FINANCIAL PLANNING SERIES – Part 2
We all do planning in our lives. Even the simple listing down of our day-to-day tasks is an act of planning.
However, when it comes to financial planning feels like a painstaking labour that we oftentimes opt not to do it. Perhaps, some simply lack the knowledge and understanding of how to do it. Others, may think that financial planning is only for those who have the monetary resources, to begin with. While the rest probably think it’s not necessary as they’re busy already busy with their lives.
Why do we plan?
Planning is an essential part of one’s journey — investment journey included. A plan gives you a clearer view of the end you want to achieve. If along the way you lost sight of your goal, your plan will keep you on track as this serves as your treasure map. A plan will help you understand why you started the investment in the first place, where you want to use this investment and how do you want to use it.
Like a map or blueprint, a plan lets you visualize where you’re at now, where you want to be or what you want to achieve in the future (could be in the next few weeks, months or even years), and what you need to do to get to that endpoint.
That said, planning is how you draw your way to your end goal. It gives you a picture of how you can get from one point to another, your other options, and what you need to bring with you as you go along your journey.
Conceptually, planning itself is simple and easy. For example, if you need to go someplace you haven’t been to, you’ll find out how to get there, which routes will take you there the fastest and the most cost-efficient way, and what time you should set off to go there. Once you’ve decided all of these, then all there’s left to do is to execute the plan – so you go there following the route, the mode of transportation, and the time you’ve chosen.
Planning or a plan only gets complicated when there are obstacles along the way or when a part of the plan turns out to be not viable. It is because of these very roadblocks that we actually plan.
During the course of planning, you’ll also get to list down or at least get familiarized with alternative routes and solutions. Remember that a plan is not just always Plan A – there should also be Plan B and Plan C and so on.
For example, when following the recipe of a dish, you get to see what ingredients you already have and what ingredients you still need to buy. If for some reason a particular ingredient is hard to come by, you can immediately assess whether it can be substituted with another ingredient or not and whether you can do without that ingredient. With the recipe as your plan, you need not waste so much time, effort, and money guessing the next steps.
Now that you have a clearer understanding of why planning is an essential part of your investment journey, we’ll now list down the steps you can follow to commence your financial planning in the next parts of this financial planning series. Stay Tuned.
You can check the first part of our Financial Planning Series, “Financial Habits in Malaysia and Around the World”, here.
You can also watch the first video of our Financial Planning Series here.
