Common mistakes in financial planning

By Kenney Khew

Many people cannot achieve their financial goals due to various mistakes. The following are the common mistakes in financial planning.

1. No goals in life

This was first and paramount mistake that many had. They tend not to set any financial goals in life and cannot prioritise them according to their preference. Therefore, many end up with nothing to achieve over time. Simply put, they do not know exactly what is needed for their retirement fund or children education fund.

2. Irrationally afraid

Some people tend to think everything in the negative way. For instance, they are very afraid of losing even one cent or panic whenever their investment value dropped due to various factors including market cycles, pandemic and change of government policy.

Investment involves some risk taking but if they put all their money in fixed deposit, they will complain that they cannot achieve their goals and value of money being eroded by inflation rate in the long term.

3. Spend first and save later habit

We must learn to save. But pay yourself first is important. Many people do not see the importance of this matter. For example, a person saves about 10% of his monthly income of RM5,000 and he will have a total of RM120,000 after 20 years later.

4. Poor time management skill

Everyone should learn time management. In financial planning, time management is very crucial in the aspect of investment as well as insurance planning!

There is no such thing as ‘durian runtuh’ in investment planning by putting lump sum of money and wait for miracle to happen. You need time to accumulate your wealth especially to prepare for retirement and children education.

When it comes to insurance, you cannot expect to stay healthy from 20 to 80 years old. Thus, you need to buy insurance for protection purposes as early as possible.

5. Negative attitude

Please do not have an negative attitude whenever a licensed financial planner approach you to discuss about your personal financial planning.

They tend to have certain belief, behavior and mind set such as LFP is an insurance agent trying to just sell policies.

In fact, an experience and professional LFP is not a product seller or investment market ‘fortune teller’ but merely looking at your financial status entirely by going through six steps of financial planning and prepare a comprehensive financial plan for you as a road map towards your financial goals.

6. Knowledge and action

Some people have studied and learnt personal financial planning in school , university or college. Therefore, it is not wrong by taking your own action when it comes to financial planning.

However, you need to have strong self discipline and monitor all your financials without any delay and involving your emotions especially in investment planning. Furthermore, you need to be aware or keep abreast with the external resources that are available to assist you in the process.

7. Emotional handling of financial strategies

Many people tend to argue and quarrel with LFP or investment advisor whenever their investment portfolios make losses and tend to ignore the strategies agreed in the first place.

Another example is in insurance planning. Many people tend to overlook pre-existing illness clause in the insurance policies. They tend to buy insurance whenever they get their medical report.

8. Spend less time with licensed financial planner

Many fail to plan their financials as they do not spend enough time with their LFP. The reasons include being too busy, too much work or too complicated.

Apart from that, some people are very unwilling to pay the engagement fees to LFP and prefer to do their own financial planning.

But their opportunity cost is they cannot get an independent financial planning advice towards their goals, which will more likely to yield better returns in the longer run.

Kenney Khew is chairman of FPAM Johor and also a licensed financial planner of Phillip Wealth Planners Sdn Bhd. He can be contacted at

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