Whats your cost if delay investing

Some of us put off financial planning, postpone retirement savings or delay pay off escalating debts.  These eventually translate into a bigger financial loss. To eradicate this habit, learn how time determine the value of money.

• The power of compounding. When money works for us, it grows in value or compound, earning interest on interest and it is one of the greatest aspect of financial planning. 
• The cost of procrastination. If your goal is to raise RM100,000 by age 65,  compounding at an annual rate of 10%, your current annual saving (assuming you are 20 year old now), RM1,132. However if you only start your savings at age 50, your annual saving will be RM22,500.
• Inflation factor. The price of goods and services increases over a period of time. Thus a dollar tomorrow will not buy as much as today's dollar.
• Other lost opportunities. We can be adversely affected financially if we put off other important financial matters like life assurance, retirement plannning, estate planning or even basic financial planning.  Eg the insurance period of a 45 year old is much higher than than for a 20 year old for the same coverage.

Delaying manging our money may result in lesser in value compared to investing now.  

Money Mistakes

1. Not budgeting.  According to experts, budgeting is the first step of financial success, as the method helps one to manage his or her finances properly.
2. Impulsive spending.  Every little thing you spend on adds up, and that could gradually eat up your finances. Unrestrained spending, which can turn into a habit, can lead to wastage, and before you realise it, you see a mountain of debt facing you because your present income just can’t sustain your lifestyle.
3. Debt bondage.  It’s fine to have certain type of debts such as home mortgages to acquire assets, but accumulating too much of credit-card debts is not only costly, but can also be debilitating.
4. No savings.  If you’ve never saved before, you will find yourself in wanting one day. 
5. No sound investments.  While seeking to grow wealth, always bear in mind – there’s no such thing as free lunch; so don’t be fooled by any get rich quick programmes, lest you end up losing more. 

              Source: http://biz.thestar.com.my/news/story.asp?file=/2010/9/4/business/6965433&sec=business

Personal Financial Planning

Personal financial planning is a simple concept of planning for a better future by establishing and achieving your financial goals through adequate and appropriate steps in budgeting, saving, investing, insurance and estate planning.

Financial planning begins the moment you have a mindset to ensure financial independence at an age of your choosing. You will achieve your goals if you have the discipline to follow through your chosen plan of action and patience to wait for the investments to bear fruit.

Financial planning does not mean that you must have a million ringgit to enjoy financial freedom, it can be any amount that you are comfortable with given your choice of living.  But it should also be a holistic approach in that you should take congnisance of other non financial goals.  Money should preferably be viewed as a means to a better and happier life.  Your attitude on how you want to live your life will set the tone for your financial plan. Thus financial independence is not about living a life, but enjoying it to the fullest with no worries about money.