Build Financial Plans Not Your Bank Balance

It's About Financial Plans Not About Your Bank Balance!

FINANCIAL plans are only for people who have money to manage, right? Wrong.
Financial planning is percieved by many as a service only for the wealthy. Since you have more money, your financial needs should, therefore, be more complex. Wrong again.

Financial planning itsn't about the complexity of your financial needs. Rather, it is about your goals or aspirations. As long as you have a goal or aspiration, you will needs a financial plan. Living from pay cheque to pay cheque does not and should not preclude you from having a plan. How else are you going to meet your goals? By continually telling yourself you don't have money?

For those wo don't  have enough, a plan becomes even more critical. Any missteps in their invesment or protection strategy will be far more detrimental than it is for a high income earner. The wrong insurance product can bind you far year while eating into your cash flow at the expanse of other financial objectives. The wrong investment product can wipe out the limited funds you have. It is quite evident that there is little margin for error.
And yet, it amazes me that there are people who spend more time planning for their financial freedom. How many of us have plan to save for emergencies? How many of us have plan for our retirement or children's education? How about a plan for a down payment on a house? In fact, how many of us view financial planning as a way to break into higher income brakect? Yes, you can plan for it.

Let's us not dismiss financial plans as a tool for older people. Speak to financially sucsessful people, and you are likely to find that they have been making smart financial decisions all their life. It has become second nature to them.
The sooner you start making smart decisions, the sooner you can buid and internalise all this experience. Not to mention, you ave some time to rebound from your mistakes. Making the wron invesment at the age of 50 means you would probably have to extend your retirement by another 10 years. But if you made made a bad invesment at the age of 30, there would still be sufficient income-producing years to recover your losses.

So where do yo start? With your aspiration. Ignore the bank balance. Make tat first million ringgit? Buy a second property? Send your child to the UK? Retire at 45? All this translates into a riggit amount required at a specific time in the future.

Then, identify what you need to get there. How much? By when? How much can you save to get there? At what returns? And if you can't get there, can you adjust for this? Can you compromise on your financial goal, be it with the amount or time frame needed? Can you save more? Can you obtain better returns? Let's be realistic, some of us may not even achive the utopian version of our dreams, but proceeding in life without  knowing this is dengerous.

We might as well be talking about the Loch Ness Monster or life on other planets. While it is possible that someone has encountered them, you can't personally confirm their existence. Don't let that happen to your life goals. Plan.

BY MUHAMMAD NASIR
Counseling Personal Money, Investment and Business