Personal Financial Plan


Most people will tell you they have a financial plan. What they really mean is they have a “retirement package” with a pension fund, life and health insurance policies, mutual funds, and the like. The typical plan is nothing more than a collection of financial products purchased without a clear idea of the total picture.

Investing requires a personal financial plan. Where are you and where do you want to go? Do you just want to be secure? Comfortable? Or rich? Are you set up to retire early, or are you living like a financial yo-yo? These are the sorts of questions you need to answer in order to choose your investments wisely.

Rich Dad Tip on Personal Financial Plan:

Do you want to be:  • Secure?   • Comfortable?   • Or rich?

It’s difficult to build a jigsaw puzzle without seeing the cover of the box. Likewise, it’s difficult to invest wisely without a fiscal picture in mind. The most successful investors are the ones who can envision a picture—and who build rather than buy the pieces.

How do you build your own financial jigsaw? First, you choose an image by envisioning your personal future. Will you retire at age forty-five or remain self-employed until eighty? Live in a mansion or in a small condo in the city? Spend your twilight years in a long-term care facility or tended to by a private nurse? Do you want to have too little money or too much money?

Once the image is clear, you’ll have to achieve financial literacy to create it. If you do not know how to make money, what type of income is tax favored or tax penalized, when to sell or when to sit tight, your plan is sure to fall apart. With the proper education and experience, however, you can break your plan down into investment vehicles, such as income-producing property, business franchises, and stock portfolios that will optimize your chances of financial well-being.

If you are seeking a loan which will give you additional funds during your retirement a standard mortgage may not be the answer. Instead, you may benefit from a reverse mortgage, which does not have the same rigid repayment standards as a regular loan. In fact, your reverse mortgage lender will give you part of your home’s equity as cash each month, and you will continue to retain home ownership. You will only have to pay the borrowed equity back in full immediately if you leave the home. If you choose not to do so or you or your family is unable to do so, the lender can recoup some or all of the balance through the sale of the home with any additional earnings beyond the owed money going to your family.

No two financial plans are alike, for dreams and comfort levels are different. Some people love camping in the wild, others can’t sleep without a roof over their heads. In general, though, people hope to be either secure, comfortable, or rich. The personal lifestyle you strive for determines what type of investing you’ll pursue. If your plan is to be rich, you must also have a plan to be secure and comfortable.


Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

15 responses on “Personal Financial Plan

  1. I can’t count how many “financial planners” I’ve met who told the importance of planning when all they know is sell insurance 🙂 Funny thing is many of these financial planners are in deep trouble – credit card debts, tight cash flow, and mostly living beyond what they earn.

    Btw, thanks for dropping by my blog.

    • I agree with you. I remember Kiyosaki saying: ‘don’t listen to brokers because they are “broker” than you’. Instead, you should educate yourself and increase your financial literacy education.

  2. I want to retire now! But that is not currently in the plan, I have some retirement products but quite frankly I’m not sure I have adequate planning done. So I definitely need to get with an adviser and figure things out. I’m not getting any younger.

  3. If you want to be financially free, you have to know how to read numbers and be able to understand it. A solid example is that you can multiple yourselves to others that you can do the work easily. If you operate 100 vs. 10 taxis you know that you make most money on 100 taxis and that is 100 times you multiply yourself and it is one of how to read numbers. It is somewhat the Law of Leverage.

  4. i first read this in rich dad poor dad and it actually made a lot of sense. It has been reverberated in other financial books like the intelligent investor by benjamin graham who says that you must not invest a coin until a plan like this and others like an asset allocation plan are well set up

  5. Dude, have you seen the UITF/Mutual Funds 3Q09 performance reports lately? Compared to how I did in the stock market, parang mas okay na ata mag-auto pilot via UITF/MF investing. what do you think?

    • I just visited the site just now and based on their yields, I have seen equity funds of both BDO and Metrobank to have huge YTD returns of at least 60%. WoW!

      I still have some investments in UITF. Unfortunately, it’s still at a loss right now since I invested when the stock market is at its peak before.

    • Tukayo, it’s good to know someone who has the passion to educate himself on the way to financial freedom. I’m confident you’re going to make it. I myself have embarked on this journey though not with the same focus as you have.
      It feels great to make the right investments just because we found time to educate ourselves and persevere. I bought an equity fund worth P40K in 2007 rather than put it in time deposit. I actually forgot about it till recently when i needed to liquidate some assets to pay off some dues. It was already worth P57K. I wouldn’t have earned the same if i had left it in the bank. Now, i’ve started to invest again. And i continue to learn along the way.

  6. Just want to add a few point on top of the question of
    “Where do you want to be?”. When answering this question, we should ask ourselves further. If we plan to be secure, then how long we can remain secured and can we remain secure as long as we are retired? If we plan to be comfortable, then how long we can remain comfortable and can we remain comfortable as long as we are retired? If we can’t remain comfortable for long after retired, then we are actually planning to get poor but not comfortable

    • Good point on that Zen. We must then have assets providing us passive income after we retired for us to live comfortably for a long time.

      Asset accumulation is the key in building a huge portfolio of passive income earners and the younger we start, the higher the possibility that we can achieve it.

  7. Yup, that’s the case with my Equity mutual fund too. But my Balanced mutual fund has already recovered. I feel kinda left out that I didn’t invest in them when I had the cash.

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