Categories: Personal Finance


Financial planning

With the global markets buffeted by the impact of COVID-19 and the oil price war, it’s natural to be concerned about the rapidly shifting investment landscape and how it affects our financial goals.

With more than 20 years of learning and advising client’s financial portfolio, I have come to appreciate the disciplines of financial planning.

The world is always looking out for new ideas, trying creative ways of turning a profit only to lose much of their wealth. These disciplines have stood the test of time and will continue to hold true.

  1. Think long-term and invest with goals.
  2. Spend less than you earn.
  3. Maintain liquidity (an emergency savings).
  4. Minimise the use of debt.

As you can see, they are simple yet not easy to carry through. They seem common-sense yet often forgotten.

Specific financial plans require in depth insights to arrive at specific objectives and goals. They need to take into account regulations, laws, taxes, etc., based on specific circumstances.

But these are core disciplines to build your financial lives that would be more shock-proof in a fast changing and uncertain world.

The 4 disciplines of Financial Success should be the core, the base and the beginning of everyone’s planning. If your foundation is built on these core disciplines, you will be more able to make your financial plans work, both during good and challenging times.

Let me expand and explain.

Think long term.
First you need to know what you earn and what you’re spending. Write them down. Call it a ‘budget’ or not but get as close as you practically can so that you know your numbers and you can monitor them.

Develop self-control on spending. If you spend less than you earn over a long period, you’ll more likely do well.

Always understand that we only earn what we saved.

Maintain emergency savings.
This reserve set aside will help you ride out life’s surprises. You will need to be spending less than you earn in order to build savings.

And this savings will help you avoid debt, and perhaps relieve potential stressful moments too.

Minimise the use of bad debts.
I have shared with many of my clients about debt management. There are “good” debts and “bad” debts. When you increase bad debts, you increase your risk. It may allow you to have more now, but it will detract from your abilities to save and invest in the future. Financial problems are usually magnified with bad debts.

It is easy to overlook these simple financial disciplines.

But in good times or bad, recession or boom, inflation or deflation, these principles have stood the test of time. They will help you grow your wealth, increase your ability to take advantage of opportunities when they present themselves.

Talk to your advisors to review your portfolio soon.