Why financial planning is an essential part of family planning
S a Filipino family, it’s natural for us to want to plan for our future. We think about our careers, where we want to live and how we want to raise our children. But too often, financial planning can become an afterthought when it should be part of the conversation from the very beginning. Let’s explore some of the “what if” scenarios that come with financial planning and how you can use them as a starting point for your family planning. What if you have an emergency? One of the most important questions to ask yourself when it comes to financial planning is what would happen if you had an emergency? Emergencies can range from medical bills to home repairs and any number of unexpected expenses. It’s important to have a plan in place so that if something does happen, you don’t find yourself scrambling to come up with the money you need. That could mean setting aside a certain amount each month into a savings account or investing in insurance policies that will help cover some or all of your costs in case of an emergency.
What if you lose your job? Nobody likes to think about losing their job, but it’s unfortunately a reality that many of us face. That’s why it’s essential to prepare for the possibility and have a few months of living expenses saved up. If you can, try to build up an emergency fund with six to 12 months of savings in case of a job loss. That way, you’ll have a cushion to fall back on while you look for your next employment opportunity.
What if you have a new addition to the family?
Congratulations! Whether it’s a newborn baby or an adopted child, welcoming a new addition to your family is an exciting and joyous time. But as with any major life event, it also comes with financial implications. You’ll need to factor in the added costs of childcare, diapers, formula and other necessities that come with raising a new family member. Financial planning should be part of the conversation when you’re expecting, so that you can ensure you have all the resources to care for your little one during that first year and beyond.
What if you want to buy a home? Another “what if” scenario when it comes to your family planning is whether or not you are financially ready to buy a home. Buying a house is one of the biggest investments you will make in your lifetime and requires careful consideration. Do you have enough money saved up for a down payment? Is your credit score good enough for banks or lenders to approve your loan application? Are there other debts that need to be paid off first before taking on another big expense like a mortgage? These are all important questions that require detailed answers before making such an important purchase.
What if you want to retire early? Finally, what if you want to retire early and enjoy life without having to worry about working long hours every day? Financial planning plays an integral role here as well since retiring early means making sure you have enough money saved up so that you can sustain yourself (and possibly even your loved ones) until retirement age. This could mean investing in stocks and bonds or setting up multiple streams of income so that retirement won’t put such a strain on your finances. There are many options available so it’s best not to wait until it’s too late — start saving now!
Financial planning should be part of every family’s overall plan because it gives us peace of mind knowing that we are prepared for whatever life throws at us — whether it be emergencies, buying homes or retiring early. Taking the time now to consider these “what if” scenarios will help ensure that our families are secure both now and in the future by creating realistic plans with achievable solutions tailored specifically for our needs.
Janice Sabitsana is a graduate of the Registered Financial Planner program and is the host of www.thepinayinvestor.com blog. To learn more about personal-financial planning, attend the 99th RFP program in January 2023. To inquire, email info@rfp.ph or text at 0917-6248110.