What are the common mistakes when it comes to financial planning?

Fitz: Well, a lot of people, when they think about financial planning, they immediately go to investing. How do I grow my money? So that's a common mistake because when it comes to financial planning, you really need to first define your financial goals. A lot of people believe that the goal for their money is to grow it. I believe that your goal for your money is to be able to afford the dreams that you have for your family, for yourself, the things that you want to do with your life. So that's really the use of money.

And when it comes to financial planning, you really need to have that goal first before you are able to come up with a strategy, with a plan on how you will be able to achieve those goals. It’s like going to a particular place. You cannot reach a destination if you don't define where you want to go. When people ask me what's the best investment, it's just like asking me what's the best vehicle to take. But I have to know where do you want to go? If you're just planning to go to the sari-sari store around the corner, I will not tell you to take your car. You can just walk.

So financial planning is like that. You have to define where you want to go so that you will have the right vehicle that will bring you to that destination. And that's the common mistake that I observed when it comes to financial planning. Everyone's just so focused on growing their money. But they don't ask why they want to grow their money. What is it for? So that's the most common mistake that I observe.

Sean: I think one of the most common mistakes that I know is, they're planning to buy the next iPhone.

Fitz: Well, for me, there’s nothing wrong with that as long as it is within your budget. So I think that's a common misconception when it comes to financial planning. We Filipinos have that mindset that it's wrong to go to Starbucks and have expensive coffee, it's wrong to buy luxuries or gadgets for you. But as a financial planner, my goal is for you to be able to afford both the things that you need and the things that you want. Of course, the priority is to first have the things that you need, but there's nothing wrong with buying the things that you want as long as you don't compromise your finances and don't waste your money on things that are not necessary for your life.

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