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IN last week’s column, I discussed some telltale signs of deep financial trouble.

These signs include having little or no savings, living from paycheck to paycheck, missing credit card payments, borrowing money to pay for debts, and not knowing how much money you owe until your bills arrive.

In this article, I am going to talk about financial planning and how important it is to manage our everyday finances.

According to the Financial Consumer Affairs Group of the Bangko Sentral ng Pilipinas, financial planning should be taken seriously.

It helps us deal with everyday situations better and prepares us for the most unexpected events.

The FCAG’s Weekly Wealth Watch newsletter lists the following suggestions on how to go about planning your finances:

Assess where you are now in financial terms.

• What is my current financial status?

• How much savings do I have?

• How long will this last if I suddenly find myself without work?

• How much do I owe?

Set goals.

• I would like to have x amount of funds for my children’s education.

• My car is no longer fuel efficient and maintenance costs are mounting; it needs to be replaced. I need to set-up funds for a new car in three years.

• I should have emergency funds of this much in five years.

• What kind of retirement life do I want to have?

Create a financial plan.

• What actions do I need to take (in light of my goals)?

• I have to prepare a budget and spending plan.

• I need to keep track of my cash flow.

• Should I consider investment opportunities to augment my income?

Implement the plan.

• I will choose the best strategy that will help me achieve my goals.

• I should prioritize my “needs” instead of my “wants.”

Monitor and reassess.

• I will review and revise my financial plan based on my current situation.

So what are the benefits of having financial plans?

The FCAG explains that it gives us more control over our financial affairs and the ability to avoid excessive spending, unmanageable debts, and dependence on others.

Having a financial plan also fosters better personal relationships with the people around us and gives us a sense of freedom from financial worries.

Lastly, sticking to a plan helps us obtain, use and protect our financial resources even after retirement — benefitting ourselves and our loved ones as well.

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Past articles may be viewed at  http://speakingout.ph/v_palace.php

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