SEGMENTAL PLANNING
Most financial check-up’s will assess the attainment of a specific financial goal i.e. retirement, children tertiary education funding and investment planning.
Take planning for your children’s tertiary education for example. When you look at your children’s tertiary education funding as only 1 component by itself, you won’t know how it will affect your retirement planning. In reality, the more financial resources you provide for your children’s tertiary education, the less financial resources you will have available for your retirement funding. Hence a segmental approach doesn’t give you a realistic picture.
HOLISTIC APPROACH
The Roadmap to Financial Freedom on the other hand, takes a holistic approach and gives you the big picture overview of your financial status. It will look at all your financial needs and wants and forecast whether you will have the financial resources to meet them. Essentially, the Roadmap offers you a new financial management model and a fresh way of thinking about the future and how best to attain your goals.
There are hundreds of financial check-ups and financial planners in Malaysia. However, most if not, share an assumption that your finances can be compartmentalized and managed independently from each other. This is a mistake and certainly not effective.
By using a holistic approach, you will be able to see how one financial goal affects the other financial goals.
What can the Roadmap to Financial Freedom do for your personal financial management?
1. It helps you to define how much wealth is enough for you? In today’s society money talks. As a result, one tends to work untiringly to attain more wealth. The trouble starts when you don’t know when to stop.
2. It lets you find out the right code (combination) of the 5 essential elements of financial freedom
- Spending
- Inflation
- ROI
- Time
- Saving
The 5 essential elements are only academic unless we are able to apply them. You get to see how each of the essential elements work in unison:
The Right Spending
+ The Right Inflation
+ The Right ROI
+ The Right Time
+ The Right Saving
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Your Very Own Financial Freedom
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3. It lets you find out the actions and goals adjustment that you can make to reach an optimum point for your financial management –Financial freedom is not simply about making more money. It is essentially about how you balance your financial needs and wants with your financial resources. It’s about finding that optimum point! If you live your life and manage your wealth according to this optimum point, you will achieve your own level of financial freedom.
4. Once you identify the optimum point you will measure this with a set of key performance indicators (KPI) to keep yourself on track– With an optimum Roadmap you will be guided by a few key KPI’s. You will know how much savings you should target annually, your annual targeted ROI, your targeted level of expenditure and of course how inflation will affect your goals. As a result, you have a very clear guideline to effectively manage your wealth. As long as you manage your wealth according to these target KPIs, you’ll be on track to achieve financial freedom.
This article is written by Yap Ming Hui, Financial Coach and author of 5 best selling books on personal finance. To read and learn more tips and resources on Money Management, please visit www.yapminghui.com
