06 November 2012

The Start Of Our Journey Towards Financial Stability

My life before Julia was all about me -- carefree and unintentional.  I had no clear road map but I was never anxious about the future.  I was promoted to manager at the age of 25 and started a small mutual fund investment, but that was it.  I started on a life insurance when I started working but never finished it and yes, three years of premium payments down the drain.  I really don't need it, I thought.  

My perspective changed ever since Julia was born.  I became literally scared of the future.  I ask questions like "Am I going to be a good parent?" "Will we be able to provide a comfortable life for Julia?" "Will we be able to afford the best school for Julia's education?" "What if we lose our jobs?" Judging from the questions I ask myself, it's pretty obvious that I am not well prepared -- emotionally and financially-- for the future.  Julia's quality of life will depend on how Don and I will manage our current lifestyle and how well we are prepared for the future.

I wrote a series of posts about parenting and money.  As we strive to be better parents to Julia, Don and I are also focusing now on managing our finances and building our wealth.  Our goal for now is not be rich (if we will be, why not?!).  We just want to be financially stable.  

Last month, Don and I had series of meetings with a Registered Financial Planner/Consultant, Mr. Ricky So.  (I am so blessed to have worked for a reputable asset management company 7 years ago.  I have friends who are still in the industry and are now working as financial consultants.)  We decided to talk to someone we know and who doesn't represent a financial institution.  This way we are assured that our goals are not force-fitted to a certain product.

Initially, our intention was to talk about options on how to prepare for Julia's college education expenses.  According to the Projected Tuition Fees Table provided to me by a financial institution, we need to have at least P2.8 Million to be able to fund Julia's college tuition fee in the most expensive university in Metro Manila.  That's just for the tuition fee alone!  What about books, allowances, transportation costs?!  Of course, it will depend on the course she would like to take and the university that she would like to attend to, but we decided to use the most expensive school as basis of our financial goal so that just in case, we are ready.

A needs-based discussion with Mr. Ricky So.

Mr. So explained the different ways we can prepare for Julia's education expenses.  However, aside from setting up Julia’s education fund we also identified some important financial goals that we need to start working on. He explained about the Hierarchy of Financial Needs and I will be sharing that with you later this week.  It took us a lot of husband-wife and dad-mom meetings before we finally decided to take that step towards financial freedom (from loans) and move on towards our financial wellness.  Most important of all, we decided to COMMIT to our financial goals.

We used to think that having money to spend for our needs is enough. Now, after our sessions with Mr. So, Don and I define being financially stable as:
  • We have a reliable cash flow to provide us our family’s basic needs.
  • We have an emergency/contingency fund set up for short term just-in-case situations.
  • We have basic protection for our family (life, non-life, health, education).
  • We have appropriately (and continuously) set aside money for retirement.
Though we wish we started years ago (for the last two bullet points), there is no such thing as "too late" in having financial wellness.  So, with concrete action plans and a truck load of discipline and maturity, we know we are on the right track in achieving financial goals.  

What are your financial goals?  What are you doing to achieve them?
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