Next one, “the pyramid of nutrition” for financial health.
Basically it divided into 2 functions with 4 categories :
Defensive (securing income) – protection (takaful and insurance) and savings
Offensive (generate income) – investment and asset allocation
This triangle or pyramid shows the priorities on your financial decision not amount of your spending. In military strategy that I learnt during my cadet officer training for 3 years, A good formation basically consist with two things: defense and offense mechanism. How to achieve good formation is one of it place priorities based on your goal (read part II), resource and energy in their optimal order. (Or in Islam’s philosophies: be just. Place it at where they should belong)
To portray the reasoning on how this priorities stage in order for your financial decision. Imagine you have an asset which is your have extra car, rarely use it and you want it to generate income for you. In order for that asset to generate income, the first thing you will need before the car able to move around generate income is you must pay the insurance even before you could get for road tax any other legal documents. It compulsory,
You know this, it actually happened surround us but we always oversee them. That’s why I said in the beginnings, the answer already within us. Moreover, asset allocation does not always be materialistic. Your life, your health, your family is also priceless asset you will ever own. So what protection do you have?
After minus out the expenses like house, bills, childcare, food and more, put the rest of your income in strategic manner based on priorities. The amount could be vary such as for me personally(as I writing this), I place about 5-7% for protection, 40-50% for savings and 2% for investment. The percentage not fixed, it will adapts depending on the lifestyle changes such as getting married, having a child and more.
Usually most people only have saving in their financial strategies, for me it risky. As per war general once said, the best defense is the offense. And we know the good offense comes with good formation.
One more thing, “Submit your wealth for the One gives you.” .
Thank you for reading this chapter in all three parts. Hopefully it could benefits you in your financial decision.
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