Financial planning tips you should take note of!
Financial planning is an important part of everyone's life to ensure financial stability. Whether you are young, old, or in between, good financial planning will help keep your finances in order. This includes having a well-thought-out savings plan for emergencies and retirement.
Why financial planning is important
First of all, the cost of living in the Philippines has been increasing quite rapidly and it does not seem to be slowing down anytime soon. This is due in part to the rising inflation rate in the country, as well as several external factors like the ongoing global port congestion. Over 11.5% of the world’s total product inventory has been taken off the market due to delays in delivery, which isn’t likely to improve anytime soon. Because of this, prices of goods are seen to rise and what deliveries are still pushing through are expected to be delayed. This congestion is also causing shipping rates to rise, further hiking the prices of goods worldwide.
Furthermore, the Philippine population is also growing at a fast rate. This means more competition for jobs and other opportunities. So, Filipinos need to start planning for their future right now in order to secure themselves financially in the future.
Secondly, it has become evident that the government will not be able to help all of those who are in need of financial assistance. This is because the economic growth generated by the government and private sectors is not evenly distributed among all citizens. While large corporations and businesses will be benefitting from said growth, many citizens such as employees and employees are struggling to meet their needs.
Financial planning tips for 2022
Here are some financial planning tips for Filipinos in the year 2022 to help them secure their finances:
1. The first tip is to start saving up right now. If you have not been able to save money so far, it will be too late to start when you get older as the possibility of losing your income due to retrenchment increases. On top of this, living is more expensive as you age due to the different illnesses acquired due to old age. It is never advisable to rely on social security from the government or from your family members when you get old because this is not always a guaranteed source of income.
The best way to save up is to start with a small amount and increase it over time. Do not expect that you will be able to save up a large sum of money overnight, as that is close to impossible. Make it a habit to consistently save, and not just put money away when you feel like it. A good starting point would be to deposit 10% of your monthly income into a savings account dedicated just towards building your savings.
2. During this time, it is advisable to have multiple sources of income. If you rely solely on your paycheck (which is referred to as an active income), if you ever get retrenched or laid off, you automatically lose 100% of your income. It’s best to have multiple income streams: active (or your current salary), passive (money you receive without actively needing to do anything such as rental properties), and a portfolio income (money that comes from your investments).
3. Another tip is to invest your money properly and avoid unnecessary expenses that do not generate any income for you. For example, instead of buying expensive luxury clothes/bags/shoes, just buy ordinary clothing and focus on investing your money in other assets such as mutual funds. Savings accounts and insurance policies are also good investments if you want to keep your money safe while at the same time earning interest.
4. Invest in insurance to provide your family with financial stability in the case of an emergency. For example, having health insurance protects you and your loved ones against health issues that can be costly to treat. Life insurance is also very important in case anything happens to you.
5. Lastly, invest some time to learn about personal finance properly so that you are well-informed on how to properly manage your money and avoid making unnecessary mistakes. You can consult a financial planner or read personal finance blogs to learn more about how you need to manage your finances in the future.
Taking the time to develop a financial plan is one of the best things you can do for yourself and your loved ones. You don’t have to do it alone, either – you can consult with a professional Financial Advisor to help you get started. With a little effort, you can create a roadmap for your financial future that will give you peace of mind and security for years to come.
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