Setting — and Sticking to — your Financial Goals in 2019

With the challenges of Christmas already a distant dream, it’s time to start turning those New year’s Resolutions into action. Here’s our handy guide to setting – and sticking to – your financial goals in 2019:

1. Set concrete goals rather than an abstract intention

As evidenced by the packed January gym, many of us have set an intention to get fit and healthy this year. So often, we run out of steam after a few weeks (as evidenced by the busyness of the gym in February and March), and fall back into old habits.

The secret to success is to set concrete goals, rather than an abstract intention. So: Instead of perpetually postponing your date with the gym, assign one day a week that you’ll go straight from work. This kind of fixed plan works. And the same is true when it comes to your finances.

2. Invest quickly, simply and cheaply

If you look at your savings account interest with disappointment, it’s high time to think about investment. Exchange Traded Funds (ETFs) are both promising and easy to understand, directly reflecting the performance of the stock market indices. So if the Dax is clearly on the up, so too would a corresponding ETF. Statistics show that in the long run stocks always provide a positive return. For example, anyone who has been loyal to the German Dax for 15 years has been able to look back on an annual yield of more than 10 percent.

Another way of compensating for price fluctuations on the stock exchanges is via a savings plan. You set a fixed amount to buy monthly shares of an index fund. If the price is high, then you get only a few fund shares; if the price is in the basement  – the best time to get started – then you get more.

3. Think about insurance

At least once a year, Germans should also dedicate themselves to the topic of insurance. Sure, rifling through thick folders for your different policies is not really an appealing task. But a lot has changed over the years, from liability to household contents, and it pays to keep on top of things. Perhaps your household has grown, for example, and you need to add cover for new bikes or an expensive hi-fi system

4. Follow the 50/20/30 rule of budgeting

If you want to invest you need to save, and if you want to save you have to budget, budget, budget! A good way to do so effectively is by following the 50/20/30 rule, putting those percentages towards fixed expenses, saving goals, and day-to-day spending respectively.

Say your net monthly income is $3,000. Here’s how it breaks down:

  • Put 50 percent ($1,500) toward your bills (your “needs” category — fixed expenses like mortgage, utilities, car payments, groceries).
  • Save 20 percent ($600) toward your goals (like retirement, a new car, and/or an emergency fund).
  • The final 30 percent ($900) goes to day-to-day spending for the month (“wants,” like meals out, new shoes, movies).

Discover the World of Ethical Investing

We all want our investments to be sustainable and protect human rights, but it’s not always easy to tick every ethical and environmental box. Finanzdiva shares her top six things to consider when making ethical investments.

  1. Cost: Active management costs money, because eco-funds require checks by external consultants and ethics committees.
  2. Risk: Managed environmental funds often invest in smaller small cap companies, whose credentials are easier to review. But smaller companies run a higher risk of insolvency, and small-cap stock prices fluctuate more strongly compared to large internationals. Plus, their tradability and liquidity are lower.
  3. Seal of Approval: Self-proclaimed ethics committees include Triodos Bank and external auditors. The FNG Siegel is regulated by the Forum für nachhaltige Geldanlage (Sustainable Investment Forum).
  4. Diversification: A portfolio of purely environmental investments is not sufficiently widespread.
  5. Renewable energy: renewables are considered top candidates in the sustainable area, however, wind energy production is not particularly animal-friendly. The solar industry provides peace of mind for investors, but often disappoints with low returns. Investment risk in the energy sector is high.
  6. Marketing: Beware of greenwashing; the “eco-product” label is often used as a marketing method.

Kat€’s top tips:

  • Before you invest in sustainable products, consider the returns.
  • Compare the cost of the products offered (including order fees, sales charge, etc.).
  • Seals like FNG indicate a sustainable product – then you don’t have to check yourself for ethical criteria.

Women Mean Business

Governments and private sector players are catching on to what we’ve always known—women are good for business and good for the economy. Women hold roughly 30 percent of private wealth globally and nearly two-thirds (62 percent) of women express strong interest in learning more about finances and retirement planning, according to an Allianz study.

The increasing recognition of what we women can bring to the party is clear. Women have an ability to juggle complexity and see a holistic perspective. We focus on long-term thinking  when it comes to making decisions. We deliver a better customer service and better public image for a company due to our higher worker engagement and better morale.

Studies show that companies with women in leadership positions are healthier on every level, and can bring out the best for everyone. McKinsey estimates that women working at their full potential could add up to $ 53.3 trillion to annual global GDP by 2025. Smart companies have figured out that women deserve a raise nor because just because it’s fair, but also because women bring qualities that make companies more innovative and show higher stockholder returns.

During rounds of research for Mind the Gap, we interviewed many women. We discovered that:

Women are financial decision makers.

Women are taking an increasingly active role in determining how their families save, spend and plan for the future. We are working and earning much more than ever before. In addition, because women tend to live average five years longer in Germany, they have a better than average chance of inheriting assets or a business at some point.

Women are more loyal and profitable clients.

We are an important source for referrals and stay for long periods with people we trust. Moreover, women have equal (or even better) credit scores than men and are more likely to receive high-cost loans.

Women have higher grades than men.

More women graduate college and have a Master’s degree. Constant learning and improving of professional qualifications leads to higher innovations and better results for a company.

Long-term thinking about women’s careers and improving our financial health boosts security for women, their families and society as a whole. We can increase women’s access to relevant financial information, products and services that can empower them to better manage daily finances, weather emergencies and other unexpected expenses like medical payments, and meet long-term financial goals.

A fairly paid woman with access to information and education is unstoppable.