Speaker 1: Many people find financial planning complex and simply choose to put it off. Others may be confused. It's actually pretty simple. Financial planning, simply put, is charting and following a roadmap to get from where you are to where you want to be 10, 15, or 20 years from now. It's like bringing your family for a road trip. Your parents, spouse, and of course, the children. You start from getting to know your current financial position. What financial resources or assets do you already have in place? What sort of liabilities do you have? And how much? How's your cash flow position? Is it enough to power your journey? From your financial position, financial ratios can point to areas of attention. Are you saving enough? Are you borrowing too much? Or too little? Are you paying too much bad debt? Next, you want to know what destinations you want to bring your family. Say, sending your children to university, owning properties giving you rental income, or retiring rich in the Bahamas. Write down those goals and put down the timeline and amount needed. A general roadmap can then be planned out, taking into account the distance, time, and resources needed. Next, determine the optimal asset allocation needed to achieve those goals. It has to match risk and return needs and your loss aversion. It's like choosing a car for the journey, depending if you like to go fast and furious, or slow and steady. You may want a Ferrari, a four-wheel drive, or something in between. Given your resources, it may not be realistic to reach all the goals in the time that you have initially planned. In that case, you may need to adjust the goals or adjust your finances, like cutting unnecessary expenses, eliminating bad debt, or increasing leverage. On the other hand, if the goals mean so much to you, you may just need to drive a little faster and work a bit harder. As you plan the roadmap, you'll need Plan B or Plan C to deal with contingencies like medical bills, loss of income due to disability, or even death, so that the family can still reach the destination you planned out. And off you go. As all road trips go, they never happen exactly the way you planned. There may be road bumps, obstacles, distractions, maybe even disasters that take you off the path. Along the way, you may need to slow down when there is a hazard ahead and take advantage of opportunities to speed up. When you ultimately arrive at the destination, you'll want to be in a position that your money is now working for you, instead of you working for your money. And that's Financial Planning Explained.