Financial planning
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This document discusses the importance of financial planning for retirement. It provides statistics showing that only 1% of people age 65 are wealthy, while 66% are dependent on others due to a lack of savings. It emphasizes that people often fail to plan effectively for education, family, health, and retirement. Scenarios are presented showing potential food and medical expenses in retirement, highlighting the need to start saving early and regularly. Different savings options are compared, recommending investing long-term savings rather than keeping money in low-interest savings accounts. The conclusion is that planning is crucial to achieving financial goals.
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Financial planning
- 2. DID YOU KNOW THAT….? For every 100 people age 65: 1 - Rich 4 - Financially Independent 13 - Still Working 16 - Dead- Never reach age 65 66 - Dead Broke-Dependents of They Didn’t Plan to Fail. Others They FAILED to PLAN effectively.
- 3. > Education > Life & Family Protection > Health > Retirement
- 4. He r e ’s a s c e n a r io f o r y o u t o c o n s id e r … a cou p le re tire s at th e age of 65 WH AT and e xp e cts to live 1 5 m ore IF … ye ars . O n food e xp e ns e s alone , h ow m u ch will th e y s p e nd ? 365 d ays S am p le C om p u tation … X 2 p e rs ons X 1 5 ye ars X 3 m e als = 32,850 m e als X 50.00/ e al m TO TAL = Php 1 ,642,500.00
- 5. He a l t h h a s a l wa y s b e e n a ma j o r c o n c e r n b e c a u s e o f t h e c o s t it e n t a il s wh e n s o me o n e g e t s s ic k . Bu t m os t are s till cau gh t u np re p are d … 95% wou ld re ly on p e rs onal 53% wou ld b orrow fu nd s s avings to finance tre atm e nt from oth e r fam ily m e m b e rs cos t And s ocial h e alth ins u rance is alm os t always not e nou gh …
- 6. HOW MUCH HAVE YOU SAVED since you started working???
- 7. P e o p l e ’s B e h a v io r o n M o n e y BE H AVIO R 1 BE H AVIO R 2 BE H AVIO R 3 INCOME EXPENSE INCOME LESS LESS LESS EXPENSE INCOME SAVINGS EQUALS EQUALS EQUALS SAVINGS DEBT EXPENSE W h ic h o n e a r e YO U ?
- 8. AM I REALLY ABLE TO SAVE? Lack of Discipline INCOME – EXPENSES = SAVINGS SAVE 10% to 30% of your Gross INCOME regularly ! INCOME – SAVINGS = EXPENSES
- 9. Am I happy with my Savings? ents sucSavings Account Time Deposit Low Interest Rates ( 0.80%-Savings; 1-3% TD) L Interest Rates subject to 20% withholding tax No choice in how money will be placed No life insurance
- 10. Am I happy with my Savings? uments include: •Savings Account •Time Deposit Cannot be withdrawn upon death of depositor In case of insolvency, deposit insurance guarantees only P500K Deposits may be GARNISHED Deposits are subject to ESTATE TAXES
- 11. AM I REALLY ABLE TO SAVE? Use SAVINGS for SHORT TERM (1yr & less) NEEDS LIKE… Sinking Fund OR Emergency Fund (6 Months x Monthly Expenses) Day-to-Day Expenses INVEST the rest of your Long-Term Other Miscellaneous Expenses Savings!!
- 12. “THE POOR AND MIDDLE CLASS WORK FOR THE …THE RICH HAVE MONEY MONEY. WORK FOR THEM.”
- 13. HARD- EARNED MONEY Your Money makes 15% - 60% 1%- Saving Account •PRE-NEED PLANS •WORK 4%- Time Deposit •MUTUAL FUNDS •BUSINESS The banks invest •INSURANCE •PROFESSION your money and •INVESTMENT LINK make up to 42% •HEALTH CARE return.
- 14. TO MY FINANCIAL GOAL (CHILD’S EDUCATION, BUYING A NEW HOUSE, OLD-AGE HEALTH-CARE, RETIREMENT,ETC) PLAN effectively. START EARLY. LOOK FOR THE BEST FINANCIAL PARTNER !
- 15. “ N o o n e p la n s t o f a il, t h e y o n ly f a il t o p la n ”
Editor's Notes
- Good Morning Everyone! My name is _____________ and I’m from Sun Life Financial. I’m here today to talk to you about Financial Planning or Management of Personal Finance. Every time I get the chance to conduct financial planning to employees/professionals like you, I always start out by sharing three (3) important things that forms the framework of what I want to share in the next hour. Allow me to share them with you also: 1. It’s not the obligation of the employer to make you wealthy. Becoming wealthy or financially independent has always been a personal obligation. It’s your personal responsibility to be wealthy. 2. At any income level, you can become financially independent. Financial Independence is not reserve for the rich. You only have to know what financial independence is and how to get there. 3. Your ability to save has nothing to do with the size of your income. If you’re problem is your inability to manage your earnings, no amount of earnings will solve your problem. You need to know what your financial needs are, plan it well, and manage your expenses. In this very short session, I will show you how. But first, let us start off with trivia questions: First Question: Who’s the richest guy in the Philippines today? (Let the audience answer) Correct Answer is Henry Sy based on Fortune 500 magazine as of 2008. He’s worth $3.5 million in net asset. He’s the 14 th richest man in South East Asia and 843 rd in the world. Second Question: To date, how many SM Malls are there in the Philippines? (Let the audience answer) Correct Answer is 30 malls excluding the three malls in China. At the moment, three malls are under construction – one in Naga, another in Las Pinas and in Cavite. At the end of 2009, there will be 33 malls in total. Also, SMPH (SM Prime Holdings) plans to build one mall every year in China. Third Question: How much does one SM Mall earns on a weekday? Common sense will tell you, it simply doubles on a weekend right? My question is, on any given weekday, from Monday to Thursday, (Friday, in the mall culture, is considered week end already) How much would an SM Mall earn? (Let the audience answer)
- Here’s another scenario…. (Go thru the slides, click it one by one) 365 days a year multiplied by two (a couple) will give you 730 days, then multiplied by 15 years as stated in the example will give you 10,950 days. Multiply 10,950 days with 3 meals, will give you 32,850 meals. So, in 15 years you need to eat at least 32,850 meals. Please remember that hunger pangs are involuntary muscles. Meaning, you can’t decide not to get hungry, right? Now, how much is a decent meal here in your area? Within the vicinity of your office? (Let the audience give you their answers. Listen to them.) Ok, for the interest of time let’s peg it at Ps 50/a meal (then press enter so that Ps. 50 pesos appear in the slide). Without considering yearly inflation on food which is around 6% every year…kung hindi tataas ang presyo ng pagkain for the next 20 years, nakapako lang sa Ps. 50: How much do you need as a couple both at age 65 just to eat for the next 15 years? Answer: (press enter for the answer to appear…wait because the answer will crawl) My question is: Where will you get one million six hundred forty-two thousand five hundred pesos if only to eat for the next 20 years? (pause…look at the audience) Now, in the first half of my presentation, I wanted you to realize that you can actually start saving if only you know the simple and proper way of doing it. In this portion of my presentation – the second half, what I want to do is to build the urgency by giving you reasons why you should start saving now. I want to make you realize that saving for the future is not whimsical but something that’s purposive. Tayong mga pilipino will not save for the sake of saving. Filipinos will save for aspirations – for something that we’re emotionally attached to.
- Now let us not forget our health. Health has always been a major concern because of the cost it entails when someone gets sick. But most are still caught unprepared… A recent study from SOLAR (Study of Lifestyle and Attitude Research) indicated that 95% of Filipinos would rely on personal savings to finance treatment cost. And 53% would borrow funds from other family members. And social health insurance is almost always not enough…
- There are only three behaviors of Pinoy when it comes to money. You can deny it or admit it but at the end of the day, you’ll realize you end up in one of these behaviors. The truth will set you free don’t worry. The first is the typical bevior of Pinoys when it comes to money and it goes this way, the moment you receive your income or salary, without too much thinking, automatically, the next best thing to do is spend the money, right? Ang iniisip mo kaagad ganito “Bagong sueldo ako, ano ba magandang bilin ko? Naiinis ka pagka wala ka agad maisip na bibilin hindi ba? Now, after spending your income at may natira, nagugulat ka pa hindi ba? You call this behavior – Accidental savers. Hindi sinasadyang makaipon. The second is the worst behavior. Hindi mo pa nakukuha ang income mo, gumagastos ka na. Welcome to the world of plastic money – of debit cards and credit cards! Is it bad to have a credit card? No, for as long as you know how to use it. Let me share with you at least three (3) points on the proper use of credit card: Use your credit card to buy ONLY the things that you NEED and not the things that you want. Your credit card does not increase your money, only your spending ability. Don’t use other people’s money (i.e. credit card is bank’s money not yours) to buy your whims/wants. Save money instead so you can buy what you want. The worst that can happen is you end up buying wants using other people’s money. Almost always, it results to bad consumer debts. Huwag kang umutang ng pera para mabili lang ang gusto mo. Ito yung mga bagay na hindi mo naman kailangan, gusto mo lang sya. Best example: buying a second cellular phone. Clearly, it’s a want. If you can limit your credit card to only 1 card, please do so. You don’t want to arm yourself much less your spouse with so much spending power, do you? Why do you need more credit cards anyway? Be aware of your real credit limit. It’s not what the bank tells you. It has something to do with how much is your monthly salary. In reality, limit your use of the credit card only up to one-third (1/3) of your monthly salary. So, if your monthly income is Ps. 15,000, you should limit your spending up to Ps. 5,000 using your credit card. That’s your real credit limit. The bank can always tell you that your credit limit is Ps. 20,000. However, if your income is only Ps. 15,000 and you end up spending all the money in your credit card, it results to bad debt and a very bad habit. A lot of salary earning Pinoys end up in behavior number because of credit card spending. Now, where do we want to bring everyone? We’re teaching people to go to Behavior number 3 where even before you receive your monthly salary, you ask yourself “How much of my salary can I set aside as savings?” even before you touch or spend a portion of your money, savings should come to mind first. Hindi mahalaga kung malaki or maliit ang savings, what’s important is to form a habit of always setting aside a portion of your salary. Kung magkano ang komportable sayo, kung magkano yung reasonable amount of money that you can set aside for savings – that should be enough to start your way to financial freedom. Let me offer you a tip: Think of your monthly salary (kung maliit lang hindi naman matagal isipin hindi ba – smiles). Now, think of your net monthly income. From your net income, you can start deducting 5% for savings every month. If you can, go for 10%, kung kaya pa 15%, or up to 20%. Now, the maximum amount of money you can set aside from your salary is 20%. Hindi puedeng gigil ka mag-ipon. You can’t save 90% and live on 10% of your money for the month. You save up to 20% (maximum) of your net income every month and live on the 80%. Now if you’re a good Christian, you can save the 20%, give 10% to God and live on the 70%. You may ask, is it ok to save beyond 20%? Answer: if you have other sources of income, then you can go beyond 20%. If not, stick it out with 20% max. You will be amazed when you realize that 5% of your monthly net income is an amount that’s bearable and not difficult to do on a monthly basis. The best example of saving I can think of is the Catholic Church’s Pondo ng Pinoy. The idea is to save twenty-five cents in empty bottled waters then give it to the nearest church or chapel. Gagamitin ng simbahan para sa pag – aaral ng mga mahihirap na bata ang perang maiipon. The project was launched last 2004. To date, those twenty-five cents have already reached more than 100M. Amazing hindi ba? True to the project’s philosophy – “Anumang magaling, kahit maliit, basta’t malimit ay patungong Langit.” In savings, hindi pinag-u-usapan kung maliit or malaki. Ang mahalaga ay malimit. So, which behavior are you in? My intention is to make you realize what I’ve said at the onset of this session, that at any income level, you can become financially independent. Kaya mong makaipon, kaya lang marami sa mga pinoy hindi alam pano sisimulan ng tama ang pag – iipon. Bakit? Kasi hindi naman itinuro sa atin kung paano.
- The poor and the middleclass work for the money. While those who are keen with their hard-earned money, we call them the rich – will always have a portion of their money work for them. That’s the secret.
- Allow me to finish the session with these words “No one plans to fail, they only fail to plan.”