Can your financial plan stand up to the Big Bad Wolf?

If you belong to my vintage, you might remember this cartoon fondly.
Besides being merely entertaining, we can perhaps draw some important lessons from it.
On reflection, we can note several parallels with financial planning.
Well you see, a financial plan is very much like building your home, to shelter you from the elements and to provide creature comforts to you and your loved ones.
However, there are 3 major differences between a financial plan and a home:-
  1. A house is a physical tangible item whereas a financial plan is intangible
  2. A house serves an immediate need whereas a financial plan serves a future need
  3. Unknowingly to most, the financial plan might be the only thing that can salvage your home
The 3 little pigs represent 3 types of attitudes towards financial planning:-

The pig that built a house of straw

This could represent an individual who

  • may lack awareness and knowledge on the need to plan financially or one who prioritizes resources for immediate gratification
  • prefers to DIY instead of seeking professional advise

The pig that built a house out of sticks

This could represent an individual who

  • has done some financial planning based on limited knowledge with the false comfort thinking it’s already adequate and has therefore underfunded the plan.
  • prefer immediate gratification over planning for the future
  • does financial planning on a sporadic rather than a systematic and holistic basis.
  • may have prioritized wants over needs e.g preference for wealth accumulation over family protection, thereby ending up with inadequate insurance protection.
  • has neglected to upgrade/upsize his financial plans to meeting his growing financial needs as he progresses through life (e.g getting married, starting a family and growing lifestyle needs)

The pig that built a house out of brick

This could represent an individual who

  • thinks long term and seeks the help of a trusted financial architect to design a sturdy financial plan that can withstand whatever life throws at it
  • has foresight and conviction to plan for the betterment of his family, he is willing to commit more time and resources towards meeting this goal
  • understands that a financial plan needs to be updated in accordance with his growing family structure and changing lifestyle needs so that the financial plan will always stay relevant in meeting his financial goals

  • In scene 1:58, he was being teased by the first 2 pigs on why he’s taking so much time and resources to build his house of brick when he could be playing. In life, it’s like when one is frugal/prudent with his money, choosing to defer immediate gratification so that he can channel resources towards meeting his future needs, while his friends indulge in parties and lavish/lifestyle goods? But he is not deterred and remains single focused, as he knows one day that the big bad wolf will be paying a visit and it’s best to be prepared in advance.
Ensure that everyone in your immediate family and elderly parents has an adequate financial plan 
In the story, when the house of straw got demolished, the first pig went to the house of sticks to seek protection, and when the house of sticks got similarly trashed, the first 2 pigs ran to the house of bricks to seek protection.
In life, this is like having a loved one who was uninsured, inadequately insured or not accumulated sufficient funds for children’s tertiary education or not having sufficient funds for retirement. Who do you think they will turn to for funds?
The Big Bad Wolf

The last character is none other than the big bad wolf but you know, so long as you’re financially prepared, there’s actually little need to worry and yes, that wolf can be tamed to become like a kitty cat.

The wolf can represent the following:-
  • Untimely death, disability, critical illness, a serious accident in the family
  • Funds needed for your children’s tertiary education
  • Funds needed to fund provide the desired lifestyle for your retirement years
If the above concerns are important for you to address, then it’ll be to your advantage to have the right attitude towards financial planning – plan early and commit the required resources to fund such future needs. Your family’s long term financial future depends on it.