Simulation

Why do we need simulation tools or software in our life? There are both steady state and dynamic state simulation tools. Steady state is something which all the scenario are considered as ideal case whereby dynamic state is with some circumstances are introduced into it to see the impact to the results. So, how this simulation approach can be applied in this financial matter or our "Humble Financial Planning"?

We need to this simulation basically to develop some planning to be implemented into our real life for saving, investment, etc. This is something like to allocate certain amount for expenses, savings, and investment. We may come out with some plans where from the salary we're getting each month will be optimized in order to achieve our financial freedom. From this plan, we may able to accumulate at least RM 36,000 at the end of the year by saving RM 3,000 each month consistently. However, it may not be the real case where there are no savings some of the months; this may due to some emergencies, disciplines, attitudes, etc. We may end up with only 70%, 60%, 50%, 40%, or 30% of planned savings due to those circumstances. Hence, sometime steady state simulation may not be the real case but at least will give us some confident level to start saving, investing, and learning something related financial freedom. This simulation could be our own planning or with some attractive fun game which is via Monopoly, Saidina, Cashflow 101, etc. Those days these games seem like just for fun but actually can sharpen our intellectual in financial education.

Dynamic simulation mainly we introduce some disturbance similar to real situation and experiencing whatever possible consequences. Hence, by having dynamic simulation scenario will guide us closer to the real scenario.

Now, how to get the disturbances, scenarios, or circumstances when implementing our plan or in other words when start running the dynamic simulation? We must have certain level of financial education so that can apply whatever possible scenario; which this financial education has to be developed by reading, attending talks, listening to audio or video about finance subject matters. Always remember very popular proverb, "Failed to Plan is Planned to Fail".