Home' Trinidad and Tobago Guardian : January 4th 2015 Contents It is a new year, and in keeping
with tradition, we are sure many
readers made resolutions at the
stroke of midnight on Wednesday
to start diets, kick a bad habit or
make some changes for general
self improvement over the next
If you ve resolved to get your financial
life in order, the Sunday BG wants to help
you by offering a few tips to get your 2015
started. The ability to budget and save is at
the starting line of any road to financial
independence. Unfortunately, like many who
turn up at the gym on January 2 only to
burn themselves out two weeks later, budg-
eting, saving and investment require com-
mitment, planning and goal setting which
are often forgotten in the rush to get start-
ed.The Sunday BG asked two financial plan-
ners---WINSTON WILLAMS of Pan Amer-
ican Life and our very own columnist NICK
DEAN---what advice they would give to
readers on their goals, whether they are real-
istic and how would they go about attaining
them in 2015.
Scenario # 1
Patricia is in her late 30s and wants to
buy a house. However, she also wants to
advance her education at a foreign university,
purchase a car and, in between all of this,
get married to her significant other in a
dream-destination wedding. She earns a
salary of $13,000 per month, has few
expenses and no debt.
She realises she will not be able to attain
all of these goals at the same time, but is
hoping to achieve them within a short period,
without having to go into significant debt
and largely through using her savings.
Is wanting to save to achieve these goals
realistic firstly, and how would she go about
doing this if it was?
"Patricia needs to have a serious conver-
sation with her husband-to-be. The fact is,
Patricia cannot deal with all these things
on her own. However, the dynamic would
change if they sat down together and worked
out their expenses with the assumption that
they were already married," said Williams.
The first thing he said they should examine
is their fixed versus discretionary expenses.
Having a sense of what they are spending,
the couple can then examine what they have
to dedicate collectively towards these goals.
Regarding the house, Williams said that
the couple needs to decide where they want
to live and what that will cost at today s
prices. However, the couple must also do
their research, for example, do new provi-
sions made in the 2015 budget for first-time
homeowners apply to them?
Also, they should also consider the asso-
ciated costs of acquiring the property, stamp
duties, closing costs and the cost of upkeep
into the future.
"If they wish to acquire the property in
five years time, they should plan for an infla-
tion rate of around seven per cent," said
Williams. "Therefore, if Patricia and her
husband-to-be want a house in Trincity
and the current downpayment is $200,000,
the should project five years into the future
at the rate of inflation, and make that figure
their savings goal over the next 60 months."
The couple may also need to decide
whether they need separate cars, or can get
along with one car. With either choice comes
costs, said Williams, the cost of maintaining
the car, insurance, repairs and the like and
these things will impact on their debt service
Her foreign education was an item that
Patricia needed to consider carefully since,
Williams said, it may not confer the advan-
tage she is hoping it will.
"The reality is that student loan debt is
higher than credit card debt in the US. She
needs to ask, can I carry the debt, for how
long, and will it give me a significantly better
job or not? In T&T context, 8,000 people
coming out of UWI compete for a few hun-
dred jobs. Is it worth it? She needs to ask
whether going off to a foreign university
will give her a significant advantage in the
Williams said Patricia s foreign degree
may be worth it if she plans to source
employment abroad, or is involved in an in-
demand field. He also suggested that couple
could even decide to split the expenses, one
taking full responsibility for paying for
schooling, while the other takes responsibility
for paying for the new house.
Ultimately, Williams said, they must devel-
op timelines for when they would want to
attain these goals.
Nick Dean also stressed the importance
of a timeline for Patricia.
"What is important is for Pat to list out
her goals then set a dollar value to each,
then rank them in order of priority. Then
set a time line with each one and divide
each goal by the time (months) and match
this next to her disposable income and she
will know if its realistic," said Dean.
In his opinion, Patricia s education would
bring the highest returns.
"It would increase her income which
increases her power to save more," said Dean.
Scenario # 2
Jimmy is 22, has just finished university
and is now working at his first job with a
salary of $7,000. Jimmy wants to move out
of his parents home and also wants to buy
a new car. He has minimal expenses and
enjoys spending on clothing and electronics.
Jimmy is aware that he needs to plan for
his financial future, but hasn t really given
much thought as to what this might entail.
He also wants to start some sort of savings
programme. What advice would you give
In Jimmy s case, Williams said that he
may want to consider getting a roommate
as the cost of an apartment in what may be
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JANUARY 4 • 2015
Are they realistic?
Continued on Page 5
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