Wednesday, October 04, 2006

Holistic Financial Planning

How are we able to get the idea of financial planning through to those who do not understand it? When I was still in school, the family finances were quite tight and my parents had zero savings outside of CPF. Financial planning focused more on getting through each month with the limited budgets than longer term goals.

Today, I am already working and am contributing to the household and yet, my parents still have no savings. The month to month living has become so deeply ingrained that extra cash these days is used to go on casino trips, majung sessions, expensive meals, etc. There is no thought made on the impending retirement where disposable income will take a significant hit. Whenever I raise the issue to my mother, it never ends well, usually with her telling me to stop giving her money if I am finding it tough to give it.

It is lucky that I had made the right move in not giving her a monthly lump sum and had instead allocated a portion of it to purchase an insurance savings plan. At least I know now that she will have a small sum of savings when the savings plan matures.

It is critical that we factor in financial planning for our parents if they do not do so themselves. In Asian societies, the mindset that parents will depend on their children in old age is still strong. Without sufficiently holistic planning to address the possible financial strains that will arise upon our parents' retirement, we will be trapped in the poverty cycle.

A well planned path is essential to ensuring a continued improvement in our standard of living.

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