The first month of 2014, I met with client V to look into her Wealth Maintenance (WM). In particular, her cashflow and budgeting. Her heart was more interested to get into the Wealth Enhancement (WE) and Wealth Accumulation (WA) bits. However, she knew that without getting her WM in order, she would not be able to find the money for WE and WA. She said she realised she had to do something, when she was consistently spending not only her salary, but her savings and loan repayments (back to her) too. Her savings were fast depleting, and it alarmed her. It was time to do a financial health check. Before we proceeded, I asked if she was ready to take action to turn her situation around. When she said ‘yes’, I knew we were ready to go!
(A) We systematically worked through the following for her WM:
1. Calculate current financial statement.
– A period of the last 12 months’ cash flow.
– Networth statement at this point of time.
– Financial Ratio Analysis.
2. Set up of emergency fund.
3. Allocate a budget for savings and insurance.
(B) We discussed various strategies and tools to get her above figures into the right positions.
Like many of us, she got into her current less-than-ideal financial situation over time. There were no quick fixes to get out. We tailored a progressive plan for her to get back on track, and were happy to note that if she stuck to it, her WM objectives would be met by 30 Sept 2017! It was not all pain though. We structured in periodic rewards, so that she would get little ‘gains’ along the way, while she worked towards her bigger objectives.
She paid an advisory fee and dedicated several hours to take a serious look at her financial health, and get it on track once and for all. Her feedback after our first discussion was:
“Hey Lynn, thank you so much for your help!!! Appreciate the multiple hours you have dedicated to explaining and planning out for my financial “life”. I now have a clearer mind!”
“It feels like another me is gonna emerge from within… I believe I have it within me, just that I just didn’t bother to exercise it…until it got far too sluggish…”
That made my day! Apart from financial advisory being a means to earn my livelihood, it is feedback like these that spurs me on to do better and make a difference wherever I am invited / allowed to.
After about 5 years in this line, it has been some time since I went back to the basics and worked in-depth with a client on Wealth Maintenance. It was refreshing, heartening (to see client’s resolve and ownership), and also a reminder to myself. I realised: now that I have left those ‘can’t even afford to eat $2.30 industrial canteen once-a-day meals’, I have gotten more lax with basic disciplines such as ‘budgeting’ and ‘save first’. Anyone can learn these. However it is an on-going conscious decision to put it into practice, which makes the difference. As building blocks to optimising one’s finances, the basics are never too minor to keep. In other words, ‘basic’ does not mean ‘too elementary’.
In fact, they are part of the foundation on which you build everything else.