Financial Planning 101

In Uncategorized on August 4, 2011 at 4:52 pm

People often misunderstand the concept of financial planning.

Financial planners are usually seen as either stock brokers, insurance agents or investment product agents; where in fact we are far from the afore-mentioned descriptions.

To put simply, our sole job is to do one thing and one thing only:
To help people better manage their money.
Everything else is an extension of this.

Growing up in a business-minded family, I was exposed at a very young age about the importance of entrepreneurship, persistence and most crucially: cash flow management.

I will always remember an important lesson my uncle told me in passing.

“It’s not about how much you can make, but how much you can save“.

That pearl of wisdom just rings louder and louder the older I get, and the more life experiences I gain, the more appreciative I am of that comment.

I learnt that people don’t always know what they have, whether it be investments, term deposits, or retirement savings. And in the events when they do know what they have, they usually manage them in irrational ways.

Case in point: a client of mine had a retirement savings plan with an interest rate less than a normal term deposit. Worse still, the client has had it for more than two decades! I mean, is that just plain insanity or what? He might as well put his money in the bank, and then give half of his annual interest to the retirement savings product provider!

Needless to say, I moved his funds to a more suitable place where he can reap the rewards of his hard-earned dosh in preparation of his retirement. I was happy to sit on our yearly review a few months ago and hand him a return that tripled his old product…
Happy client, check!

It is things like this that I wish to raise awareness to. If only we can be more responsible and accountable to our own financial positions and decisions, we would all be a better parent, partner, children, and citizen.

Think of the journey of your life as embarking on a ship to arrive at a certain point.
As the ship’s captain, you know you want to leave A, to reach B, in X amount of time.

Instead of jumping on board without a compass and wishing for the best, wouldn’t you want to be prepared for all that may come your way?

You might want to investigate the weather forecasts for that week, the geographical conditions of your journey and prepare for a storm. You might decide to go at a higher velocity on even surface and reduce your speed on rough waters. You might also want to decide on how much food to allocate per day, and leave a buffer in case of late arrival.. Anyway, I’m sure you get the analogy.

Let this be an illuminating point in your journey to bring that inner financial planner out of you. Start by doing the uncomfortable: talk about money.

Talk to your parents, to your friends, to anyone you perceive to be better educated about the subject. Talk about assets, talk about investments, talk about taxes.. and all that you ever known and want to know about money.. because at the end of the day.. it’s about your money too!


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