When was the last time you looked at your financial situation and made a plan for the future? In Malaysia, there are many young people who are talented and intelligent in their fields but unfortunately most of them do not realize how important financial planning is for their future.
Why Is It Important?
Financial planning allows you to transform your income into real life goals. Do you want to have a big bungalow but you can’t afford it right now? How exactly can you raise enough money to own a property like this? Financial planning gives you the direction to work towards achieving your goals.
According to admin Servis SEO, When doing your financial planning, you may also find something lacking in your planning. For example, you may be surprised to realize that the flat rate on your savings account is growing but still not enough to cover your needs when retirement comes.
In short, planning finance should be seen as a guide to how you need to allocate your property and serve as awareness in knowing whether or not you’re planning was efficient in the past.
Become your own financial planner
It is a sure thing to be a planner for your own finances. Here are some simple steps you can follow to create a financial plan for yourself and your loved ones
1. Create a Balance Sheet
Do you still remember how you created a balance sheet for your work/company in the past? Now is the time for you to create one for yourself and your finances. Now that you know how your finances are, it’s also important to make sure you’re saving your money every month.
2. Income and Expenses
By subtracting your total monthly expenses from your total net income, you can calculate how much cash you have set aside for savings each month.
Apart from that, you can also calculate your debt ratio by taking the amount of your monthly commitments divided by the amount of your monthly gross income. Debt ratio is important for you to know because you don’t want to be burdened with debt because it will affect your loan application in the future, thus affecting the journey of your goals!
It is very important that you divide these three goals. Short-term goals can often be achieved by adjusting your spending. Long Term Goals can often be achieved by building your savings over at least a few years.
Retirement goals are a failing for young adults. What sets this goal apart from others where you will experience a loss of ability to have financial income when you retire later. Therefore when you are planning for this goal, you need to always be alert. And finally, this is how you achieve your goals.
When planning a strategy, there is no specific way of planning. However, we have general guidelines for your guidance. Your strategy should include these 4 important components:
- Insurance (not only an insurance product but as an additional plan if you don’t have one of the categories above)
By identifying and planning through these four components, you should be able to form a good plan and a guide to your goals!
Should You Do This Alone?
While doing your own financial planning can be economical, you may also want to consider hiring a professional financial planner for you. This is because some things such as investment, tax and insurance are very difficult for us who are not in the field to understand.
If you are still in the process of creating and managing your financial plan, there are many resources on the web that can help you. A very popular website in Malaysia today is Financial Planner Malaysia where you can download free money tips, and they offer users personal advice on various aspects of personal finance through Webinars and regular updates with their newsletter that can provide you knowledge for you to be your own financial planning.
Everyone should have a financial plan, especially for those new to their respective fields of work. The sooner you have made a financial plan, the sooner you can effectively move towards your goals. Imagine owning a house when you are only 30 years old compared to owning a house when you are 50 years old, this really shows the difference between having a financial plan early and later.