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What Is The Single Most Important Lesson You Learnt In Personal Finance?

I was invited to contribute my thoughts for Personal Finance Blog Carnival.

The question goes…

“What is the single most important lesson you learnt in personal finance?”

Here are my thoughts 🙂 

Managing your personal finance is the responsibility of every individual.

Be it, if you are a student, an employee, a business person, a full time investor, EVERYONE, I meant all of us, has the inherent responsibility to manage our finance well.

The most important lesson, I learnt in personal finance, boils down to setting financial goals.

In my capacity as a financial associate in Singapore, I get to talk to lots of people, every single day.

I realise most of them have an insurance plan, have an endowment plan, have an investment linked policy, yet many do not set that OBJECTIVES for having those plans.

When asked, “Why do you get that endowment plan?”

Most will answer, “For savings purpose.”

When pressed for specific objectives, most will retort, “Don’t know. Just savings”.

You need to set your objectives right.

You need to set up your objectives clear.

Soccerplayer

A soccer player can’t score goals, if he does not know where his goal post is.

An athlete in the Olympics cannot win the game, if he is not clear on the perquisites to winning.

You get life insurance, for your coverage against death, permanent disability and 30 critical illnesses.

You save your money in the bank as a form of contingency funds for emergency use or for your everyday use.

You save your money in endowments, in investment linked products for child’s university education, for your retirement or simply to improve your living standards in the future.

The goal, the time frame and where you money is allocated to; everything is instrumental to your financial success.

Being clear of what exactly you want, and how much exactly you need, will help you in achieving your financial goals.

When setting financial goals, I always share with my clients this simple acronym, simple formula, which I termed as SMART.

Your goal must be Specific, Measurable, Attainable, Realistic and Timely.

1)     Specific.

What is your OBJECTIVE of getting that savings plan?

How much money exactly, do you want to accumulate?

2)    Measurable

Your goal must be measurable.

If your child is 8 years old, and 10 years later, she wants to go to a local university; do you have at least $84,000 for her 3 years university education?

3)    Attainable

When you identify the goals that are important to you, you must find ways to make them come true.

Align yourself with professionals to ATTAIN your goals. 

Align with people who already achieved the outcome you want, and learn from them.

4)    Realistic

If you have been saving only $100 per month, to save $1000 per month in an endowment plan now, may seems farfetched.

Unrealistic.

Set yourself, a realistic goal.

5)    Timely

When exactly do you need, the money that you has saved?

10 years? 15 years? 20 years?

You decide!

So, just remember, setting financial goals are important, and when you set those goals, make sure it is SMART financial goals.

Thank you. We will catch up soon. 🙂 

 

p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…

Whole Life Insurance Is Very Important

I feel sad, reading from other people blogs, supposedly “to promote the importance of having an insurance plan“, condemning life insurance agents.

I prefer to stay out of this debate as I feel, the points brought forward are negatively biased.

I DONT MIXED with negative people.

To all my comrades out there, continue to preach on others, the importance of insurance, the importance of savings and the importance of investments.

As what Freddie said in the video below, “they will never know when their thunderstorm will come”.

 

p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…

Some People Dont Need Insurance: Yes…Believe Me. It May Be YOU! :)

When I talk to my clients, some of them say that they don’t need insurance.

To me there is only one type of people who don’t need insurance.

Who are they?

The Ultra-Rich.

Heck…Bill Gates dont need insurance.

Warren Buffet dont need insurance.

The ultra-rich have millions or billions of dollars they can afford to spent.

However majority of us need insurance.

You buy life insurance not because of the “returns” that you can get.

You buy life insurance not for yourself.

You buy life insurance because you love someone and because someone loves you.

Imagine you are the sole-breadwinner in your family, supporting your wife and kids.

Touch wood, if anything were to happen to that very sole-breadwinner, the family is gonna suffer.

If the sole-breadwinner do not have health insurance, the family is going to be drained financially for them to pay for the hospital bills.

If the sole-breadwinner were to met with death, permanent disablity or critical illness, the family will be in deep trouble if the sole breadwinner do not have any insurance with him.

Expenses still goes on and the wife may have to work.

AND…who is going to take care of the kids.

If the husband, the sole breadwinner have an insurance policies in place, and anything were to happen to him the family will be left with an estate/sum assured.

Usually few hundred thousand dollars.

The family can depend on that money to carry on with life, and will be thankful to the deceased for his extra mile of financial planning.

Friends, insurance is important!

You need it!

 

p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…