Financial Planning is unique for each individual. A good plan is important for a stable and promising future. Here are some quick tips to get started on your Financial Planning.
Guideline For Your Age & Focus
- Late Millennials (below 25): Pay off any debts (e.g. student loans), live frugally (set a budget), grow income.
- Millennials/Gen Y (25-34): Build savings, start investing, buy your 1st property.
- Gen X (35-44): Marriage & mortgage years, balance expenses, child care & education planning, invest as much as possible.
- Late Boomers (45-54): Plan for retirement, good returns from investment/savings.
- Baby Boomers (55-64): Slow down spending and get ready for retirement, hold on to stable investments & increase savings.
- Seniors (65+): Live on savings & investment income, leave a legacy for loved ones & charity.
Financial Planning Checklist
- Emergency savings fund: 3-6 months of your salary
(If you earn RM2000/mth, have at least RM6000 in your emergency fund) - Insurance: Get medical & critical illness plan
(It should cost less than 10% of your net income) - Investment: at least 10% of net income
- Plan your cash flow & set a spending budget. Put money aside for what’s important such as savings, investments, and debt.
- Create your investment portfolio. Learn how to invest and/or get help from trusted portfolio consultants
- Plan your retirement fund
- Track your numbers & review your financial plan regularly (once every 6 months)
Risk Management (Insurance and WIll) Checklist
- Medical coverage: coverage for medical bills, hospitalisation, surgery & treatment
- Income replacement: coverage for yourself & dependents upon death, disability or critical illnesses
- Debt cancellation: to cover all or part of debts and loans (e.g. home/business loans)
- Legacy planning: leaving a gift for loved ones or for charitable causes
Investment Tips
- Learn about investments and work with a portfolio consultant you trust.
- Be skeptical about hot tips even from friends.
- Your overall portfolio allocation between high risk:low risk should be based on your financial goals or ideal retirement age.
- Diversify but do not over-diversify (3 to 10 investments would be enough)
- Track your investment performance regularly. How often depends on whether it is a short-term or long-term investment. You decide.
- Don’t hesitate to cut your losses.
- Seek help and advice from an investment advisor
