In collaboration with the Federal Authority for Government Human Resources, the General Pension and Social Security Authority (GPSAA) announced the launch of the proactive financial planning program (Wafra) on Jahiz platform. The program will focus on the enhancement of awareness on proactive financial planning and the culture of early investment and saving. The program covers the key aspects of personal financial planning including the preparation of budget, saving, investment, debt management, and achievement of financial stability and personal growth and development at the economic level.

The first course "Personal Lifecycle, Wishes, Needs and Values" provides a vision on the relation between the personal consumption rates and the income, differentiation between needs and wishes and understanding how the personal values affect spending.  The course highlights the strategies of comparing prices like "value for money" and other strategies tat help making right purchasing decisions. Participants in the course will gain the basic financial knowledge to develop personal budget planning skills, enhancement of savings and adoption of sound habits of spending and borrowing.

Financial decisions

The financial decisions depend on the identification of needs and wishes against the expected income while adopting sound practices like "value for money", "needs vs wishes" or "what is essential vs what is not essential" and stresses the cooperation between the two partners on how, when and how much is the personal and family spending, awareness of the values of saving and differentiation between needs and wishes and assuming the join responsibilities contributing to the establishment of financial sustainability through healthy spending practices.

Lifecycle

Needs change with each of the lifecycles from childhood to old age. An individual can identify his / her needs in each cycle through the identification of clear financial objectives. Similar to the change of needs, the income level and spending level change. Each stage in which the individual achieves the planned objectives contributes to the financial stability at the short or long term.

Money and elements of expenditure

Elements of expenditure consist of three groups: basic needs including the essential items each individual must meet to survive, personal wishes reflecting the unessential things the individual wishes to have and the personal ambitions expressing the things or experiences the individual wishes to have in the future and endless things. The key problem is the limited sources vs the endless wishes. Here is the role of saving to achieve all such objectives.

Factors affecting the needs, wishes and ambitions are divided to internal and external factors. Internal factors include the lifestyle, number of family members, ability to afford the costs, the values, beliefs, behaviours, impressions and preferences. External factors include marketing and publicity, pressures of relatives and friends, general approaches and influencing persons. Unexpected circumstances play a key role in affecting the lifecycles and responsiveness to such factors. This means that each individual must evaluate his / her life conditions and needs in each lifecycle depending on such variables and align his / her needs with his / her income.

However, researches show that there are many factors affecting the process of making financial decisions of individuals. Personal values are one of such factors as the individual's feelings affect his / her acts and attitude. The correlation between thoughts, feelings and behaviours depends on our personal values. Therefore, it is important that an individual is not driven by incorrect values which adversely affect his / her personal and family life.

Ethical determinants of investment

One important term is the "ethical determinants of investment" which means a set of behaviour determinants and beliefs which differ from one person to another. Financial options are affected by the person's loans, expenditures and investment and to what extent he / she feels capable of managing the costs and affording the consequences. Many persons are ready to borrow but the question is to what extent they can pay back such debt. In other words, is the ability to plan for the future and set a budget is made to within the right context or not? Hence, the arrangement of priorities of spending helps organizing the financial affairs according to the level of importance by prioritizing the essential purchase before the unessential purchases.

Expense management

Expense management is to get the required value for each spent dirham. This does not necessarily mean to get objects at the lowest price as the cheaper thing may lead to false economic value. Value for money is defined at the set of components most beneficial in terms of cost, quality and convenience to meet the individuals' requirements. In general, people have two common attitudes towards spending money; first: spending less money and saving more money, and the second: spending money once gained. Therefor, we should think about things we need to spend our money on more than other things.

Why saving money is important?

Each person has different reasons for saving. However, the existence of a clear financial objective makes it easy to save money like saving for emergencies, saving for settlement of advance payment for buying house, securing the future family needs, travel abroad on holiday and guaranteeing conformable life after retirement. While understanding some of the reasons for borrowing, the saving as a practice remains better than borrowing; particularly that wrong borrowing may adversely affect the financial objectives. therefore, it is important to ask whether the person needs the thing he / she borrows for or not? And ensuring that the person gains sufficient inform in the future to pay back the loan.

General Pension & Social Security Authority