Get your numbers checked! Plan your finances well
According to the Consumer Expectations Survey (CES) Report of the Bangko Sentral ng Pilipinas (BSP), more Filipino households reportedly have savings. From April to June 2015, those with declared savings reached an all-time high of 33.9 percent across all income groups. Emergencies, education, and health are among the top 5 reasons cited for the increased savings pool. Meanwhile, those who could regularly save 10 percent of their income remained somewhat fixed at 36.5 percent.
You have probably heard of SMART goals already. But do you always apply it? The simple fact is that for goals to be powerful, they should be designed to be SMART. There are many variations to what SMART stands for, but the essence is this:
SPECIFIC Goals – The first step in effectively setting your goal is to get highly specific about what you intend to achieve. Your goal must be clear and well defined. Vague or generalized goals are unhelpful because they don’t provide sufficient direction. Make it as easy as you can to get where you want to go by defining precisely where you want to end up. Remember, set specific goal to a specific timeline.
MEASURABLE Goals – Give precise amounts and dates in your goals so you can measure your degree of success. Without a way to measure your success, you miss out on the celebration that comes with knowing you have actually achieved something. If you evaluate your progress, and realize that you’re getting further away from your goals rather than closer to them, you can re-adjust your approach. This gives you a moment to correct things.
ATTAINABLE Goals – When you pick goals that are achievable, not only are you more likely to achieve them, but you can also develop some momentum in the process. Find goals that are big, but not impossible to achieve.
RELEVANT Goals – How relevant are the goals that you’ve selected for your life and your future? Are they aligned with who you are? Do they resonate your core values and beliefs? Goals should be relevant to the direction you want your life and career to take. By keeping goals aligned with this, you’ll develop the focus you need to get ahead and do what you want.
TIME BOUND Goals – Your goals must have a deadline. When you give it a real date on the calendar, you can break it down into monthly and weekly goals. This way, you can chart your progress to determine how far or close you are to achieving that goal. Working on a deadline gives you a sense of urgency that prompts achievement of goals much quicker.
Having a price tag and timeline for your goal makes it all real. This way, you can work backwards: how much should you save and invest each year to achieve your goal. However, this is just for one goal. How about your other goals? Can they be put together in one plan so that all areas of your life are covered? The answer is yes. You can have a comprehensive financial plan.
A comprehensive financial plan is a document that outlines the goals of a person, assesses his/her financial status, and gives concrete recommendations on how to achieve those goals. Each plan is different as every person has unique status, needs and aspirations. Yet all comprehensive financial plans cover each aspect of a person’s finances – cash flow, debt management, investments, insurance, tax and estate, and retirement.
Financial planning should be fun and so is learning about money management if you choose to approach it that way. It is a lifelong process that takes commitment and consistency for it to be effective and impactful. It must be worked on until it becomes part of a routine or even developed as an instinct to save and invest. The heart of financial planning is about achieving your dreams and securing the future of your loved ones, not really about how much you have in your portfolio.
Either voluntary retirement or unexpected job loss, is a road all of us will eventually travel, remember that you’ll just be retiring/leaving from a job, not from life. You still have a vibrant life ahead of you; spend it in complete financial independence. Having a clear focus and a plan can be empowering, you don’t need to depend on your children or anyone to take care of you in your old age. Opportunities await! Grab them.
Begin with the end in mind. Be it taking a skills enhancement course like the ones being offered at Philippine Business School or attending related seminars, it is important to take that first step towards learning more. Then, like an investment, the basic foundations of financial knowledge can grow exponentially over time. The seed of time and knowledge you saw today can mean bigger savings in your bank account and more funds placed into smart investments. But moreover, it can equate to peace of mind and the satisfaction that comes with financial security.
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