A person can only be considered to be financially successful if he is able to become financially independent. However, we see so many people struggling financially in their daily lives. The answer is simple – They are not doing the right thing in managing their finance. To become financially successful, you have to set your foundations correct first. This has since be my life-long beliefs and what I have been practicing – Foundational Financial Planning, guided by the 4 underlying principles:

A – Plan A. The foundation of a financial plan is predicated on having a long-term career supporting a rewarding and consistent cash flow throughout our working life. Today, we live in an era of exponential change and accelerated globalisation. There is no such thing as having an iron rice bowl anymore. Whether you are a working employee or being self-employed, you have to constantly upgrade your knowledge and skills to stay relevant in your industry, be adaptable for changes, and be prepared to go through occupational changes.  Therefore, “A” stands for the ability of earning an income. Without plan A, there is no way a financial plan can be constructed. 

B – Plan B. While having a long-term career is important, we cannot deny the fact that there are uncertainties in life that could topple our plans. Situations like premature death, catastrophic illnesses, occupational disability or even long-term unemployment are major financial risks which we need to manage. It’s also important to get your will and lasting power of attorney done, particularly when you have young children or dependents in your family. Plan B is about setting up a comprehensive risk management program, should Plan A fail.

C – Take Control. There is a proverbial wisdom that says “Take control of your money because it has four legs and a pair of wings”. The number one mistake people make is not taking control of their money. It can be a combination of bad money habits, impulsive spending behaviour, poor debt management or whatever reasons. To create wealth, you will need to know about your money management, and make it a priority.  It’s important to be aware of how you spend, save and grow your money, and tracking them. Taking control of your finance also involves taking action plans like buying insurance when you are in your pink of health, purchasing a home within your means, and managing your debts, etc.   

D – Living a Life with Dignity. There is a saying “Nobody plans to fail, but many fail to plan”.  Today we are all tied up in a fast-paced life, spending much of our busy lives working, paying off housing loans, and raising family. It is natural that financial planning will take a back seat, after all it is just a plan. However, it is important to think of the bigger picture. Can you imagine the consequences a family will face upon the demise of a bread winner? Without proper planning, the surviving family may have to downgrade their lifestyle and seek financial help. What about retirement planning? When a person has to stop working, whether is due to old age, health issues or prolonged economic downturn, how is he or she be able to survive if the savings cannot last long enough? So financial planning is immensely important and is a lifetime process which we have to manage it well. A sound financial plan allows us, and our family, to live a life with dignity.