If you were to pick up any book on financial planning, most will convey to you the importance of maintaining good health in your golden years, so that you are able to enjoy your retirement to the fullest. I couldn’t agree more with that. However, in my opinion, the relationship of good health and effective financial planning begins long before retirement, when we are still in our student years. IN OUR Malaysian culture, we frequently hear the saying “health is wealth” being bandied about, to the point we turn a deaf ear to it. But have you ever stopped to ponder what the saying truly means? Does good health really equal to good wealth? With 2021 just starting, I think this is a timely topic to visit as we start making plans for the year. In this article, we will examine this wisdom from a financial planning perspective. What role that good health play in financial planning and how does it put us in an advantageous position in our chase for financial freedom? If you were to pick up any book on financial planning, most will convey to you the importance of maintaining good health in your golden years, so that you are able to enjoy your retirement to the fullest. I couldn’t agree more with that. However, in my opinion, the relationship of good health and effective financial planning begins long before retirement, when we are still in our student years. Let’s compare a hypothetical situation of two students studying in college, both studying for the same degree and with the same level of innate intelligence. The only difference is that one student is in great health and looks after himself, while the other has poorer health and neglects his own self-care.Yap Ming HuiThe healthier student would feel energetic, alert, and sharp, therefore allowing him to concentrate better in class, and learn more effectively. In contrast, the student with poorer health would likely be more prone to ailments, falling sick frequently and feeling lethargic in his daily life. Someone who is in this state of physical health would find that their focus and attention are affected, which could cause their learning and mastery of their syllabus to be slower and less efficient. Even though both will graduate from the same degree, one would likely perform better than the other in exams. This would then affect the speed and the type of first job offers that they field, already resulting in an income disparity as they kickstart their careers. Once they begin their working lives, the effect of good health on finances will be seen even more clearly. The person who is in good physical health will feel strong physically, mentally and spiritually, translating the same energy from their college years into the workplace. They will require less medical leave and are able to show more enthusiasm and commitment at work. In contrast, the person in poorer health may find difficulty summoning the energy to perform at work. When you’re not at your best physically, you’ll also find it difficult to contribute at your best at work. Your focus may also dwindle as you take more medical leaves and time off for checkups. This may be seen by your superiors as poor commitment and enthusiasm for the job. When the time comes for a promotion and increment, guess which one of the two are likely to get the bigger bump up? You guessed right, it’s the person with good health. With this increase in income, he will have accumulated more seed money to invest and grow their assets, resulting in a further disparity in the two individuals’ journey towards financial freedom. The person who is in poorer health on the other hand, will progress more slowly up the ladder, or worse still stagnate because he lacks the energy and mental stamina to perform consistency. Not only is this person likely to be passed up for promotions, in dire times like now, he may also lose his job or be selected for retrenchment, resulting in a loss of income. Over time, this poor health along with the additional financial stresses that accompany as a result, may contribute to the further deterioration of health, such as cardiovascular disease or hypertension. If this person suffers a heart attack, stroke, or other critical illness, this could set their bank account back even further.Combined with the loss of income during their period of recovery, this person may well have to put off their dreams and goals of attaining financial freedom for a few more years. Even if one had the financial means to buffer this burden, the fact of the matter is that this person’s health is affected, and their quality of life may have reduced drastically.For example, they could be bedridden or housebound. Even if you were in a comfortable financial situation, what is the point of having all that wealth if you are in no shape to enjoy it in the way you dreamed of? It is only in good health are you able to enjoy the fruits of your hard work in life. While reading this, you may have been thinking “All this doesn’t apply to me, as I am in great health” - for now. Do not take this situation for granted. Good health doesn’t miraculously last, and needs to be maintained on a regular basis. An example I would like to share here is a story about one of my clients. He used to casually show off about how he was a sportsman in college, with impressive achievements and accolades to go along with it. He was in excellent health in his college days but did not do much to maintain this. As his business grew, he was put under tremendous stress. When I last saw him, he informed me that he failed his ECG stress test, and that he had a minor heart attack without even noticing it. His doctor then put him on the necessary medication and warned him about his excessive work. What I am trying to highlight here is that good health is a never-ending journey of physical upkeep and making the right choices. You may have good health now, but if you don’t look after yourself, the situation can change rather drastically. As part of good financial planning practice, good health or not, it is essential that you provide yourself with an adequate safety net. This way, when the unforeseen happens, you will not have to dig a hole in your personal assets and lose years of careful wealth accumulation. This can of course be done in the form of good insurance coverage that covers the following: Hospitalisation and surgery coverage that takes care of your medical bills in times of need. Accident and disability - This is of course important to give you coverage in case you are injured and unable to work. Critical illness coverage - this is a payout that will help cover expenses in the event you are diagnosed with a critical or chronic illness (eg. cancer, heart surgery) which can result in loss of income if you are unfit to work temporarily. Life insurance policy - this will be to the benefit of your family in case of your unfortunate demise, to ensure that they are not left in the lurch and can maintain their standard of living. While employers do usually provide some insurance coverage as part of their remuneration package, it is still best to ensure that you have signed up for your own policies, as it usually gives you and your loved ones better coverage and a safety net in the event you are no longer employed. I hope that this article has highlighted to you the importance of good health in your life, and in attaining your financial goals. The saying “Without health, there is no wealth, ” rings very true when we examine it from this perspective. While achieving your financial freedom is important, you would want to make sure that you achieve it in a manner where you are able to enjoy it - with great physical and mental health. With 2021 just beginning, it is a great time to start reviewing your insurance policies for the future, preferably with an independent licensed financial advisor who is unbiased in their counsel to you. Together, let’s commit to taking better care of our health, making better choices for our health and ultimately wealth. Yap Ming Hui is a licensed financial planner. The views expressed here are the author’s. Any reliance you place on the information shared is therefore strictly at your own risk.
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