Financial Planning 101 by Avida Land's "My Path to Financial Freedom" Manual

I've always believed that if you want to achieve something big in the future, you better start working for it in the present.  Same prin...

I've always believed that if you want to achieve something big in the future, you better start working for it in the present.  Same principle should be carried out to our financial planning.  Admittedly, I started thinking about and taking this seriously not too long ago.  It was in 2012 when I took the first step.  I wish I had started sooner, but it's better to have started than not to do something at all.

Last month, I received a present from Avida Land to guide me in meeting my financial goals.  If you're a newbie to financial planning, this manual will definitely help you jumpstart your future towards financial freedom!

You need tools such as Avida Land's "My Path to Financial Freedom" manual to keep you relaxed in financial planning, which could appear complicated and intimidating to most people.  The manual is compilation of informational content, fun graphics to go easy on the eyes, and engaging activities or worksheets to really help you get down on your knees and actualize your financial planning.

In this blog post, I will share some features of the Avida Land's financial planning manual and how it will help you through your financial freedom journey.  I will also share some helpful worksheets which you could do on your own.  Lastly I'll be sharing what I like about the manual and my recommendations as well.

First thing's first, one has to know his financial standing.  How?  By knowing these two important things:
  • Statement of Cash Flow
  • Statement of Assets and Liabilities
Whoa!  Big words right?  It sounded intimidating sa totoo lang.  But when I read the manual, the graphics actually helped in making it seem less complicated, it's easy to do.  Compute your Cash Flow by listing all your Income and all your Expenses.  Then subtract all your expenses from your income and you will arrive at your net cash flow.  Don't be surprised because your net cash flow may be positive, negative or almost zero.  This is a good exercise because it lets you discover something about your financial status.  If the result yields to insufficient cash flow, then use your list to adjust your expenses or look for additional income.  You may use these worksheets:
If you noticed, the income to be listed should include also your bonuses, sidelines, and all other incomes which you bring to your household.  This may be a husband-wife joint computation or individual computation.  It's really up to you. :)
Expenses are divided to three: Fixed Expenses, Discretionary Expenses, and Hidden Expenses. Usually, you adjust the discretionary expenses should your net cash flow be insufficient.

Next step is to compute for your SALN or Statement of Assets, Liabilities, and Net Worth.  You may use these worksheets to guide you:
List all your liabilities by including your personal loans from the office or cooperative (if you have any), all your credit card balances, housing loan, and also car loan.
When I did this activity myself, I discovered that we do have a little more than enough, but we could have still saved some more if we put a ceiling to our discretionary expenses.  Both my husband and I work full time and it helped that I have sideline jobs where I get additional earnings.  I get our discretionary expenses and "wants" expenses from my sideline earnings.  But admittedly, if we have been more disciplined, we could have save some more or put our eggs in other investment baskets.

Moving on, now that we know our financial standing by doing these activities, we could assess if we're spending too much, if we're saving too little, if we need to get another job or look for another source of income, if we are too indebted, and if we have enough savings or emergency fund.  By knowing our financial condition, we could start financial planning better because we have a realistic baseline.

Sabi nga ni Ka Benjamin Franklin, "If you fail to plan, you are planning to fail."  So, on our roads to financial freedom, careful planning should jumpstart it, and the timing is NOW.  But just like any other plans, your plan should be S.M.A.R.T.:

  • Specific - list down what you really want to achieve or save for.  There are no right or wrong answers here.  Is it a car, a house, a cruise, an educational plan, a X amount of money?  List it down.
  • Measurable - List down the cost of these dreams so you know how much you would need or save for.
  • Attainable - Based on your SALN and your plans to save more to build your future around it, assess your specific dreams if they are attainable with the current financial condition you are in.  
  • Relevant - Are your dreams and plans in line with your core values?  Know the whys of your plans and if they sound relevant to the life that you have right now or wish to achieve in the future, then go for it.
  • Time-bound - A goal without a deadline will not push or pressure you into achieving or reaching for it.  Consider this as a project which you need to launch timely otherwise, it's like planning to fail.
Now, where do you want your money to go.  There are so many investments to choose from.  You have to study each one of them and choose where to put your money.  This will also depend on the risk you are willing to take.  I am no expert, because I am also still studying my options.  But let me share with you that I've made my investments in the following:
  • VUL
  • Mutual Funds
  • Stocks (through a broker because I'm no expert and I have to time to bantay)
My investment goals in the future is to also go into real estate.  Particularly to get property lots for each of my children, to get a lot and build X number of apartment doors, to get a condominium for rental, and to also get a house and lot of our own.  Currently the only lot I've invested in are columbarium lots in Manila and Quezon City.  

I also am not sure if getting a memorial plan is part of financial planning, but I also got two already.  It's still a plan right?  The main objective of me getting protected through insurance and covering my memorial plan is that if my time comes, and I have to leave the earthly world, I won't leave my husband nor children worrying where to get money to pay for my hospitalization, their education or part of, and my burial.  It's still a good plan right?

Basically, the most important thing is to GET STARTED, not later but NOW if you can.  Sabi ko nga, when I started planning four years ago and began to understand how financial planning works, I really wished I had started sooner.  I also wish this Avida Land's "My Path to Financial Freedom" book was existent already.

It's a tool which is helpful to starters or those who are easily intimidated by financial planners who approach them.  Sometimes we get intimidated with terms we don't actually understand.  But this manual (which is graphic, fun to read, and uses simple and understandable terms), make financial planning and investments less complicated and seem easy.  It's a recommendable guide to making the first steps in achieving financial freedom.  I highly recommend it, I just don't know where you could get a copy of it.  (I'll update this post as soon as I get the info where to get it. Promise!)

Let me share with you a few words of wisdom which I read from the manual:
  1. Study your cash flow.  Be aware of your current financial condition so you now where you stand, your starting point and aim a more realistic destination.
  2. Spend less than what you earn.  
  3. Have discipline.  Create a habit of saving and investment by paying yourself first (savings or investment) before your bills.
  4. Protect yourself.  Build an emergency fund and get insured as well.  Better to have critical illnesses covered.
  5. Choose investments wisely.  It's important to know how much risk you are willing to take to know which investment is workable for you.
  6. Leverage.  Pay off debts and clear your credit line, you'll need this in the future when you have to make a loan for let's say a business or for one of your listed dreams/goals.
  7. Be Smart. Invest only in what you understand.  It pays to read a lot, talk to financial experts, and equip yourself with tools to help you get started.
Lastly, commit to your plan and you're on your way to setting the right path to reaching your financial freedom.  Good luck loves! :)

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Mommy Practicality is a home and lifestyle blog that's about positive, informative, 
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