Getting to know yourself

Part of getting started with your wealth journey is "getting to know yourself".

What do we mean by this?

As humans, we have to understand that we are most vulnerable when we let our emotions do most of the talking and decision-making. And at times, when it comes to our personal finances, it is all about our behaviors.

Have you noticed or observed yourself the night before payday? What's the feeling?

Exciting and thrilling, isn't it? Well, that's because the majority of us are eager to buy something, especially when payday arrives. And in the end, when we have already bought what we want and end up without savings afterward, we regret it and feel at a loss. That frustrating feeling of not thinking because we purchase on impulse gets the best of us.

Now the question is, when it comes to our behaviors in handling our finances, is it a good thing or a bad thing?

Actually, it really all boils down to you. That's why when we decide, it should be both logical and gut feeling.

We based it on facts and reason.
We have to understand and remind ourselves that our income is the source of our livelihood and that we also need to prepare funds for our future. Because if we keep letting our impulses rule us, we won't be able to get things in order with our finances. We always end up at square one. That is why DISCIPLINE and commitment both play big roles in our personal finances.

20% Skills

and 80% Behavior

Building your future

Now that we understand that personal finances are all about behaviors, we can agree that it is time for us to prepare and build for our future. Why plan for the future? Well, simply put, because...

Time is constantly moving forward. And we will all need funds in the near future.

Not only do we have to prepare for the future, but part of the future is us fulfilling those dreams we have always wanted since we were young. That dream house, that dream car, that dream travel expedition, and even that dream business.

And did you know that the reason we need to build our finances for the future is that we will constantly battle a natural phenomenon that will never go away?

What is that? It's called inflation.

Inflation is when the prices of things and services, increase. When the overall price level goes up, each unit of cash can buy fewer goods and services. This means that inflation means that money has less power to buy things.

So the question is, "How well prepared are you?"

This is where your income plays an integral part in building your wealth for the future. Because there is no other source that can do this but your income alone. The more income you have, the better. If your money works for you while you are asleep, that would be great. This is why preparing, saving, investing, and managing our finances

Wouldn't that be amazing if we got this started?

Your income is the most powerful tool in building your wealth.

-Dave Ramsey

The Four Basic Financial Planning Principles

Through your commitment and dedication, you can make your vision a reality.

#1 - Know what you want

The start of any financial planning is to know what you want to have and what you want to happen. Unless there is a clear financial goal or destination, we can never determine our direction.

#2 - Know what you have

Now that we know what we want to achieve, it's time for us to look into what we currently have with our finances and understand the importance of setting aside our financial goals.

#3 - Bridge the gap

We bridge the gap between WHAT WE WANT and WHAT WE HAVE by looking at our cash flow. Understanding the current condition of our income and expenses will allow us to determine the actions we need to take by budgeting, managing our expenses, and expanding our income and investments in order to set aside money for our financial goals.

#4 - Stay focus and committed

The most important thing you can do to reach your financial targets is to commit to the things you pledge to accomplish. With the help of a financial planner like me, we can come up with ways for you to start saving and implementing funds so that you can reach your financial goals in the near future.

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The Hierarchy of Financial Needs

Covering our financial bases first

With our understanding of the four basic financial planning principles, let us now start by preparing the funds we need to prepare first before we can go all out with whatever investments we want to have.

The Hierarchy of Financial Needs is our guide for this.

Like building a house, we start by building the foundations of our wealth portfolio. This is where Wealth Protection comes in, which happens to be the first layer of the Hierarchy of Financial Needs. Adequate Health Insurance and Life Insurance Plans are what you would need in order to build a strong, solid foundation.

Wealth Production is the second layer that we need to create. We cannot live on our savings alone; that is the reason why our income needs to multiply, and therefore investing is our solution for this. We invest in order for our money to grow, even while we are sleeping. So that by the time we reach either retirement age or our children are in college, we have financial provisions we can collect and utilize for both financial needs.

The third layer focuses on reserving the funds we have built; therefore, we preserve what we have accumulated through Wealth Preservation. What is wealth preservation? This is the stage where we have already preserved or set aside funds that can either pay for our taxes or financial provisions that we earn from interest, based on financial instruments that we have accumulated, or even insurance proceeds that we can leave to the future generations of our families as their legacy from us as we grow old.