financial planning Archives

Benefits of Having A Financial Planner

Financial planning goes beyond the calculated investments. Building a financial plan helps you visualize the “big picture” and set financial goals (i.e., both long-term and short-term). This is a crucial step in mapping out your financial future. And, a financial planner or financial advisor may just help you with that!

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BENEFIT #1: ENUMERATING ONE’S FINANCIAL GOALS

The first step that financial planners partake in is the identification of the client’s financial goals. For couples, this activity is enough to get the two individuals on the same page. It highlights their similarities and differences. The funny thing is that many Singaporeans spend more time planning their travels than planning for their financial goals (e.g., retirement fund).

BENEFIT #2: DETERMINING WHETHER YOUR GOALS ARE SMART

After listing down your financial goals, the financial planner visualizes how you can get there. How much do you need to save S$10,000 a year? Should you invest your income in mutual funds? A cost-benefit analysis will be done. This act will put each of your goals in a microscope to see whether they are SMART! SMART stands for Specific, Measurable, Attainable, Realistic, and Time-bound. The financial planner must ensure that both your goals and your timeline are attainable.

BENEFIT #3: HAVING PEACE OF MIND

Certified financial planners have years of education, training, and experience working with different clients of diverse situations. Their broad professional background aids in assessing your needs. They are qualified to give you advice that reflects the best practices of the financial industry. Simply put, having a financial planner gives a sense of peace when it comes to knowing that you have an in-depth financial strategy in place.

BENEFIT #4: HIGHLIGHTING THE MONEY MISTAKES YOU MAKE

Analyzing your holistic financial picture exposes the mistakes that you are currently making.

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For instance, you disregard some of your credit card debts. This leads to paying a significant amount of money for penalty fees. Said mistake will be highlighted to ensure that you can apply an efficient fix.

Sources: 1 & 2

6 Significant Reasons Why You Must Plan For Retirement Now

According to a recent survey by Nielsen, 1 in 3 working Singapore adults are not planning for retirement. This is alarming because many people have curated a list of “excuses” for not saving money. Rather than adding glistening fuel to the fire, this article will give you six good reasons why you must save for your future.

1. TO DANCE TO THE BEAT OF YOUR OWN DRUM

Planning for your golden future likely ensures that you covered your living arrangements for the rest of your life. You can move freely to beat of your own drum without worrying about the perceptions and rules of other people. Believe me when I say that living in someone else’s household robs you of privacy. Discretion is one of the fruits that you can reap from your prudence.

2. TO NOT RELY TOO MUCH ON THE CPF SAVINGS

Your Central Provident Fund account (or CPF Savings) was established to provide a basic safety net to cushion the minimum standard of living during your senior years. You must aim for financial independence and not fully rely on what this welfare system can bring.

3. TO HELP YOU DEAL WITH FINANCIAL HICCUPS

As your body’s reflex interplay, hiccups occur unexpectedly. This applies to your finances too. Regardless of the financial hiccups that you will face throughout your life, a secure nest will do wonders! It can help you cope and save you from bankruptcy.

4. TO MAINTAIN YOUR CURRENT LIFESTYLE

Whether you want to admit it or not, you have stable spending habits that you cannot do away from. It is difficult to maintain these habits if your financial resources are limited. More so, the limited funding can put you at risk of barely being able to afford the necessities. This is why you must set a realistic budget to fit your lifestyle.

5. TO BUFFER COSTS DUE TO UNFORESEEN ILLNESSES

Your body will continue to deteriorate with age. Unless you find the “Fountain of Youth”, of course. Old age usually leads to elevated healthcare costs and unforeseen medical problems. Do not forget to plan for emergencies to support your Medisave account.

6. TO EARN THE COMPOUND INTEREST

Creating a bulk of savings ahead of time can help you earn the compound interest. Compound interest allows you to not only earn interest on your principal deposit, but also on any interest that is credited to your account. It helps your money to grow at an accelerating rate! The longer you keep your money invested, the greater the rate at which your initial investment produces returns.

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Sources: 1, 2, & 3

Newbie’s Guide To Financial Planning

Picture a curve going up. This is your lifetime money curve. Every decision you make affects the direction of your curve. For example, once you earn money from your first job then, the money curve will go up higher. But living in reality, your money curve are exposed in certain financial pressures such as taxes and bank fees, which, will push the money curve direction down. The good news is that, with a strategic plan that evaluates the potential pressures, you can survive or prevent the downward money curve. This strategic plan is called a Financial Plan.

Financial planning is an important process that draws out your monetary future. It is a process of managing your finances and knowing where you want to go. Here are 5 pointers to guide you…

1. INFORMATION GATHERING

In order to manage your finances, the first step is to gather all the important documents (e.g., bank statements, insurance policies, and investment accounts) and financial information. Organize these records by using a folders or filing accessories that will cost less than S$5 at Popular Bookstore or Daiso.

2. EVALUATING

After you gathered all the essential information, you must evaluate all the areas of your financial life including long-term savings (e.g., retirement and college fund), short-term savings (e.g., payment for bills and emergency fund), key documents (e.g., durable power of attorney and will) and insurance (e.g., life and car insurance). Calculating your net worth is also in this step.

3. SETTING GOALS

Following evaluation is goal setting. It involves two things: identifying your goals and knowing what resources you need. Identifying your financial goals both short-term (e.g., staycation in Bali) and long-term (e.g., retirement at 50s) is vital to knowing what your next plan of action will be. After plotting your goals, you must know the resources you will need to achieve them.

4. TAKING ACTION

Since your goals are set, your next plan of action is to decide whether you shall do it on your own or to hire a professional financial advisor. The personal actions you can take may include purchasing life insurance, creating a will, and setting a side money for your retirement. While, hiring a professional can help you reach your objectives in the midst of time your constraints.

5. MONITORING

The last step is monitoring. Monitoring involves tracking your progress and altering your goals based on the reevaluation of your current economic situation.

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With a systematic and a holistic Financial Plan, may your money curve take a flight…leading you to success! 🙂

Sources: Entrepreneur and MoneySense

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