There are 3 main components in personal financial planning. It applicable to everybody . There are i) wealth protection, ii) wealth accumulation and iii) wealth distribution.
Wealth protection is the planning to protect our existing wealth and asset and to insure the future ability to earn if any unexpected accident happen. This basically refer to insurance planning. This is very important stage where individual can predict and plan for the worst scenario and prepare it. We will feel secure if we properly plan for it then we will have full force to go for next stage, wealth accumulation.
Wealth accumulation is the interesting and challenge stage in financial planning. We should very clear on our own financial goals & their priority, the time horizon, the meaning of the goals to our life. This is the process to understand the cash flow, budget control, balance sheet, net worth statement of own financial status. We need to have surplus for monthly cash flow by increasing the income and reducing expenses. We also can have multi sources of income by doing investment . business , consulting and others. We should always be aware and keep ourselves away from the money scam. We should learn and learn from time to time in this stage. Do not give any excuse to yourself and we should hold full responsible to our accumulation process.
Wealth distribution is refer to the distribution of our asset and wealth when we accidentally or naturally passed away. We need to decide how we only to allocate the asset to our loved one, friends or the world. What is our final wishes and planning, helping our family to get through the transition period of life without our present in their life. We need to do wise planning for this to prevent argument within all the beneficiaries.
No comments:
Post a Comment