Financial planning requires a mixture of discipline and strategy. But the very foundation is to recognize why you are doing it.

To lead to that is to answer the question: what is your greatest financial asset? The answer is you.

Being you, means acknowledging your limitations: you are not always strong, your earnings can vary, you can get sick, you can die anytime.

Contrary to what others say that financial planning is for the future, I say that financial planning is to enable you to live your best life now.

That is why, at the top of all my financial planning advice is to understand what money stands for.

Money is a store of value. Which is why, you don’t work for money but you work on increasing the benefit or value that you can give.

So the first financial planning tip that I will give is to know how you can increase the value that you give. Knowing this will give you a game plan to achieve what you need.

Next is to know your cash position and cash flow. One of the many mistakes people do is to think their cash position is also their cash flow. This is wrong.

Your cash position is the cash you have right now. This amount right now may or may not be enough to let you do what you want. Your cash flow on the other hand is the timing of your cash inflows and outflows. Cash inflows would be whatever you are able to collect from your job, your business or any other source of income you may have. Your cash outflows are the ways that money goes out of your hands. It may be to pay your mortgage, your amortization, your groceries, tuition and the like. Now, it is important to note that your expenses, as well as, your income are not everyday. In order to know whether what you need money for and what you have is enough, you need a budget.

That is my next tip: maintain a budget.  A budget is not just a listing of your income and expenses but a way for you to make sure that your expenses do not go over your income.

In budgeting, I teach that you identify the income that comes daily, weekly, monthly, quarterly, semi annually or annually. You also need to identify the frequency of your expenses. Which expenses do you spend for daily, weekly, monthly, quarterly, semi annually and annually. Once you have identified the frequency of your income and expenses you then check the net cash flow. Is your daily income sufficient for your daily expenses? Is your weekly income sufficient for your weekly expenses? Is your monthly income sufficient for your monthly expenses? Is your quarterly income enough to support your quarterly expenses? And so on and so forth.

If it is not enough, then you will need to explore the sources from which you will get the additional cash flow that you need. This is why it is important to know how you can increase your value. If in case you do not have any other sources, then you have to explore ways in which to lessen your expenses. The aim of the budget is for you live within your means so you can prepare for your future. There are a lot of ways to budget the money that you get. The one I recommend the most is 50-20-20-10. Fifty percent of what you earn is for your needs, the first 20% of what you earn is for luxury, meaning paying yourself and the next 20% of what you earn is for your financial foundation. The 10% is for giving back or for your charity endeavours. It takes discipline to stick to what you have written in your budget. The more consistent you are, the more it becomes easy.

Financial mishaps happen when you keep on spending money that you do not have. For example, you see your cash position today and it is one million. Without taking into consideration the cash flow, meaning the cash inflow and outflow for the 1million, you go ahead and buy something that was not initially in the budget for the cash position you have.

Remember that your assets can only come from two sources, from borrowing or from personal savings. This is essentially the accounting equation. Asset is equal to liability and equity.

Equity on a personal level is your savings. This is what you have kept after paying for your liabilities.

People have to realize that financial freedom is not a destination, it is a journey. Your needs change according to your capacity which is why your state of financial freedom also varies. As you journey, you make sure that your situation improves as compared to your yesterday. We can only define financial freedom as that state having the choice, control and dignity at any point in time.

If at this state in your life, you have accumulated debt that is bothering you, you have to take care of it. In accounting, debt is a liability and we define a liability as a present obligation arising from a past transaction that will make you sacrifice resources in the future. In other words, a debt is your past, present and future. This is why you feel you are unable to get out from a debt. Don’t get me wrong. Not all debts are bad. The basic rule of thumb is if a debt allows you to create a resource with a future value then that debt is good. For example, if you took out a debt to develop a resort, that is a good debt because the resort will give you money with good management increasing your net worth. If you took out a debt from your credit card to travel without any cash budgeted for it, then that is a bad debt because you are spending money that you do not have.

There are two strategies to effectively lower your debt: we call this the snowball and the avalanche method.

In the snowball method, you pay the debt with the least balance first and then you move on to the next debt with the least balance once you are done with the first. The advantage of this method is that it keeps you going because you can tangibly see one debt being done after another.

In the avalanche method, you pay the debt with the highest interest first. This allows you to save a lot on interest cost.

The method you choose should be aligned with your personality. If you are someone who get motivated when things get done, you go for the snowball method. If you are someone who gets motivated when you are able to save on costs, then go for the avalanche method.

No matter what method you choose, make sure that that you lessen your debt for it will affect your financial plan.

The next tip that I will give is to commit to creating your emergency fund if you do not have one yet. Having emergency funds worth 3-6 months of your expenses will give a safety net that will work wonders for you in your financial decision making. When you do not need to have money right this instant, it allows you to broaden your horizon and weigh the pros and cons of a decision more meticulously than when you need to earn the money already.

My next tip is to make sure you protect your lifestyle. A lot of people start saving at once without protecting their lifestyle first. This is why when an emergency happens, like a health emergency, the savings that you have accumulated will be used to fund for your health emergency. After the health emergency, you will find yourself with lesser savings than before or worse without  savings anymore. This is where risk management comes in. You have to shift the responsibility of your life’s certain risks to a third party. And the best product to use for this situation is a life insurance.

I do not understand why a lot of people shy away from getting life insurance. Do we have certainty in this life? No. Will we ever get sick? Yes. Is there a possibility for accidents to happen? Yes. Is there a possibility that when we pass on unexpectedly, the dreams we have for our children to finish college, for our family to maintain the lifestyle that they have been used to will not happen? Yes. If the risks to our life are certain, then why are we managing our risks?

I think one of the problems of the life insurance industry is that it has a lot of agents who do not say the truth because of 2 things: 1, they want to merely earn and are just doing it for the money or 2, they are simply not trained.

A good financial advisor will help you navigate your current situation to get you to where you would like to be using the resources that you have to last for your lifetime and beyond. So find yourself a good financial advisor.

In the financial planning pyramid, the foundation is protection, then wealth accumulation and last is wealth distribution. This is why my last tip for 2025 is to make sure that what you have accumulated will not become a burden to the ones who will be left behind. You need an exit plan.

If you have not accumulated anything, at least leave your loved ones something that will make the next generation start with money. The best product for this is still life insurance. You see, life insurance gives the heirs money that is not taxable that they can use immediately.

If you have accumulated some, make sure you give your heirs money to pay for the taxes on the inheritance that they will get. Again, the best product for this is life insurance.

To recap my tips for financial planning in 2025:

1. Understand what money stands for
2. Know how you can increase your value
3. Know your cash position and cash flow
4. Maintain and commit to a budget
5. Reduce your debt
6. Commit to creating an emergency fund
7. Protect your lifestyle
8.  Have a plan in place to distribute your assets

Financial planning may be difficult but a good one is guaranteed to change your life.