A note to the youth

Wealth, like a tree, grows from a seed. The sooner you plant that seed the sooner shall the tree grow.– George S. ClasonI LEARNED and started doing personal financial planning when I was already in my 30s. I am thankful that my insurance career taught and exposed me to the world of savings, protection and investment. Now that I am retired, I get to enjoy the fruits of my financial education. However, if I could redo things all over again, I would start much younger and much sooner.But since I can no longer bring back the hands of time, I just share the importance of financial planning with the young ones, starting with my children. Early on, I shared with them what I learned about the value of money management. Today, they have their own savings, insurance and investment portfolio.The majority of our workforce is composed of Gen Ys and Zs; thus, teaching them financial planning becomes more crucial. As they pursue personal and professional growth, financial planning will empower them to develop healthy money habits and choices and secure their financial welfare. With this, they will avoid committing the common money mistakes made by their elders and break the cycle of financial dependency on the family and the community.All eyes are on Olympic two-time gold medalist Carlos Yulo as he continues to receive cash incentives, which are now pegged at P113 million. At age 24 and in just a matter of days, Carlos became one of the youngest Filipino multimillionaires. For as long as he stays smart with his money moves, Carlos' future is financially secured.But not everyone has the same instant fortune as young Carlos. Most millennials and Gen Ys have to wait longer to build their own wealth. Now, my question to them is, at your current age, have you made any of the following smart money moves to help you reach your financial goal?If you do not know where you're going, then any road will take you there ... even the wrong ones. Having a clear picture of what you want is key to achieving financial independence. You may start crafting your goals by asking yourself questions: How do I want my finances to look like at the end of 2024, the end of three or five years? How much monthly savings do I want to have? When do I plan to have my first car or my first house? Your answers to these questions will guide you as you set your smart money goals, which have to be specific, measurable, realistic and time-bound.Have you experienced wondering where your one month's salary went or why you have no money left yet still have outstanding obligations? You need to be comfortable with keeping a budget, as it will instill the discipline of tracking where your money is going. One of the most popular budget formulas suggested by finance gurus is the 70-20-10, where 70 percent of your income goes to your needs or essential expenses like housing, food and clothing; 20 percent goes to your savings, such as retirement and emergency funds; and 10 percent goes to your wants or discretionary spendings like entertainment and travels. This way, you are able to cover all your money baskets. Regardless of the size of your income, stick to this formula. Learn to budget as soon as you start earning, as you will carry this as you earn more money later on.Sticking to the 20 percent for savings of the 70-20-10 formula, is the most challenging. Most of the time, it's just 50-50, equally divided between needs and wants. The term YOLO (You Only Live Once), coined by the millennials, reflects this spending attitude. They want to experience everything now, ASAP — sometimes forgetting that there is still tomorrow, which may bring uncertainties. Start saving money from the get-go. From your income, immediately set aside 20 percent for savings even before spending on needs and wants. Regardless of the amount, just save. We never know when it will rain, but it will surely rain. So, better save for those rainy days.As much as you can, stay debt-free. With the convenience of credit cards and other payment platforms and pay-later schemes, it is very tempting to spend beyond your means. As no actual cash is going out, you don't realize that you are already overspending, which may lead to loans or debts. Many youngsters (and adults) have fallen deep into credit card debts. The best advice I got when I was just starting with my credit card was to always settle in full my due bills. The problem starts when you just pay the minimum or pay installment, not realizing the interest you are accumulating. So, I make sure that the amount I charge to my credit card is what I am confident of paying in full when the due date comes. It's not wise to start your adulting with debts. Learn to spend wisely and live within your means.Once you have created your savings funds (at least six months of your monthly salary), it's time to invest. You want to retire at age 45 or 50? Then start investing in your 20s because time is on your side. The longer you stay invested, the higher the chance of growing your money. That's the beauty of compounding interest (interest on the money you've saved and on the interest you earn along the way). The interest you get from your savings account will not get you near your money goals. Invest in growing your money. Unlike when millions were needed to invest, now there's an abundance of instruments and platforms where you can invest for a minimal amount. For as low as P50, you can invest in GInvest. The more extra funds you have, the more investment options are available to you. Just beware of investment scams. It's not important how much your initial investment is, what matters is you start and consistently build on it.The objective of financial planning is not just to have more money; it is to live a life you want on your terms. When you are financially prepared, you have the freedom to make choices aligned with your aspirations and values. But you don't do it on the eve of your retirement. The key is to lay a strong financial foundation early in your life. The younger, the better.