Introduction to Financial Planning and Life Planning
8/17/2015 03:18:00 pm
Bismillah.
Assalammualaikum everyone!
As I have shared last Friday about The Journey. In this post, I'm sharing with you on Financial Planning and Life Planning.
First and foremost, let's recap based on my old post on the definition of Needs and Wants, as we all know that in different stages in life, individuals have different needs.
Needs
Urgent want, as of something requisite. (Dictionary.com)
Wants
To feel a need, a desire for; wish for. (Dictionary.com)
Financial Planning is about planning ahead in terms of financial for every stages of an individual's life, which should be in line with their Life Planning. Life Planning is a set of goals that you have set for yourself, for the next 5 years, 10 years, 20 years etc.
Here is an example of how you can actually do up your own Life Plan and Financial Plan, all in one table as per image below:
Keep in mind that at every stages in our life, there are different Needs. Here are the following list of Needs that we commonly know of:
Young (Age 1 to 25)
At the young age of 7 years to 16 years old, most of our parents would give us pocket money for our daily lunch in school, ranging from as low as $2 to $10 a day (depends on inflation and at which era). Our parents will make the effort to teach us how to save our money, providing us a coin box to save at least 50 cents a day or more. Some of us will be enthusiastic at aiming a certain amount of savings in order to purchase the things we need or want. Some of our parents will encourage us to earn our own money, by doing housechores.
At the age of 17 years to 20 years, where some teens tend to explore working part-time jobs to gain experience and earn some extra cash to finance our school fees (partially) or to finance our expenses. This should be a good time to start saving for future expenses such as paying back your school loan or laptop loan.
At age 21 years to 25 years, where young adults just graduated from polytechnic and university. Majority with CPF Education Loans or Bank Loans that needs to be paid after 6mths upon graduation. Identify your expenses and list them down like this:
I will continue to explain further for the rest of the life stages in my next blogpost this coming Friday, insyaallah. Aamiin.
Wassalam.
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