Financial Planning: How to Begin? - Part 2
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While building your wealth foundation, list down all the things you want in life. These things should be SMART - specific, measurable, attainable, relevant and timely. Sort them according to your priorities - short-term (1-2 years), medium (2-5 years) and long-term (more than 5 years). Then monitor it every month if you are hitting the target or not.
Main goal: What do you want to achieve in life? You need to know this so that you know where to go. It's like traveling. If you don't know your destination then it's pointless.
- getting insurance - VUL/Term/Whole within the year with a budget of Pxxxx. Can start by September
- emergency fund - Target amount of Pxxxx to be completed on .... Already have Pxxx. The balance will be paid starting September. Monthly savings would be Pxxx.
- Travel fund - travel to Hongkong on .... Budget of Pxxxx. Compute how many months are you going to save before the travel date. Example: Travel date: September with a budget of P20,000. Ticket to be booked around March costing around P6,000 (on sale). Hotel to be booked around June. Can start saving by January. Monthly savings should be P20,000/8 months (Jan-Aug) = P2,500 per month. By March you will be able to save P7,500 for the ticket and by June a total amount of P15,000 - P6,000 (ticket)= P9,000.
- Memorial plan
- House & lot - Target date: 2018, Amount: Pxxx exclusive of furnishings, Furnishings budget: Pxxx, Loan or cash, Loan: how much is the downpayment plus other fees. Monthly amortization inclusive of MRI and fire insurance etc. After getting all needed information, compute if you can afford or not, how much are you willing to save and when will you start saving. The same as above procedure.
- Business fund
- Retirement fund
- Education fund for my baby