OBJECTIVES OF FINANCIAL PLANNING

Achieving your dreams

Someday you would like to quit your job and start your own cafe, or a boutique, or do your MBA, or tour the world. If you don't plan for these things, chances are they'll just remain dreams. You will never have the right resources to go about achieving them.

The difference between someone who plans and someone who doesn't, is that the one who plans, puts it into action, whilst the one who doesn't, just talks. You've met these people before. They keep having little crises in their lives, which they claim prevent them from doing what they want. So it is the time for you to take control of your life.

List down the things you want to do. Find out how much they cost, and embark on a mission towards achieving the right resources in order to be able to afford them.

When your mind is focused this way, you start to be aware of every dollar that you spend and earn. Does it help you achieve your goals? You will have better control of your money, and not be left with very little at the end of every month, and wondering where it all went.

Financial Independence

Can you imagine a time when you are no more a slave to money? When you can do anything you want at any time that you want? The time when you no longer have to work but have enough money not to worry about the major expenses in life, we call that Financial Independence.

It's different from retirement. You may still continue to work if you enjoy it. But your have the resources to stop working anytime should you wish to.

Financial Independence is different for everybody. It really depends on your lifestyle needs. If you can be happy with small flat, you are likely to reach your Financial Independence sooner than if you have to live in a landed property.

Financial Independence doesn't just happen. You have to plan for it. Those who do tend to achieve it sooner than those who don't.

Prudence is a way to achieve the objective

In the book "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" by Thomas J. Stanley and William D. Danko, the authors discovered that the typical American millionaire does not fit the stereo-typical idea of a millionaire. Most of us would think that millionaires are characterized by their big houses, flashy sport cars and expensive jewelry. But what the authors discovered was that most of America's millionaires were average people, living in average houses, driving American-made cars. They tend to have small businesses of their own, and their lives are characterized by long working hours and a high level of prudence in how they spend their money. That's how they amassed their fortune.

So what our parents taught us when we were very young is right. If we work hard and spend little, our chances of making it is a lot higher. If you constantly feel that you need more luxuries in your life, then you may forever be asset-rich, but cash-poor, and certainly a long distance off from financial independence.

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