Achieve your goals with financial planning

If you want to achieve your financial dreams, you should put them down in writing together with your plans on how you intend to achieve them. Beside giving you a clearer idea of what you want, a written plan will allow you to track your progress and take any corrective steps needed for you to reach your goals.

Stage 1 - Set your financial goalsFinancial goals reflect things you want to achieve with your money within a specified time. Setting the goals help you understand the value of money and encourage prudent spending. Be sure you know how much time is needed for each goal.

Stage 2 - Write down your income, debts, savings, investments and insuranceStart by writing down your household income, including your spouse's income. Then, list down all your outstanding loans and financial commitments, including repayments of loans you have to make during the month. We suggest that you repay your debts first, then you pay yourself by putting aside at least 10 percent of your disposable income into savings or investments. At this stage, it is also advisable to set aside a sum of money for your insurance.

In Stage 2, there are three steps:

Stage 1 : Compute/ add your disposable income (Family income for the month)
Stage 2 : Add up all debts, investments and insurance paid during the month (loan + savings, investments and insurence);
Stage 3 : Deduct the amount from your disposable income. The balance of this money is referred to as cash-in-hand.

Stage 3 - Write down your expenses
Stage 3 guides you on how to prepare your daily expenses based on the amount of cash-in-hand. Although you have made full commitment on your loans, savings, investments and insurance, the money left for your daily expenses must be spent wisely. Knowing the difference between needs and wants will make a significant impact on your spending behavior. Your decisions on what you need or want will affect your budget and your monthly spending. Remember, live within your means and only spend the money you have.

Stage 4 - Assess your financial positionReview and assess your financial position every month. If you need to reduce your spending, look at the expenses you can do without or cut down. You may need to take a look at household expenses, personal items and other expenses, particularly entertainment. You may even have to revise your investment portfolio it your spending budget is too tight for you to live on. If necessary, you may even revise your financial goals if you think some of these are no longer realistic in relation to your income

Manage Your Money Wisely

Whether you earn a little or a lot, it's always wise to budget and plan your finances smartly. Common mistakes that most people would make when it comes to money is getting too deep in debt, paying bills late, and not knowing how to save for the future. You can avoid making these mistakes by always keeping track of where your money goes and knowing what you can spend on.

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"It's not the plan that is important, it's the planning" (Dr Graeme Edwards)

Involve your entire family in preparing a budget and agreeing on the family's income and expenditure. Teach your children how to save and spend wisely.