This year marks the tenth year of my service in the financial services industry, and over the course of my career, I have provided advice to clients from different backgrounds, with different and unique aspirations of their own, and with their own sets of challenges and mindsets on various areas of personal finance.

The advice includes cashflow planning and management, debt management, retirement planning, education planning, reviews on insurance policies and insurance planning, will writing as well as estate planning.

Having managed to assist people in addressing some of the issues that were preventing them from taking control of their life, I see this as a huge blessing because this means that I have been effective in my role as a financial advisor and a Licensed Financial Planner.

I noted that in most instances, people commonly lack focus or put their attention on matters that are not the most important, and thus missing the fundamentals. Take for instance a person whose only focus is investment returns: he is thrilled at the possibilities of high returns (of at least 12% p.a.) and perks up at terms such as ‘guaranteed’.

What we fail to understand, is that if we first understand our required rate of investment returns and understand our own risk tolerance before parting with our money, we would be in a better position to prevent handling our hard-earned savings to scammers.

Be careful of the many investment proposals from salesmen or advisors with vested interests of their own.

Balancing the Ins and Outs

If we want to take control of our own lives, we have to be in the driver seat or be in the position of being in control. Many times, we lost control of our lives because we have a hard time managing the ins against the outs of our cashflow or the expenses against income flow.

It is very important for us to ensure that we have a surplus after subtracting the expenses from our income, as this surplus is what gives us the ability to build our dreams and stand firm when things get tough.  

Save That Surplus!

With the surplus from our monthly cashflow, finding a way to really retain the surplus is essential, otherwise, it will just belong to another party and we are nothing but short-term keepers of said money.

Leaving the surplus in our current or savings accounts might be hard to retain as is easily accessible. A feature of a good money-saving instrument is one that keep this money yet making it inconvenient for us to access it, but at the same time, it is liquid enough and has minimal or no fluctuation in value.

After identifying the ‘emergency savings’ or buffer fund that you need to keep with you, put the excess to work. Otherwise, the amount will not stand a chance in protecting our purchasing power which will shrink over time due to inflation. It makes better financial sense for you to deploy them to investment instruments.

Protect your backyard

A person has to be aware of events and circumstances that have the potential to destroy your planning or require you to fork out money that you cannot afford, namely an illness or accident. Therefore, we should learn how to protect our savings, and to ensure that should such unfortunate events were to happen, our finances will not be affected, nor will we need to think about liquidating our assets for some quick cash.

Don’t Dig a Hole for Yourself (Unnecessary liabilities)

One of the most common basics of personal finance is building up assets and having liabilities under control. It is imperative to avoid taking up debts meant to support our desire and consumption.

If you have to create a debt in your balance sheet, it better be for the objective of leveraging on it to create more wealth in the future.

Should you have lingering debts that you have been struggling to get rid of, it is because you have not really tried hard enough. Stop using instruments that help you create a bigger hole and start putting together a plan to help you ‘attack’ these debts instead.  Sometimes writing off a debt isn’t about how much interest you save but how much momentum you gain by doing so – start with those that are the easiest to neutralise, and move forward from there.

Making mistakes when trying to manage our money is normal because we are human, and we all make mistakes. However, if we keep repeating the same mistake time and again, then perhaps this is because we choose to repeat those mistakes. Perhaps it is time to make a conscious choice to start taking control of our lives.