Great Expectation: How To Plan For Your Family’s Future (Part 1/3)

How To Plan For Your Family’s Future (Part 1/3)
No matter what your income level is, early planning for financial security is always the best course of action. Here, some tips on how to get started!

STARTING a family is probably the biggest responsibility you’ll undertake. Taking care of your spouse, your kids and your extended family requires much thought, attention and love. It also means having to manage your finances right.

WHY PLAN NOW?
Most of us are going to live longer. Fifty years ago, the average life expectancy in Singapore was just 61 years old. Today, the average life expectancy is 80 years old and many people will live beyond that. If we want to ensure our golden years are smooth and pleasant, we need to be self-reliant and start financial planning early. Our plans need to take into account rising costs, an ever-changing job environment, and most importantly, our growing families.

The lessons we learn from planning and managing our finances will also be invaluable to our children. Passing on good money management habits to our children should hopefully translate into lives less troubled by monetary woes. With increasingly smaller families, there will be fewer economically active persons to support an elderly one. Therefore, it is important to plan early for a secure retirement as well as reduce some of that burden for our younger family members.

Our financial security and that of our family’s is our responsibility, no matter what our income levels. A healthy CPF balance helps but may not be enough. Everyone should have a financial plan, tailored to our needs, lifestyle preferences, attitudes to finance and appetites for risk. Our plans might also reflect the different life stage we are at.

WHAT IS FINANCIAL PLANNING?
Financial planning should minimally comprise setting some financial goals or objectives and mapping out how we achieve them. A financial plan should minimally cover the following areas:

Cash-flow Management: this is about living within our means. Our expenses should never exceed our incomes and ideally we should be setting aside sufficient money and other assets to meet future financial goals.

Risk Management: this refers to taking precautions to make sure that our families will have enough income to live on in the event of unforeseen circumstances such as premature death, disabilities or illness.

Investment Planning: this relates to investing our savings to meet our investment goals and grow our wealth. There are many financial products and investments to choose from depending on a person’s appetite for risk and understanding of the different products.

Retirement Planning: this relates to building up wealth during our working years to achieve financial independence when we retire.

NEXT: FIVE TIPS TO BASIC FINANCIAL PLANNING FOR YOUR FAMILY

Source: Great Expectation: How To Plan For Your Family’s Future (Part 1/3)