ARE you a glass half-empty pessimist or a glass half-full optimist?
Either way, you will agree that there are plenty of grim facets of life, including hatred, racism, poverty, illness, violence and ignorance. And yet, there are probably more bright spots, streaks and swaths, such as love, acceptance, tolerance, bounty, health, safety, security and knowledge. All of us will face tough times, yet also enjoy seasons of joy and delight.
So, are there some ways to load the odds in our favour when it comes to building a happier life?
Common sense tells us our lives will be better if we choose:
1. A healthy and fit lifestyle as opposed to one marked by excess, obesity and indolence;
2. Curiosity and rationality instead of bigotry, narrow mindedness and superstition; and
3. Financial discipline in place of random fiscal reactions.
Unsurprisingly, healthily adhering to various tenets of financial planning is one way to lay a deep bedrock of economic discipline in our lives. After all, since money permeates our culture and civilisation, it plays a role in pretty much every facet of life.
This is reflected in my favourite definition of financial planning, which I extracted and memorised more than 20 years ago from an old version of the CFP (Certified Financial Planner) Board of Standards website:
"Financial planning is the process of meeting your life goals through the proper management of your finances."
DIMENSIONS OF LIFE GOALS
Those life goals permeate every part of our lives. Some, like education and healthcare, often require lots of money to meet their objectives. Other goals, though, such as fitness and recreational ones, can be enhanced through the judicious use of modest amounts of cash.
Whenever I am teaching or consulting on financial planning, I point out the three dimensions of this powerful process, which should dovetail together to form a rock-solid plan that doesn't let important considerations fall through the cracks. Those dimensions are:
Wealth Protection;
Wealth Accumulation; and
Wealth Distribution.
I have written often about the importance of all three. (If you'd like to dive into a deeper understanding of them, here is a pertinent Money Thoughts column from last year: www.nst.com.my/lifestyle/sunday-vibes/2022/05/800331/money-thoughts-3-di...) You might notice a nifty way to remember all three financial planning dimensions is to use the mnemonic PAD.
WISE ATTRIBUTES
Today, we'll explore half a dozen wise attributes to enhance our lives. Each of them can go a long, long way toward enriching the quality of our family and personal life. Those six attributes are saving, having, investing, enjoying, loving and distributing.
Here's what I mean:
Saving — is the cornerstone of wealth accumulation. It isn't the only discipline that plays a role in financial accumulation but it is the crucial FIRST step, which boils down to this simple discipline: when money flows into our lives as income, a gift or an unexpected windfall, NEVER spend it all. ALWAYS set aside an initial slice toward a lifelong savings nest egg.
Having — is a mindset that establishes a higher priority on owning our stuff outright rather than borrowing money, and thus owing a loan on it, just to possess it earlier instead of waiting to accumulate all the funds to buy it later. Some large ticket items like houses and cars, though, are tough to afford without initial loans, so make it a GOAL to pay off such liabilities sooner rather than later.
Investing — is the turbocharger of wealth accumulation. Saving must come first, but since building up a savings nest egg takes time, use that period of preparation to study investing. The two goals of all bona fide investing are to TRY to grow our money faster than inflation and taxes erode our purchasing power. YET, even intelligently chosen investments carry risk. So, make sure you take time to understand why any specific investment you look at carries risk. Always invest with your eyes wide OPEN.
Enjoying — what we have is the goal of managing our money and our life well. So, squeeze out each DROP of enjoyment from every ringgit you spend.
Loving — those around us and ourselves is the best way to live. Therefore, in the pursuit of your key life goals, be sure to structure your calendar and your budget to MAXIMISE the love you verbally and tangibly shower upon the significant others in your life.
This will also include the judicious use of insurance policies for wealth protection in case anything untoward happens to you.
Distributing — your riches, during and after your time on Earth, should be carried out in a well-CONSIDERED manner. Make sure you write a will. PLUS, if you have sizeable assets of more than, say, RM1 million in liquid assets apart from immovable ones, decide if establishing a private trust makes sense for you.
If you haven't yet noticed it, scrutinise the first letters of those attributes. They form an appropriate mnemonic to help you remember aspects of financial planning to enrich your life and perhaps more importantly help you leave our messy, complicated world a better place, later, than it was when you arrived.
© 2023 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via [email protected]. You may also follow him on X@Rajen Devadason and on YouTube (Rajen Devadason).
