01
Do you worry about the standard of living when you retire? Have you accumulated enough money for your old aged days? How much money is enough money? That is an issue we should take seriously even you are still young.
Some people, especially younger ones think retirement is a long away from now, so they spend every penny they have earned. Some even borrow money online in order to afford their current lifestyle. A slogan usually quarter by these people is: we should all treat ourselves better now.
They believe it is much too earlier to worry about it now and by magic, it might work out in the end. We know it is a daydream.
02
Lifestyle planning is not necessarily related to old age or somebody with a good pension. We all have to consider it carefully once we enter society. The sooner, the better.
However, where should we start? A lifestyle financial planner says the starting point is we need to know the lifetime cashflow forecast.
In order to do this, we need four numbers.
The first one is your income, the money you have coming, from your salary, for example. And the second is your expenditure, which means the money you pay out, for rent, food, entertainment, transport, etc.
The other one is assets, which refers to the value of things that you own, like property cars, jewelry, and, savings and investments. The last one is liabilities, which is the opposite of assets. It refers to the things that you owe, like credit cards, car loans, and mortgages.
Once we get the four numbers, we can calculate a lifetime cashflow forecast and what your future lifestyle would be if you do nothing at all. And what is the difference if you make good use of financial planning and financial products to help you.
That is what lifestyle financial planning will do. An expert who leads a financial company in the UK says, these days she has quite a few younger clients who come to us and ask, we know a little bit about these financial things, and we don't know what they will do for us, we need you to give us a hand. We want to be financially organized and avoid messy economic situations when we are old.
03
From above, we can see that some savvy young people have realized that they need a lifestyle financial planning for the future they can't go on like that, penny-in-and-penny-out. What they need are financial knowledge and common sense.
Try your best to get more assets such as savings and investments and control your expenditures. It is hard and painful sometimes, but there is no way out, except you have wealthy parents or grandparents.
Otherwise, you start with a spreadsheet and list all your incomes and expenditures from month to month. After a while, you will know where your incomes are from and where your payments are going, then cut off necessary payment items, save up every coin you have and put it into an investment account. Let the compound interest principle plays a part. Fortunately enough, years later there would be some money accumulated to support your old age lifestyle.
