Run a full review of your system and decide your actions for the coming year.
Once a year, set aside an hour and go through every layer of your personal finance system in one sitting. You check all nine layers, update your net worth sheet and cash flow statement, choose no more than five actions that each have a date, and put next year's review in your calendar.
You have built every layer over the last eight modules. Some may be finished, some under way and some still plans on paper. This is your first full pass over the whole system at once, and you'll repeat the same routine every year from now on. Do it somewhere you won't be interrupted.
Gathering figures takes up most of the hour, so the better your files from earlier lessons, the faster the review goes. You need the review checklist from lesson 9.1 and your net worth sheet and cash flow statement from lessons 1.3 and 1.4. You also need what you produced in the other modules: your spending plan, emergency fund details, insurance map, CPF summary, debt list, investing line, housing and retirement draft, and estate action plan. Have your banking apps, cpf.gov.sg and your insurers' apps ready to open.
The nine layers are cash flow, buffer, CPF, debt, protection, investing, housing, retirement and estate. Cash flow is the bottom of the stack, so start there and work up.
For each layer, answer the checks on the checklist and give it one of the layer marks: done, partly done or not started, the same marks you used in lesson 1.1. Then write one line on what you found. Don't fix anything at this stage. If you stop to sort out each problem as you find it, you'll run out of time halfway down the list.
Fill in this year's net worth sheet on the same date as last year, and build a fresh three-month cash flow statement. Then split the change in your net worth into three sources: what you saved, what went into CPF, and what markets did. Lesson 9.2 shows the method. Write one sentence on what drove the change.
Go back through your notes from the layer check and the statements, and write down every problem and unfinished item. On a first review, most people's list runs well past five items.
Choose five at most. Pick the actions that protect the most, and use the order of the layers to guide you. A missing nomination or a gap in hospital cover usually comes before raising your investing amount. Give each action a specific first step and a completion date. Anything you don't choose goes on next year's list, so nothing is lost.
Before you close the spreadsheet, book next year's review as a calendar appointment on the same date next year. In the event, note where your files are kept.
A finished review has five parts. Every layer has a mark and a line of notes. Your net worth sheet and cash flow statement are updated, with a sentence explaining the change. You have no more than five actions, each with a first step and a date. The items you didn't choose are on a list for next year. Next year's review is in your calendar.
Not every layer will be green, and it doesn't need to be. The system works because you look at it every year, fix what matters most and come back to it. This review is the last piece of your final project. Your dated actions go on the one-page system summary, beside the status of each layer.
Wei Ling (an invented example) does her first review on 1 March. Her layer check marks cash flow, buffer, CPF and debt as in good shape: her card balance is cleared and her emergency fund is at target. Protection is partly done because her insurance nominations are still unclear. Investing is partly done because she hasn't decided on a monthly amount yet, and she'll set one after the wedding. Housing and retirement are drafts. Estate is partly done: her CPF nomination is made, but she has no will or LPA yet.
Her statements show her net worth up S$25,800. Of that, S$11,200 came from her own saving, S$14,000 from CPF and S$600 from markets (S$11,200 + S$14,000 + S$600 = S$25,800).
Her to-do list has nine items. She picks five:
Sign her will with a lawyer by 30 April. Get both insurers' nomination forms back and submitted by 31 March. Have her LPA certified and submitted by 31 May. Redo the housing draft with her partner Jun after they set the wedding budget, by 30 June. Set her monthly investing amount and start date by 31 July, after the housing draft.
The other four items go on next year's list. Two of them are a CPF top-up she is curious about and a new travel budget. She books 1 March next year in her calendar, with a note that her files are in one folder on her laptop.
Open your checklist from lesson 9.1 and start at the bottom of the stack, with cash flow.
Do the full review, write down your five actions with a date for each, and put next year's review in your calendar.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).