- There are simply not many Filipinos who can get by and survive this global health and economic crisis without their next paychecks, much less without a job.
- There are risks you are taking when you are neglecting the need to have a financial plan.
- Once this global economic and health crisis is over, consult a professional financial planner or wealth manager so you won’t be caught off guard in the future.
- Visit The Financial Today’s homepage for more stories.
Warren Buffett once said, “only when the tide goes out do you discover who’s been swimming naked.” The proverbial tide went out and it exposed how only a few of us were financially prepared for the worst when the COVID-19 came in. There are simply not many Filipinos who can get by and survive this global health and economic crisis without their next paychecks, much less without a job.
Most of us were caught off guard. Most of us don’t have any financial plans at all.
When the economy is doing good and everything seems to be fine, most of us feel a sense of security. We think that good times will last forever and that we can always create a financial plan in the future—today, you’ll just either enjoy the fruits of your labor or take care of your debt payments.
But what are the risks you are taking when you are neglecting the need to have a financial plan? Here are a few that you need to seriously consider:
You don’t know where you stand financially.
One of the first steps in creating a financial plan is to evaluate your current financial standing. In short, before you can create an actual plan, you need to know where you are today when it comes to your income, expenses, savings, and debt. This will be one of the key basis of your financial plan.
Without a financial plan, you wouldn’t be aware of your current financial standing. Without knowing where you stand financially today, it is hard to pinpoint where exactly to base your whole financial plan.
You have no clear financial goals.
Unfortunately, saying “I want to be wealthy” isn’t enough. A financial plan will help you identify, prioritize, track, and achieve your financial goals.
You don’t know the courses of action available to you.
Since you don’t have a financial plan, you only have a vague idea about your current financial standing. Because of this, you can’t clearly identify the courses of action that you need to take to achieve a healthy financial standing. Do you need to increase your income? Do you need to remove some expenses on your monthly budget? How much do you need to set aside to pay your debts? These are some of the questions a financial plan can help you answer so you can clearly see the available courses of action you can take to take control of your finances.
You don’t have any financial action plans to achieve your most important life goals.
Without a financial plan, having a set of life goals won’t be enough. Although it is important to know what you want to achieve in life, it is also vital to have a clear idea of the investment vehicles that you can use to achieve your goals and the risks associated with each asset class available to you.
Your financial plan will also identify your risk profile as an investor that will drive how your assets will be allocated in each investment class.
You don’t know when and how to rebalance your portfolio.
Creating and building a financial plan requires the assistance of an expert wealth manager. An expert in financial planning and wealth management will be the one to guide you in every step of the financial planning process including when and how to re-evaluate and rebalance your portfolio of assets depending on a lot of factors including the status of the economy, your financial standing, and your life goals.
As you just saw, a financial plan affects multiple aspects of your life from evaluating your current financial position, discovering your goals, learning the available courses of action you can take to control your finances, creating an action plan to achieve your life goals, to knowing when and how to rebalance your portfolio of assets to help you adjust with the current events of the economy and your own financial life.
Once this global economic and health crisis is over, do yourself a favor and consult a professional financial planner or wealth manager so you won’t be caught off guard in the future.