personal finance planning overwhelming

Personal Financial Planning: Do you find it overwhelming?

Having a hard time doing your personal financial planning and administration? You know you have to do it, but always find an excuse to postpone dealing with it? You are not the only one.

Many people struggle to properly take care of their personal financial planning. Perhaps you don’t know how, think it is not important, or have some sort of mental block to get yourself to do it. However, having your finances in order can give you financial freedom and peace of mind.

In this article, we will first look into what personal finance is, the challenges surrounding planning your personal finance, and why it is important to have your finances in order.

What is personal finance?

The term personal finance covers more than just ‘money’. Indeed, it is about budgeting, savings, and debt. But did you know it also includes:

  • Estate planning (wills, trust, insurance, PoA, guardianship)
  • Tax filing
  • Retirement planning
  • Investments

Estate planning is the preparation of what will happen with your estate when you pass away. Your estate consists of everything you own, such as your home, car, bank accounts, insurances and investments, but also furniture, hobby items, clothes, and jewellery.

Tax filing may not be the most exciting part of personal finance, but it is unavoidable. Filing a correct tax return form that is compliant, optimised, and on time can save you money.

Although retirement may look a long time away for some, proper retirement planning will save you financial trouble – and early retirement might even be possible!

Investments offer exciting opportunities. However, deciding how to invest your hard-earned money can be challenging to some. There are risks involved and it is not always easy to understand how investments work.

Tending to your personal finance is a lot of work. Besides, external factors might build up an invisible wall to work on your personal finance.

What makes personal financial planning so hard?

If you find it hard to manage your financial administration, you are not alone. It is understandable to find personal finance challenging. Perhaps one of the following modern obstacles may apply to you:

Too many choices

“Would you like skim, whole, almond, soy, or oat milk? Would you like to pay with cash, credit card, mobile payment, or debit card? Should I be on Facebook, Instagram, Twitter, TikTok, Linkedin, Reddit, Snapchat, or Youtube?”

Almost wherever you go or whatever you want to do, there is an overload of choices. Even though these many options are supposed to make you happier, it often causes overwhelm and inaction.

The same goes for managing your personal finance. Which insurance should I use, which fund should I invest in, which budgeting software should I use?

Making a decision to “just get it over with” may cost you later in terms of money, frustration, and time. Not making a decision because of choice overload is not smart either because procrastinating on your personal finance will hardly ever be in your favour.

A busy lifestyle

When was the last time you had an evening or weekend when you had nothing to do? Like many others, your life is probably filled with work, family, social activities, sports, household tasks, random errands, social media, and more.

Financial administration, like paying bills, tax filing, and checking your bank statements often falls to the bottom of to-do lists. Let alone personal finance matters that require more attention and resources, such as researching investments, evaluating retirement plans, and discussing estate planning.

There is rarely a “right time” to tend to these matters; unfortunately, you can be too late.

Information overload

If you search Google for “estate planning”, you receive 1.5 billion results. If you search “how to invest”, you get over 2 billion results. And “how to make a Will” results in almost 10 billion hits.

Besides the information that you can actively search for, we receive a lot of information on a daily basis through 24-hours news websites, social media, emails, and so on, all demanding our attention and offering different kinds of goods and services.

You can find plenty of knowledge and advice online, but it can be hard to decide which information is right for you, which sources are reliable and how to act upon the knowledge you acquired.

Do any of these obstacles sound familiar to you? It is not easy to have your personal finance in order, but let’s take a look into why it is important.

Why it’s necessary to take care of your personal financial planning

Protect your finances

Building up assets does not happen overnight but takes time and hard work. If it’s not protected correctly, you could get into financial trouble in case of an emergency or a life-changing event. Financial protection includes, for example, insurance, wills, and tax planning.

Secure it for next generation(s)

If you die and don’t have a will, then your assets fall “intestate”, meaning that the law in the country where the assets are held will be imposed. With an estate plan, you can keep control of what happens with your possessions after you pass away. That way you can protect and preserve your estate for your children and more generations.

Be compliant with tax authorities

An incorrect or delayed tax filing can cost you a lot in hefty fines. Excuses such as a forgotten deadline or not knowing how to file your taxes are not accepted by the tax authorities. Engaging a financial professional, like a tax advisor, can help you always be compliant with tax authorities.

A financial advisor can help

Many people relate to one or more of the challenges mentioned above. The good news is that you don’t have to do all personal financial planning by yourself. Just as you let a doctor take care of your physical health, a financial and tax advisor can help with your financial health.

A good financial advisor can support you make the right choice, take time to discuss your personal finances, and is up to date with the latest information. They will take care of your personal finance planning and make sure you have things in place. All you need to do is reach out to one.

At HKWJ Tax Law, part of the HKWJ Group, our trusted advisors are here to listen to your specific needs and to help with your estate planning, tax filing, retirement plans, and investments. Do not hesitate to reach out via the form below.

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