I failed miserably on my first (and second, and third) attempt at financial planning. I took the following steps I’m about to regurgitate, half heartedly. Meaning, I was all for “the show”- assuming I knew something about my financial goals and hoping it will work on itself.
But we all know that achieving financial prosperity is not an overnight win in a casino or a lotto hit. It’s a slow, painstaking process of discipline and money smart attitude. A recent study by a giant American banking Fin-Q showed that we Filipinos have low financial IQ (one out of ten!) Even physicians, who often have complicated financial portfolios rarely understood what financial planning really mean for us. Learning, understanding and creating a blueprint (through financial planning) is our way to personal and practice financial stability.
No matter what stage you are both personally and financially or what goals you’ve set for yourself (or your family) , the key to financial stability is first, ” knowing thy self”:
- Know how deep your “pocket” is. Academic degrees often do not reflect what is inside our pockets. There’s a good chances its not that deep and we’re just afraid to accept it. It took me one large columnar book, a logbook of my spending, a pencil, a calculator and another month sitting down my table computing for my net worth.I started determining what my assets are and then painstakingly subtracted the liabilities. I got my current net worth. I wasn’t surprised about my lilliputian net worth, but I’m appalled by the worthless spending spree I’ve indulge before!
- Worst,I borrowed money from someone else pockets (debts) they grew on leaps and bounds without me knowing! These liabilities all include my “obligations” and loans I incurred and been paying off for quite sometime. How much does these liabilities suck up on my earnings? Am I stuck waist deep?
- Not yet. Not until I examined my current earnings. How much “income” am I generating right now? How did I allocate it before?I wrote it down. I was spending more than what I’m being being paid for? The good things is, I’m not alone. Some 30% of the population spend more than what they earn. Welcome to the nilioner’s club! But this is not something I’m going to be proud off in the future.
- How much am I spending on everything? Ain’t got a clue. But when I woke up one day flat broke and my bills came banging at my door, I got hooked to jotting every single cent I spent on everything (including that diet coke and shuttle cocks I’ve wasted) for a month (three months supposed to be but I only got to religiously do this everyday for one month). Boy, I am not really happy of my spending habits! Are you?
- Then I looked at my age, and begun pondering, where I am right now? At what stage of the financial phase or ladder am I? Some people already earned their first million by the age of 21. I, on the other hand is still on the start up stage, meaning my income comes directly from my job. Nothing else.
- I went deeper into my personality. What are my spending traits?My spending demons? Psychologically, do I have unresolved spending issues from the pasts, unfulfilled wishes perhaps?Most financial planners and advisers would agree that these issues be understood and resolved first as these greatly affect our financial personality!
- But the hardest to dig upon, or at least in my case, is determining my unique potentials, my strengths and weaknesses as well as my business savvy-ness. But my being a good at interpersonal interactions and verbal command pooled me quite a number of loyal friends. I thought this might be a potential, as in the business of medicine, where communications with your patients is a must.
After conscientiously and honestly answering these questions, I wrote them down on the front page of my columnar notebook to remind me of who I am or where am I, financially, right now.
(Special thanks to the following money “advisers” who in indirect ways have made me develop these questions into my fit. Francisco J. Colayco PhD, his book Wealth within your Reach Pera Mo Palaguin Mo book 1 & 2; Salve Duplito of Money Smarts; and the other blogs of financial planners)