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How to Start Financial Planning: A 101 Guide

08 August 2019 | 2-mins read


Just starting work, or finally got down to looking at the numbers in your life? Personal ​financial planning is essential to achieve financial security and long-term goals. It is an ongoing process that involves assessing your financial situation, setting goals, and creating a plan to achieve them. Here is a quick guide on how to get started with financial planning – an ongoing process that helps you to approach your life goals. 

Financial planning 101 guide with Manulife Singapore

What is Financial Planning?

Financial planning refers to an in-depth review of your financial situation; and from that information, develop a strategy to help you reach quantifiable goals. For example, your goal maybe an income of S$2,500, adjusted for inflation, by the time you retire in 2047. To achieve that goal, you would need to work out the total amount you need to save and invest, as well as type of financial instruments you should buy (e.g. endowment plans, unit trusts, equities, bonds, and so forth). This would constitute a financial plan for retirement.

A financial plan should be customised to the individual's needs and objectives. There's no "one-size-fits-all" approach to financial planning. Below is a guide on how you can get started on your financial planning. 


Why is it important to undertake financial planning?

Financial planning helps you gain control over your finances. By assessing your current financial situation and creating a plan, you can manage your money more effectively and make better financial decisions.

It also helps you achieve your long-term goals. Whether it's building your retirement portfolio, buying a house, or starting a business, having a plan in place will help you stay focused and motivated to achieve your goals.

Ultimately, financial planning helps you reduce stress and worry about money. When you have a plan in place and feel in control of your finances, you can enjoy a better quality of life and focus on the things that matter most to you.


What are the 3 steps of financial planning?

1. Set a budget and track expenses

Being in control of your finances is a great start to financial planning.

How much of my salary should I save?

A starting guide would be the 50/30/20 rule1 where you allocate 50% of your monthly budget to essentials like housing, utilities, food and transport; 30% towards lifestyle and recreational activities; and the remaining 20% towards savings, insurance and investments. 

Look for investment opportunities to make your money work harder for you. An example of how you can do so is through Manulife InvestReady (III), a whole-life regular premium investment-linked plan that offers access to over 100 funds including dividend-paying funds for potential income. 

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Diversify your portfolio with access to a diverse range of funds

After setting your budget, it is important to track actual expenses. If your actual expenses exceed your budget for consecutively a few months, maybe you need to review your budget again. This will help to ensure that you are on the right track to achieving your goals. 

2. Set quantifiable goals

An example of this would be "to accumulate S$50,000 to make the down payment of a flat by age 32", or "to build a stock portfolio that pays S$1,000 a month in dividends in 25 years”. Financial planning should not involve vague goals, such as "make more money". Once you set your quantifiable goals, you can do the math and adjust your budget to achieve your goals. 

Also, it's important to speak to a qualified financial consultant at least once every six months. This is for you to undergo a financial review to fine-tune your range of assets (e.g. portfolio rebalancing) to help you get closer to your goals.


3. Have a fluid financial plan

Many things can happen between today and your retirement. Your portfolio of assets – and long term financial goals – may have to change. Factors such as marriage, becoming self-employed, litigation, or an economic recession may require changes to be made to your plan. Therefore, it’s important to review your financial plan regularly to ensure that you are on track to getting closer to your goals. 


How often should I review my financial plan?

Speak to a qualified financial consultant at least once every six months for a financial review and fine-tune your range of assets (e.g. portfolio rebalancing) to help you get closer to your goals.

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