Ask Melanie

Grasp your priorities in life with a budget

Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries.

PUBLISHED : Monday, 29 July, 2013, 12:00am
UPDATED : Monday, 29 July, 2013, 3:53am

Life is a lottery. Why bother with financial planning?

Life is a lottery and, even for the most controlling, mostly beyond our control. All we can hope for is to manage the odds and relish the evens.

Financial planning is, at least, risk management and, at best, wealth enhancement.

A lot of financial planning comes down to common sense (don't spend more than you earn) but so does diet and exercise (don't eat more than you expend) and most of us need help with all this.

I'm always gratefully surprised at the number of people who want advice on budgeting and setting prudent savings and investing goals.

Motherhood stuff, yes, but a budget reveals more than we initially realise. It reflects not just what we spend our money on but what we choose to spend our money on. It's a mirror of personal values, of vices and virtues. Your budget may help you fathom what's worth striving for.

Once you've come to grips with that, you can at least defend against sideswipes.

The risk management side of financial planning was on my mind this month while climbing in Mont Blanc. To avoid the obvious risks I mostly employed common sense and put one foot in front of, or above, the other. The rest was left to my guide, Mark, a master of risk management.

With our fortunes tied together by a length of rope on steep and slippery slopes, he had to assess and manage our capabilities, resources and resolution. That was against a backdrop of changing snow and ice conditions that demanded continual realignment of our plans and, sometimes, modification of our goals. But we always bothered to plan and I knew and trusted that Mark's layers of experience and skill enabled him to appraise and manage the interplay of risks not yet obvious to me.

There are parallels between Mark's business and mine. We both want our clients to achieve their goals, we both see risks not always obvious to them, and we must educate our clients while not panicking them into paralysis.

Money, even a little set aside, gives us options. Whether material wealth makes us happy is debatable. But we certainly need the basics - a roof over our heads, food on the table, decent education and health care - if we are then going to meet our full potential. Financial planning is about creating the means to get to that greater goal.

So there's usually a huge amount at stake. Through a lifetime we change, what we want changes, and what we think will make us happy changes.

These changes happen against a kaleidoscope of external changes. We can give up, stunned in the headlights, but there's no standing still. If we don't make decisions they are made by default for us.

So taking stock, thinking about your goals, preparing a financial plan and being prepared to modify it is worth bothering about. In my experience knowing where you're at each step of the way, even if it seems a modest start, is the first step in the long haul. It creates a more resilient base from which to seize opportunities in life's lottery.


The views presented are of a general nature. For specific advice, talk to a professional planner. See the column archive at