5 tips to start financial planning
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Many people embarking on financial planning for the first time may feel stumped or overwhelmed by the endless “101” financial planning guides telling them to do different things. This can apply to anyone, not just the usual “millennial” crowd. The truth is that if you are an employed working adult, you are rarely starting from ground zero.
Financial planning is the process of understanding your income, expenses, and financial priorities so you can make more informed decisions about your money over time.
How do you start financial planning? You begin by understanding where you currently stand financially, rather than trying to follow every rule or guide at once. Financial planning does not require starting from scratch or making complex changes immediately.
Why is financial planning important for everyone?
Financial planning is important at every stage of life, but the reasons for planning can differ across generations. For millennials, financial planning often focuses on managing competing priorities such as daily expenses, debt, career changes, and long-term goals like home ownership or retirement. Building a plan early can help create structure and improve decision-making as responsibilities grow over time.
For older generations, financial planning may place greater emphasis on protecting savings, preparing for retirement, and managing income during later stages of life. Changes in health, family needs, or employment can also make regular planning essential to stay aligned with evolving goals.
Regardless of age, financial planning helps individuals understand their financial position, anticipate future needs, and adjust to life changes with greater confidence. While priorities may shift over time, having a financial plan provides a consistent framework for making informed money decisions at any stage of life.
Financial planning basics to get started
Here is a list of things that you might already have as part of your financial protection arsenal that you should be aware of:
1. Social Security System (SSS)
Filipinos aged 15 and above are eligible to be part of the government social insurance program, Social Security Program (SSS), which covers you with a package of benefits and compensations in the event of sickness, maternity, disability, retirement, death and funeral. In order for an SSS member to claim lifetime monthly pension, you have to be at least 60 years old with at least 120 monthly contributions. In case of death and if qualified, either the primary beneficiary of the insured person is granted a monthly Death Pension plus a 13th Month Pension payable every December, or the lump sum benefit is paid to designated beneficiaries or legal heir. Check out the SSS website for more information as this should be something you have in mind when you consider your life insurance coverage as part of financial planning.
2. Universal health coverage for the employed
Most private companies in the Philippines offers coverage from Health Maintenance Organizations (HMO) to their employees on top of the PhilHealth membership contribution. These group health plans typically have defined benefits and limits.
- If you are currently employed, start by reviewing your company’s group health insurance policy to understand: what types of coverage are included, such as:
• Hospitalization and surgical expenses
• Outpatient consultations and treatments
• Personal accident coverage
• Critical illness benefits
- The applicable limits or payouts, including:
• Annual benefit limits
• Per-illness or per-visit caps
• Any exclusions or waiting periods
Once you are familiar with your existing coverage, you can make more informed decisions by:
Using your group health benefits where applicable
Assessing whether additional private health insurance is needed
Determining how much you can allocate toward broader or long-term coverage while building your investment profile
One common financial planning mistake is not fully understanding existing coverage, which can lead to paying for duplicate benefits. Having a clear view of what your group health policy already covers can help you avoid using private insurance for expenses that are fully or partially covered under your employer-provided plan.
3. Checking in with your parents
Check with mom and dad. Your parents might have already purchased insurance plans for you when you were young. You'll want to avoid purchasing duplicate insurance plans, or policies with overlapping coverage.
To start your financial planning strategically, it is important to have this conversation with your parents as soon as you step into the workforce, or even earlier if you want to kick start your insurance planning. This process will help you understand what you already have and greatly assist you (and your potential financial consultant) in coming up with a suitable insurance plan.
4. Reviewing gaps and overlaps in coverage
Once you're armed with knowledge of what you have, the next step is to review the gaps and overlaps in coverage. These gaps and overlaps present an opportunity to remove or add coverage to your private insurance policies. For example, if you have a health insurance policy but your HMO already covers it, you may want to avoid the overlap and save on premium payments by sticking with the group coverage if the protection is sufficient. Alternatively, if your group insurance policy doesn’t have life protection coverage and you’re not covered for it by your existing private policies - you can fix this gap by adding it as a rider or getting a new policy.
5. Knowing where to start
Starting out on a clean slate with financial planning can be a daunting task, but there's always somewhere to start if you feel hesitant to speak with a financial planner before doing any research. More often than not, you would already have some form of insurance protection without even realizing it. Arm yourself with the right information and start your financial planning process right!
Bonus tip: build an emergency fund early
An emergency fund is money set aside specifically for unexpected expenses, such as medical needs, urgent repairs, or temporary income disruptions. Having this buffer in place can help prevent short-term setbacks from affecting longer-term financial plans. For those starting financial planning, building an emergency fund can support stability while other savings and goals are still taking shape.
Budgeting 101: the basics of creating a monthly budget
Creating a monthly budget helps turn financial planning goals into practical, day-to-day actions. Rather than restricting spending, budgeting provides clarity on how money is allocated and where adjustments may be needed.
To get started, begin by listing your regular sources of income and identifying fixed expenses such as rent, utilities, and insurance. Next, account for variable expenses like food, transportation, and discretionary spending. This overview helps you understand how much flexibility you have each month and where savings or changes may be possible.
Sticking to a budget often becomes easier when it is reviewed regularly. Checking your budget at the end of each month allows you to see what worked, what did not, and where small adjustments can improve consistency over time.
Setting financial goals: achieving short, medium, and long-term success
Budgeting works best when it is guided by clear financial goals. Short-term goals may include managing monthly expenses or building an emergency fund, while medium-term goals could involve saving for travel or major purchases. Long-term goals often focus on retirement or long-range financial security.
Breaking larger goals into smaller, manageable steps can make them feel more achievable. For example, instead of focusing on a large annual target, setting monthly savings amounts can help align daily spending decisions with longer-term objectives. This approach allows progress to feel more visible and manageable.
Common mistakes to avoid during financial planning
When creating and following a budget, some common challenges can affect progress, including:
Setting unrealistic spending limits that are difficult to maintain over time
Overlooking irregular or occasional expenses, such as annual fees or seasonal costs
Not reviewing or updating the budget regularly as income or priorities change
Focusing only on short-term expenses while ignoring longer-term financial goals
Treating budgeting as a one-time task instead of an ongoing habit
Avoiding these pitfalls starts with flexibility and awareness. A budget should evolve as your financial situation changes, helping support more consistent and effective financial planning over time.
Now that you understand what is financial planning and what the steps are, you can kick start your financial review. Reach out to us for a conversation.
Key takeaways
Understand your income and expenses to know where your money is going before making any plans.
Set clear and realistic financial goals to give your planning direction and purpose.
Build a regular saving habit, even with small amounts, to support future needs.
Learn financial planning basics before making major money decisions.
Review and adjust your plan over time as your goals, income, and priorities change.
Frequently asked questions
Financial planning is the process of understanding your income, expenses, goals, and financial priorities so you can make more informed decisions about your money. It is important because it helps you prepare for future needs, manage day-to-day finances, and adapt to changes in your personal or financial situation.
A good starting point is gaining clarity on your current financial situation. This includes reviewing your income, tracking expenses, and identifying short- and long-term goals. Building awareness first can make the rest of the planning process more manageable.
Many people begin by understanding their cash flow and setting realistic goals. Establishing basic habits, such as budgeting and saving regularly, can help create a stable base before moving on to more complex financial decisions.
Yes. Financial planning is not limited to investing. It also includes budgeting, saving, managing expenses, and understanding financial risks. Learning the basics first can help you make more informed choices if and when you explore investments later.
Balancing both often involves prioritizing needs and spreading savings across different goals. Short-term goals can focus on immediate needs, while long-term planning supports future stability. Reviewing goals regularly can help maintain balance as priorities change.
Insurance can play a role in managing financial risks by helping protect against unexpected events. Understanding existing coverage and how it fits into your overall plan can support more informed financial decisions as part of a broader planning approach.
Want to learn more about financial planning? We're here for you!
Talk to a Manulife Financial Advisor!