Importance of financial planning

This article is for information purposes only.

In a fear of missing out ( FOMO)  and you only live once ( YOLO)  world where we make life choices based on what we see online or what your friends do, it’s easy to get distracted and lose sight of where we want to be financially. Maybe you’re in your 20s, life is still a series of try-outs. Afterall, that Spotify and Netflix account you share with your circle of friends is not going to put too much of a dent on the savings you’ve set aside for your BTO down payment. But the fact is, you don’t know where life is going to take you.

Preparing for the future

You were probably encouraged to save as a child. Saving is still a good habit and goes a long way in building your emergency funds. The general rule of thumb is to have at least six months  of your expenses set away for a rainy day so you have cash on hand for those unexpected moments like car repairs or even a sudden loss of income.

In addition to building an emergency fund, however, you should also pay attention to other aspects of your personal financial planning.

Based on data from Standard Chartered Goals Planner as at 31 January 2022  while women tend to save a lot, they don’t invest enough of their money. Compared to men, they tend to have more substantial savings , even though they express greater interest and intent to invest their money. Also, a majority of women today do not have enough funds to sustain them throughout their entire retirement period.

If you have not embarked on any kind of financial planning, and only have your emergency funds to fall back on today, ask yourself: How well am I able to deal with life’s milestones and unexpected events?

The importance of financial planning to meet your life’s goals

Financial planning can give you the freedom to meet your life’s milestones head on when they arrive, and can be key to securing your loved ones’ future.

However,  focusing on the big picture may not be easy.  Just as you’ve learnt that reading a map requires knowing where you are in order to map out your journey, your financial planning begins by understanding where you are, financially.  Knowing the financial planning tools at your disposal is a great way to start.

Standard Chartered Goals Planner is designed to help you map your financial goals, regardless of your net worth or financial literacy. From understanding your current financial standing to evaluating your insurance and investment options, and buying a property, it  gives you better control over your wealth goals, including tracking your fixed and living expenses against your household income, your various accounts, as well as your investment portfolio.

Planning for the long-term

Another essential aspect of financial planning is getting adequate protection insurance. Getting health and critical illness insurance at a young age means you’ll get to enjoy low insurance premiums. Remember—health problems tend to crop up later in life, and they can happen when you least expect it, which will adversely affect your insurance premiums. But aside from being adequately insured, depending on your risk profile, you may also opt for different types of life insurance, from term plans to investment-linked insurance plans that provide you with some investment opportunities.

This is a great way to start building your financial plan if you have yet to dip your toe into building a portfolio.

Invest as early as you possibly can.  Successful investing requires time and patience.

A potential option is looking at a monthly investment plan in unit trust where you invest regularly in small amounts of $100. You can choose to invest in unit trusts. This dollar-cost averaging investment method allows you to accumulate more units when the price is low and less units when the price is high. It is fuss-free, affordable and allows you to benefit from the power of compounding as you can grow a small amount of savings into o substantial amount over time. When you invest, it also helps to reduce the effects of inflation on your money.

 What does this mean for you?

Take small steps in developing good financial habits and learn to manage your money early. Family and friends are good sounding board but seeking profession advice is key to achieving your goals.

Speak to a financial advisor to better understand how you can embark on financial planning. When you speak to a Standard Chartered financial advisor, they can tailor wealth solutions based on your personal needs.

Gaining financial insights through tools like Standard Chartered Goals Planner and even speaking to a financial advisor go a long way in helping you to navigate the complexities of financial planning no matter your age.

If you haven’t done so, don’t fret. What matters is that you begin today.