SAVE
a little each day, every day and see small things grow big,” says Bam
Aquino, a social entrepreneur in a Sun Life advertisement. Yet, long
before those words were popularized in a television commercial, the
Japanese were already living that principle, which they call Kaizen.
The word Kaizen comes
from two words: “Kai” which means “to change” and “zen” which means
“for the better.” Both words embody the philosophy of making continuous
improvements in all aspects of life.
With
a gross domestic product (GDP of $5 trillion), Japan is the world’s
second-largest economy next to the United States. Yet Japan didn’t
achieve its status as a global economic leader dramatically; it took
them 60 long years to recover and rebuild their country from the ravages
of World War II. And one of the crucial factors that made Japan’s
momentous growth possible was the application of kaizen, a strong desire
to be better and to be the best.
The
principle of continuous improvement can likewise be applied in
financial planning. So diverse is the field that we can always find
something to improve on. In asset allocation, for instance, portfolios
can be regularly rebalanced for us to maximize gains and opportunities
and minimize losses and risks. In debt management, we can look for
institutions that offer lower interests and more flexible terms. And in
financial literacy, we can be wiser and smarter about the environment
today than yesterday.
One
of my greatest frustrations as a financial planner is that most of the
people I have talked to do not want to undergo the process of financial
planning. They feel it’s boring, old-fashioned and down-right slow.
Guess what? They are right. It is boring, old-fashion and down-right
slow. That’s why it is effective.
But
others who heeded the advice, reaped the rewards. One of my clients,
Celine Salazar, a single mother of two who works in the training and
development department of a business process outsourcing company started
2009 with nothing in savings. But I worked with her through a formal
financial plan. She diligently saved P2,000 every pay day. Within a
year, her savings grew to more than P50,000. Considering all her
obligations and the environment she was in, it was a great
accomplishment.
Salazar
will be the first to agree that it wasn’t an overnight success. It did
take her quite a while to accumulate that amount. But she was steadfast
in her commitment and even when she was on maternity leave, she still
saved that up. Yes, P2,000 may not be much. But when added to the other
P2,000 she saved before, it becomes significant.
Then
there’s another client of mine who invests regularly in mutual funds.
Not even the financial crisis that struck the world two years ago
stopped him from investing. As a result of this practice, he was able to
buy shares at lower prices. The result: huge gains when the market
rebounded.
The Kaizen principle can also help us in being keener in spotting opportunities to make our money grow legitimately.
Randell
Tiongson, one of the most respected financial planners in the
Philippines, noted this paradox, “For a conservative country like the
Philippines, a lot of people are getting scammed.”
True. Several
years ago, a financial organization was offering lucrative returns for
its investors. Enticed by the potential of growing money exponentially, a
lot of people were lured into it. Despite tell-tale signs of its being a
pyramiding scheme, nobody bothered questioning its legitimacy. As long
as the investors were paid, everyone was happy.
A
crackdown ensued and it was proven that the institution was indeed a
scam. When the dust settled, the investors were bewildered. The
masterminds were nowhere to be found, taking with them millions and
millions of pesos along with the dreams of the investors.
Several
years after, another organization offered the same thing. Although it
was a Ponzi scheme instead, the result was the same: Investors lost
money.
Financial
planning never advocates get-rich quick schemes but rather a consistent
saving and investing approach to achieve financial independence.
Kaizen is all about improvements. No
matter how small, they are still improvements. Vincent Van Gogh once
said, “Great things are not done by impulse but by a series of small
things brought together.”
The
philosophy is applicable to money management as it is to any facet.
Even if one is contented with their financial status, there is always a
way to improve it further, to make it better, to look for a higher
yielding investment, to spend a little less, to save a little more, and
to dream a bigger dream.
Kendrick
Chua is a Registered Financial Planner of RFP Philippines. To learn
more about personal financial planning, join the RFP program Batch 29 on
October 13 to December 8. For more details, e-mail
info@rfp.ph or visit www.rfp.ph.
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