All About Financial Planning Philippines (AAFP Phils) is all about spreading financial awareness and financial literacy among Filipinos worldwide.
In order for us to be financially free, we strongly encourage that you follow the Basic Steps to Financial Security by heart. Doing so will keep you from the common pitfalls and mistakes in financial planning.
If you are just starting, these are some of the guides that you can take.
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Basic Steps to Financial Security
- Save / Increase Cash Flow – Without any savings or any cash flow, it is impossible for you to achieve financial security. You have to master the art of savings in order to build your wealth.
- Get Out of Debt – Do you have any loans or debt or credit card problems? If so, try to devise a plan how to solve this. But if you don’t have any, I must congratulate you for living a debt free life.
- Create Emergency Fund – This will be your instant money so that when emergency arises, you’ll have no problems borrowing. How much is the fund needed? 3-6 months of your monthly salary should be in your passbook account.
- Ensure Proper Protection – Do you have a personal life insurance policy? If not, this is a must. This will be the safety net of your dependents should anything happen to you most especially to the breadwinner of the family. How much is the ideal? 10 times of your annual income. Idea is in case of death, your dependents can live up to 10 years living the same lifestyle with your income.
- Build Long Term Savings – This will then be the time to invest in mutual funds, uitf, stocks, bonds etc. This should help you in your retirement of education of your children.
- Preserve your Estate – This might not be your immediate concern but will be when the right time comes. Idea is, when you’ve accumulated so much wealth and want to transfer it to your heirs, either you or they’ll have to pay for estate tax.