“A long healthy life is no accident. It begins with good genes, but it also depends on good habits.” – Dan Buettner, a National Geographic Fellow and New York Times-bestselling author
It is said that Filipinos are an unprepared bunch. We see it on the news everyday, in fact. When calamities hit our country, we scamper in fear because either we are misinformed, ill-prepared or both. Sadly, we even know that life throws curve balls at us and when these things suddenly strike us, most of us are not prepared. For those who are smart enough to keep their finances in check, lucky them because they don’t have to worry about these things. For most of us, however, our finances will almost always be affected by these dilemmas. This is where the importance of financial planning comes in.
A financial plan is basically a person’s game plan for their long-term financial security and when we talk about it, we cannot escape the topic of insurance (i.e risk management). Insurance is a contract in which a person is offered financial protection and/or reimbursement against losses by an insurance company. There are many types of insurance but the focus of this article will be personal insurance, those that insure human life values against the risks of death, injury, illness, or any personal items that an individual own. This type of insurance covers a specific aspect of our lives and is undeniably important to our financial future.
My dear reader, insurance is good but it isn’t free. Milton Friedman, a prominent economist, once quipped, “There is no such thing as free lunch” and the same thing goes for insurance. You are basically paying someone to protect you and your loved ones in times of crisis and that protection comes at a cost. Usually, the better the protection, the higher the premiums will be. For most Filipinos, getting insurance is an additional cost. While it is true that insurance is expensive and definitely takes up a significant portion of our budget, we have to realize that not having it could result in more financial problems in the future. Most financial planners would tell you that the expense of not having insurance cannot be compared to the expense of living without it.
Since most Filipinos don’t even have personal insurance or a solid financial plan in general, it’s no surprise that most also don’t have an estate plan. An average Filipino would give you a raised eyebrow if you talk about estate planning, but then again, no shocker. In the course of our lifetime, we acquire things – house, car, investments funds, the insurance that we get for ourselves. All the things that are under our ownership constitute our estate. Estate planning then involves planning for how our assets and properties (collectively, our estate) will be preserved, managed, and distributed after we pass away.
In Filipino culture, we would think that estate planning is solely for the rich so that they may preserve their wealth. Now’s a good time to debunk that. Even for a middle-class citizen, estate planning addresses comfort for our loved ones. This would allow them to have food on their tables and for our children to pursue their education. In essence, you secure your loved ones’ future with your estate plan. Another good thing that comes with estate planning is tax-effectiveness. State-imposed taxes also apply to estate plans and if it’s not done properly, these taxes can considerably reduce the value of your estate before it is distributed to your beneficiaries.
Getting started on the right track with estate planning is difficult because it requires a certain knowledge of the law and personal finance. The best step forward is to talk to a Registered Financial Consultant who can help out in getting protection and security from life’s uncertainties. After all, we all want to continue to enjoy the quality of life that we want despite the unexpected adversities that we may face, including death, which is inevitable. Getting the right insurance and drafting an estate plan that’s tailor-fitted to your lifestyle will help you with that.
To our ever-supportive readers, we are inviting you to be a globally recognized Registered Financial Consultant. Once you attend and pass the training, you will stand out as a qualified Financial Advisor with the RFC designation. If you’re interested, send us a message on our Facebook page. or email me at firstname.lastname@example.org.
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. It is mainly for your entertainment and education only.