How to prepare your Personal Financial Plan?

Most of us are asking, how can we create our own financial plan to better manage our money

as well as our future. It may surprise you to learn that a few basic financial principles are all

you need to understand to enable you to make better decisions.

COMMON PROBLEMS:

If you haven’t noticed yet, the truth is, the biggest money problems all come from living our life.

There is nothing wrong with any of these expenses. Almost everyone has them. The trouble

is when one of them gets out of balance from the others, and starts becoming a drain on your

finances. Everyone has housing, food, and more. It’s a must. You can’t let it stop you from living.

But you also can’t let it stop you from saving or investing. You need to balance.

HOW TO COPE UP:

Your first most important step to financial freedom is to resolve to take action towards gaining it.

Believe you can do it!

Know where you are financially. If you are using a map to find directions to a place where you want to go,

you also need to know where you are on that map - the point mark "YOU ARE HERE".

The road to a financial freedom requires that you first must know:

1. What assets and other resources you have now?

2. How much debt and other obligations you have now?

3. What is your financially worth?

4. How much income are you generating now?

And the most important thing,

5. How much you are spending now?

Now, How much MUST you save every year?

This is the hardest part for us, specially when Christmas season will soon be here (not to mention Birthdays, Anniversaries, etc.)

Our fundamental savings rule is that 20 percent of your Gross Regular Monthly Income (GRMI) should be saved.

Your 20 percent savings should be distributed as follows:

- Cash reserves - 10 percent of your GRMI

- Term Life Insurance

- Medical or Hospital Insurance

- Long term savings Plan

Furthermore, we also need to find out in particular the amount you need to save for a lifestyle that you hope or want to have

when you retire or, conversely, what kind of lifestyle you will have at retirement given the amount of money that you set

aside at present.

BE A SMART SAVER!

Being a smart saver can tremendously increase the amount of money you can have when you retire.

START EARLY.

- Do not withdraw the interest or whatever the money you haveset aside has earned.

- Keep it intact with the principal

- Learn about available "Investment Instruments" that can give youhigher interest without necessarily

making your investment more risky.

LEARN HOW TO KEEP YOUR MONEY AND GROW IT.

In growing money, you have to educate yourself on the available investment opportunities

Each investments has to be studied in terms of three important criteria: RISK, RETURN and LIQUIDITY

TYPE OF INVESTMENTS:

1. Treasury Bills or Treasury Notes (or Government Securities)

2. Time Deposit

3. Equities/ Stock Investments

4. Unit Investment Trust Fund (UITF)

5. Mutual Funds (also known as Investment Companies)

Simple living, both now and when you retire, will also help a lot in making the process of saving for the future less painful today.

SAVE - EARN - LEARN