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A recent
survey of the Social Weather Stations indicated that
despite the many problems they faced in the past year,
nine out of 10 Filipinos, or 91 percent, have high hopes
for 2008.
Hopefulness is highest in Metro Manila at 95 percent, up
8 percent from 2006. This is closely followed by the
Visayas at 94 percent and the rest of Luzon at 91
percent.
In
Mindanao, 87 percent look forward to the New Year with
high hopes. The survey also revealed that having a
better family life is numero uno in the list of
New Year’s resolutions. Second on the list is to work
harder or look for work.
Filipinos are indeed a hopeful bunch. Unfortunately,
many are content with just being hopeful without doing
anything about it. What good is it to hope for a better
life for your family if you don’t do what’s necessary to
turn these dreams into reality?
A lot of
people complain about the sad state of their finances,
yet, they continue to do the same things; they continue
go about their lives with the same passive attitude;
they continue to succumb to their bad habits. If what
you’ve been doing all these years failed to improve the
financial condition of your family, isn’t it time to try
something else?
For a
change, try to make this year different. Let this be the
year that you will finally start acting on your dreams.
Use that hopefulness to fuel your burning desire to
achieve greater and better things for your family.
Begin by
overhauling yourself. Change the attitude, drop the bad
habits, do more of the things that will move you closer
to your dreams; create a plan of action.
To have
an organized and structured plan of action, do the
following:
Define
your goals.
Call it dreams, if that evokes a more powerful mental
image. To achieve greater things, you should have a
dream. And not just any dream, it should be a clearly
defined dream or goal.
Your
goals should be specific and as detailed as possible;
instead of “I want to retire rich,” state “I want to
have P5 million in retirement funds 20 years from now.”
Goals should also be achievable because unrealistic ones
set you up for failure and will only cause distress.
All
goals should have a deadline, so that you will have a
sense of urgency in working for it and let you monitor
your progress. With the Filipinos’ knack for doing
things at the last minute, not having a deadline means
it’s not going to be done at all!
Finally,
write down your goals; don’t keep them in your head
where they can be forgotten.
Prioritize your goals.
Like me,
you probably have many dreams in life. However, with
limited resources and time, we should prioritize our
goals.
Focus
should be given to those that are most important. It is
also a good idea to categorize your goals into
short-term (less than three years), medium (three to
seven years) and long-term (more than seven years).
Concentrate on the short-term goals.
However,
you should continue to take the necessary steps to
achieve the medium- and long-term goals. It is advisable
to slice up your targets into smaller subgoals which, in
turn, become short-term goals.
Assess
your financial standing.
After defining and prioritizing your goals, you need to
assess your current financial condition so you will be
able to gauge how near or far off you are from your
dreams.
You need
to take stock of what you currently have: savings,
investments, insurance, preneed plans, cash flow (a.k.a.
income and expense), etc., so you know how much
resources you have available to reach your goals.
If it
turns out that some of the goals you have written appear
unrealistic in view of your present financial status, go
ahead and change them. However, before you do, try to
think of ways you can achieve these seemingly
unrealistic goals despite the limited resources you
have. Chances are, you won’t downgrade these goals and
just decide to work harder for them.
Draw up
a plan.
Once you determine the resources at your disposal to
attain your goals, you will now create plans for
spending, saving and investing. A calculator will come
in handy when doing this.
When
projecting how much you need to save and invest, always
use compounding (i.e. growth is not linear) and take
into consideration the effects of inflation so you will
not “undersave” or “underinvest.”
Shop
around for investment products; your basic choices are
special savings and time deposits, insurance and preneed
plans, UITFs and mutual funds.
The
latter two have different varieties, which appeal to
different levels of investors’ risk tolerance. Forget
regular savings accounts; as an investment vehicle,
they’re for dummies. Remember to invest regularly and
consistently as well as diversify to maximize returns
over the long term (annual returns should be greater
than inflation rate).
Don’t
try to time the market; even experts with a room full of
machines can’t say for sure which way it’s going in the
future.
Implement and monitor your plan.
This is
actually the hardest part: doing what you’ve set out to
do.
Remember, plans rarely fail. It is the failure to follow
the plan that makes us fall short of our targets. Don’t
make excuses, just do it and stick to the plan.
Assess
your progress regularly, every three to six months. If
your investments are not giving the projected returns,
try switching to other alternatives or another company;
performances vary considerably between types of funds
and companies.
When a
situation arises that makes it difficult for you to
follow your plan (e.g. temporary loss of job or
prolonged sickness), then change it. Plans and goals are
not supposed to be set in stone; they should be modified
(upgraded or downgraded) to reflect changes in your
financial condition. Just don’t make changes to your
goals to accommodate lavish spending or because you’re
not willing to work hard for it.
Involve
your spouse as you go through the tasks above.
Financial planning should be a joint effort between
husband and wife. Sure, you can come up with an
impressive plan by your lonesome. But I’ll bet you my
left-over hamon, it’s not gonna work if you leave out
your spouse in the planning. Will he or she be able to
implement your plan if you suddenly suffer a stroke
after over-indulging on fatty food and booze during the
holiday season?
To
achieve marital bliss, learn to talk money with your
honey. I wish that you will both enjoy your journey
toward financial freedom!
****
Alvin T. Tabañag is a registered financial planner and a
member of the RFP Institute and the Association of RFPs
in the Philippines. He is the founder and training
director of AdvantagePlus Consulting & Training, which
is dedicated to promoting a culture of saving among
Filipinos through financial education. Comments and
questions about the article and other queries maybe
e-mailed to
advantageplus.info@yahoo.com.
Join the Ninth RFP Program (January 19 to March 8).
Visit www.rfp-philippines.com or inquire at info@rfp-philippines.com/Tel.
No. 634-2204. |
