Take
Control of Your Finances: Financial Planning in Three Life Stages
Everyone’s
life journey is different. The many choices and decisions you make along the
way will lead you to different paths and produce different outcomes. But it’s
safe to say that everyone wants to live a secure and comfortable life from here
on out.
With smart
financial planning, you can be in control of your finances and live a
worry-free life. The sooner you get started on securing your future, the earlier
you will reap the rewards.
If you’ve lost
track of your finances because of the demands of life, that’s okay. You can
take back control and change your life’s trajectory. It’s never too late to
start and make better decisions that will positively impact your financial future.
From early
career to retirement, you can map out your future with a solid and
comprehensive financial plan.
Early Career
Your early
career is very important when it comes to financial planning. This is the
period of your life where you lay out your plans and work to turn them to
reality.
Because you’re
starting on a clean slate, anything is possible! Just remember that the
decisions you make during this stage will lay the groundwork for your financial
plans and impact your long-term financial health.
In short, this
is where your ‘adulting’ begins. There will be bills to pay now, and you’ll be
shouldering most of the expenses at home to help your parents out (if you
haven’t moved out to get your own place already).
Thus, your
main focus during this period is managing your cash flow to make your budget
work.
But the truth
is it’s easier said than done. Since you’re just starting out in your career,
it can be challenging to meet all your financial goals, especially on an
entry-level salary.
Whether you’re
earning ₱15,000 or ₱150,000 a month, the prices of commodities are the same for
everybody. The prices of goods and services will not adjust to your income.
But even with
a meager salary, you can still make it work by managing your finances. Plan
your short-term and long-term goals. List down your monthly financial
priorities, making sure to pay off your bills first. Then decide what you want
to do with the money you have left.
Why not open
your own savings, checking, or time deposit account to kickstart your savings
goals? If you have ₱5,000, ₱10,000, or ₱25,000 saved up, you have many savings
options that will suit your lifestyle and boost your savings goals.
For instance, RCBC's
OneAccount combines the features of savings, checking, and time deposit in a
single account. It also allows you to earn higher interest as well as customize
its features according to your needs or preference--from choosing between
having an account with zero maintaining balance or no annual fees, to which you
can add-on features such as free life insurance coverage, card insurance,
personal accident insurance, and free withdrawal at any Bancnet ATM. It comes with an ATM Card, Transaction Journal and
Checkbook. Base rate is P10,000 but you can increase it if you want to avail
the full features of this type of account.
You may also
opt to put your money in low-risk investments that can help your money grow
over time. For example, you can invest in RCBC Unit Investment Trust Funds
(UITFs) for as low as ₱5,000. Money market UITFs are low-commitment investments
that are also convenient and accessible.
Enjoy what you
earn, but think about your future as well. The important thing is to spend
responsibly and save money so you can afford to spend guilt-free!
Mid-Career
By the time
you reach your mid-career, your focus will shift to building your wealth for
the long-term and protecting yourself financially.
From buying
the latest gadgets to saving up for exciting barkada trips, the next life stage
will have you saving up for your wedding, your first home, your first child, or
your first business.
During this
stage, your income will have increased, and you’re likely to hold a better and
more stable job.
Because of
your increasing financial responsibilities, you should also prioritize
maximizing your savings, increasing your income sources, and growing your
investments.
This will not
be easy, especially when your household income is only just enough for your
daily expenses. But if you were able to save during the early career stage, you
can now use a portion of your savings to pay for the down payment of your house
or your child’s tuition. You can even get that business started.
The goal is to
earn more passive income, preferably on a low-risk investment product. If you
have ₱100,000 to invest, you can explore RCBC’s fixed income securities, such
as Treasury Bills, Retail Treasury Bonds, Local Corporate Bonds, Fixed Rate
Treasury Notes, or Foreign Currency Sovereigns. Or if you are looking for more
affordable investment options with higher earning potential, you can also try
the more aggressive UITF products such as the Bond or Equity Funds.
Moreover, your
life and health insurance coverage should be sufficient and in force in case
anything happens to you. No one knows what the future holds. In the blink of an
eye, you can lose everything you’ve worked so hard for, so it’s a must to have
protection.
At the same
time, start saving up for your own retirement. It may seem many years away, but
it’s sooner than you realize. While you still have the earning capacity,
prepare for your comfortable golden years.
Pre-Retirement
By the
pre-retirement stage, your children will be almost finished with college. Your
mortgage will also be almost fully paid.
For a lot of
Filipinos, there will still be plenty of financial strains in the
pre-retirement stage. Especially when there are just too many financial
obstacles and not a lot of income opportunities.
Your
retirement is something you prepare for as soon as you receive your first
paycheck. Your current age and the age you want to retire will help you create
a retirement strategy that works.
Don’t panic if
you’re only ten or fifteen years away from retirement. This is still a lot of
time to build a retirement fund.
A pro-tip is
consistently and regularly building up your retirement fund overtime. For
example, investing P5,000 in RCBC Equity Fund every 1st of the month
for over fifteen years, without fail, is a sure way to build your fund. You accumulate P900,000 in principal plus the
unlimited potential earnings of your investment over fifteen years!
If you have a
more substantial savings at this point, Investment Management is another option
that can help maximize the earning potential of your portfolio. A team of
financial experts can guide you based on your investment preferences and
parameters or they can also make investment decisions on your behalf.
.
Evaluate your
progress regularly to make sure you’re on track and see if you need to change
anything in your financial plan. Consider present risks that may prevent you
from reaching your financial goals, and then do everything right now to fill in
the gap. Even if it means getting a side gig, changing your investment
strategy, or even pushing back your retirement date.
Set clear
financial goals when you reach these life stages and strive to achieve them.
This way, you can worry less about your finances and be in control whenever you
encounter financial hurdles.
