( Excerpts of the article of the same title written by Larissa Josephine C. Villa, Researcher of the Business World, from an Interview of Mr. Jose L. Cuisia, Jr . The article was published in a Special Supplement published by the Business World on June 21, 2005. )

Financial planning is the process of meeting one’s life goals through the proper management of finances. Life goals, which usually involve necessities of life, can include buying a home, saving for child’s education, planning for retirement or estate planning.

Undoubtedly, financial planning provides direction and meaning to one’s financial decisions. It allows anyone to understand how each financial decision affects other areas of his finances.


A financial plan summarizes one’s earnings, expenses and what will be done with the excess, or the savings.

But even before the plan, it is necessary to first identify one’s needs. Your plan provides for your needs, so that is the foundation. By doing a needs analysis, not only is one able to budget his finances, but also prioritize his needs and see where his earnings can take him.

As most people go to broadly predictable stages of development in their adult lives – from young adulthood to building a family, reaching the peak of a career, and retirement – their financial goals and needs also change.

It is easy to identify what one needs in each stage of his life. Education, health, protection and retirement are the primary considerations. What makes it tough is the struggle to have these needs while dodging the blows of life – thus, the need for a plan that will provide for these necessities and even allow one to have more in the future.

Unfortunately, many Filipinos have yet to discover the benefits of financial planning. Filipinos have to learn more about finance management, overseas Filipinos workers especially. Many of our OFWs come back and use all their savings for consumption. That is why we have to encourage them to save more of their funds for the rainy days.

It is true that the journey to financial security is not a smooth one. But the right preparation should take you from where you are now to where you want to be in the future.

  1. Setting goals and objectives is the first step of any financial planning process. If you do not know where you are going , how can you know when you get there, or even decide which route to take?
  2. Setting goals and objectives should lead to a sound financial plan. Keep in mind also that heading in a general direction will not guarantee success in reaching your final destination.
  3. Then, you have to re-evaluate your financial situation periodically, since financial goals may change over the years due to changes in lifestyle or circumstances , such as an inheritance, marriage, or change of job status. Financial planners advise that you revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your short and long term goals.
  4. Third, be realistic in your expectations. Financial planning is a common- sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control, such as inflation or changes in the stock market or interest rates, will affect your financial planning results.
  5. Another step to make financial planning work is to realize that you are in charge. if you are working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all the relevant information on your financial situation.
  6. And finally, it is always better to start planning as soon as you can. Do not delay financial planning. People who save or invest small amounts of money early often tend to do better than those who wait until later in life. In the same way, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.

With the help of some personal finance software packages or self-help books, one can actually do his own financial planning. However, in many instances, a professional financial planner is needed. If you need expertise you don’t possess in certain areas of your finances, or if you have an immediate need or unexpected life event, a professional planner is simply the answer.

The PLIA member companies have in their respective rosters professional financial planners, ready and willing to be of help. Please check the websites or contact details of the companies for further information and assistance.