable or potentially fraudulent investments.
Investor Knowledge Quiz by FINRA
Financial Industry Regulatory Authority in the USA
University of Missouri Investment Risk Tolerance Assesment
UBS Bank Financial Personality Test
Investor Personality Test (psychological approach)
If you have taken the time to implement the 3 points above, you are already closer to becoming a conscious AND hopefully successful investor.
In the following blogs, we will write more about which effective investment solutions, services and platforms can help you manage your savings.
If you would like to go deeper into the area of investor self-awareness, we can of course offer you further advice. Reach out to us, we will be happy to assist you.
Remember: everyone is an investor!
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