The four stages of financial planning

Posted 6 November, 2016 by Surely
in Educate Yourself

Do you remember your favourite school teacher?
The one who doted on your more than the rest.
Perhaps the one who made your parents so proud of you by complimenting you during the Parent-Teacher meetings.

The one who inspired in my school days was my Primary 3 Maths teacher.
She was a large-bodied auntie with a curly yet fluffy Afro-like top.
A bit like what you imagine of a Japanese middle-aged Oba-san.

I loved everything that she taught me and soaked up every piece of information and advice that she dispensed
It was amazing how one teacher could influence a young mind.
Till today, I never really understood why I liked her so much.

Yet, she did teach me a lesson that I had to unlearn much later on.
“The best Mathematician love to skip steps.”
While it may work time to time, I found out that skipping steps would usually end up biting me in the ass.

When you memorize the questions but do not understand the subject, you tend to receive a failing grade in your exams.
If you try to drive a car without a license, you will end up in jail.
Should you decide to woo a fine lady without flowers, well … good luck to you!


And you keep wondering why

And you keep wondering why.


It goes without saying that the same applies to financial planning.
Thankfully, my beloved Maths teacher had already retired so I would be conducting classes today.
Unlucky for you, we are not skipping any stages today.


Stage One: The Realization


What did you have for breakfast two days ago?
A simple yet almost impossible-to-answer question.
Because we were likely operating in an auto-pilot mode at that time.

Don’t get me wrong – I love autopilot!
It makes mundane things a little more palatable.
However, too much of it is bad.
We allow ourselves to be complacent and overlook things.


Source: SGAG

Source: SGAG


The awareness that you need to plan for your financial future is important.
To prepare for your retirement, to safeguard your income and to protect those who you love.
The day that you developed this consciousness is the day you truly matures.

Some people live day-to-day without a plan or any contemplation of other people.
Congratulations !!
By virtue of being a reader to this blog, you are not one of them.


Stage 2: Information Collection


Getting down to work is the second step.
The awareness that you need to do something is insufficient.
You gotta know what to do.

First thing first, you have to set your goals.
Everyone has different ambitions
Some crave for early financial freedom whereas others may settle for retirement at a later age.

Some parents like to provide their children with everything from fine education to inheritance.
Others prefer a lasse faire approach so that their children may learn to be independent.
All these and other considerations must be factored in when setting your targets.

Next, you have to know how to attain your goals.

How insurance may help to preserve your way of life.
What financial instruments may help you reach your goals quicker?
Why are some products riskier than other?
These are just some questions to be answered in your quest to formulate a financial plan.

Financial advisers are helpful at this stage.
But they are not your only sources.


The power of financial planning. Maybe in this case, just tax evasion.

The power of financial planning. Maybe, just tax evasion.


Research the technical questions online.
Talk to the people around you and gather ideas
You may pick up some tips that you can never get off the internet or your financial planner.


Stage three: The Decision


By now, you should be armed with the essential financial knowledge to help you make a decision.
You have to make up your mind on which plans to execute.

This is the stage that many find it the most difficult.
They are worried about whether they are astute enough to know what to do.
Instead of deciding, they leave that to their financial advisers.

Newsflash !
Your adviser does not need to face the consequences of ill-conceived financial planning.
You do.

And you are the best person to evaluate what matters the most to you.
You know how much you value each possession and each person in your life.
It is impossible for anyone else to help you with that.


You value your own baby much more than any other kid.

You value your own baby much more than any other kid.


Remember that there is no such thing as perfect financial planning.
Things happen in life that is just beyond your control & expectation – recession, illness, accident, etc.
Decide what matters to you the most and prioritize them.


Stage 4: The Follow Through


Those who plays racket sports understand how important the follow through is.
It helps the player to maintain more control and generate better power.
It is no different in financial planning.


Maria agrees wholeheartedly.

Maria agrees wholeheartedly.


Most financial instruments need regular maintenance.
Checking up on the prices of your equities and rebalancing your portfolio are vital.
You need to review your insurance needs after major events in life.

Financial planning is not a one-time event.
It requires occasional reviews so as to maintain its efficiency and trajectory.

Moreover, you have to ensure that your intended recipient will receive the fruits of your careful planning.
We are talking about making a will.
Naming or nominating your insurance beneficiary is a viable alternative.

In addition, you have to inform your loved ones about your financial plans so that they are in good position to take advantage of them.
You may not be around or not well enough to communicate.
If someone knows your insurance portfolio well, he/she may help you with the claims with expedited speed.


A process that does not end.


When it is mapped out so clearly, it is clear that skipping a step is a no-no.
Without the first stage, the whole financial planning will not happen.
If you skip the second stage, you are bound to make an ill-informed decision.

The whole process is cyclical in nature.
When you does a periodical review, you may discover that you have a new goal or protection need.
You go back to stage one – lather, rinse and repeat.

When you miss a step, it may end up jamming the whole system.
Your goal may fall short; your loved one may go unprotected.
What is the whole point of financial planning when that occurs?

Don’t procrastinate.
Don’t skip steps.
And start your financial planning today. aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

Do you agree with us?
Or do you think that there are more to financial planning?
Share with us in the comments.

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