PERSONAL FINANCIAL PLANNING

(FIN533)

FAMILY FINANCIAL
PLANNING OF
EN AHNAF FAMILY
PREPARED BY:
HUSNIAH BT MOHD EZANI
2019348345
PREPARED FOR:
MADAM SITI AMINAH HJ MAINAL
TABLE OF CONTENTS
ACKNOWLEDGEMENT ...................................... 3
BIODATA OF THE FAMILY ............................... 4
FINANCIAL INFORMATION .............................. 7
MONTHLY EXPENSES ........................................ 9
BALANCE SHEET STATEMENT ..................... 10
CASH FLOW STATEMENT ............................... 13
RATIOS ................................................................ 15
INCOME TAX YEAR ASSESSMENT 2019 ...... 17
COMMENT AND ADVICE ................................ 18
REFERENCES ..................................................... 22

ii
ACKNOWLEDGEMENT

By the name of Allah, the Most Gracious and Most Merciful. There do I worship and then aid I
seek. Show to the straight way, the way of those have bestowed the grace, not those who are wrath and
astray. Thanks, because I am able to finish this individual assignment. A lot of efforts have been done and
surely there are various parties involved in contributing information to me. I would like to express my
sincere gratitude to all of them because without them, I am not able to complete this assignment.

First of all, I would like to express my deepest appreciation to all those who provided me the
possibility to complete this individual assignment. A special gratitude I give to Madam Siti Aminah Hj
Mainal, my lecturer of Personal Financial Planning (FIN533), for giving me a good guideline for advice,
guidance, encouragement for this assignment.

Furthermore, I would also like to acknowledge with much appreciation to En Ahnaf and family,
who gave the permission to use all required information related to the financial planning to complete the
task of my individual assignment “Family Financial Planning” as the completion of this assignment gave
me much pleasure.

Besides, an honorable mention goes to my family, thank you for their love and support. This has
been a constant source of my strength a lot because during the complementation of this assignment in
giving opinions and ideas.

In preparation for my assignment, I would also like to expand my gratitude to all those who have
directly and indirectly guided me to complete this assignment especially my classmates have made a
valuable suggestion on my report which gave me the inspiration to improve the quality of my individual
assignment. Without their help of the particular mentioned above, I would face many difficulties while
doing this assignment.

Thank you.

3
BIODATA OF THE FAMILY

Figure 1 En Ahnaf and family

En Ahnaf bin Mohd Osman is currently working in a private company which is Grab Malaysia as
Information Technology Engineer for 16 years. He is 45 years old. He is a husband and father of four
children. He is happily married to Puan Tasnim binti Yusoff who is a fulltime housewife. Therefore, En
Ahnaf is the sole breadwinner and earns RM 7,800 per month. He also pays EPF and Income Tax from
his gross salary.

En Ahnaf and Puan Tasnim have been married for almost 25 years and blessed with three daughters and
one son who are currently already working and studying. In the further state, his first child is Mohd Naim,
24 years old who is married with 1 child currently working as an Electrical technician at one of the
manufacturing companies. Then, En Ahnaf’s second child is Nur Natasya, 23 years old who has already
finished diploma but waiting for IPTA results for further studies at the Degree level. Next, his third
daughter is Nur Athirah, 20 years old who is currently doing her diploma major in Accounting at Kolej
Poly-Tech MARA, Bangi. Other than that, his last daughter Nur Ainaa, 16 years old who is still in
secondary school at SMK Subang Jaya.

4
This whole family lives at SS22 Subang Jaya and has been living in a Double Storey house with his wife
and children, except for their third daughter Nur Athirah which is she stay at her college and just be at
home during weekend only. They stay at that house for almost 15 years after En Ahnaf’s bought it for his
family.

Besides that, En Ahnaf owns Honda City as a family car, and Perodua Axia used for daily use. En Ahnaf's
wife has a driving license in which where his wife will go around with Perodua Axia to pick their daughter
from school and supermarket. He also owns the Yamaha LC motorcycle year 2014 that he used for work
and go to the mosque. Besides that, En Ahnaf 's owns an Apartment house a long time ago that used to be
his investment in which give rent to one of his friend's until now.

In the nutshell, En Ahnaf and families are actually my families relative to my mother's side. He is a very
kind-hearted person and really good at taking care of his family. Being able to be apart as a financial
planner for En Ahnaf and family is a huge opportunity for me.

5
 Mr Ahnaf bin Mohd Osman &
Mrs Tasnim binti Yusoff

Mohd Naim,
24 years old Nur
Natasya, 23
years old

Nur Athirah,
20 years old

Nur Ainaa,
16 years old

6
FINANCIAL INFORMATION

DETAILS RM
Monthly salary 7,800
Cash on hand 450
Savings account balance 3,270
Bonus 2 months’ salary
Rental income of Apartment per month 650
Market value of Honda City 53,800
Market value of double storey house 550,000
Market value of Perodua Axia 24,600
Market value of Motorcycle 4,200
Household furniture (current value) 8,000
Laptop and desktop (current value) 2,300
Clothing (current value) 5,000
Honda City loan balance 45,639
Double storey house loan balance 398,000
UnifiTM outstanding 150
Credit card 3,000
Apartment (market value) 125,000
Purchase Smartphone on August 2019 1,780
Monthly installment on Double storey house 1,658
Monthly installment on Honda City 761
Electricity and water bill per month 340
Vacation 1,500
Parents allowance monthly 400
Water dispenser Coway 85
Food and household supplies 500
Dining out 200

7
Transportation- fuel, parking and toll per month 500
Car insurance and road tax 2,190
Clothing expenses 3,000
EPF monthly contributions 858
Income tax per month 234
Annual Zakat 1,300
School children expenses for 4th child per month 350
University fees a year for 3rd child 3,000
3rd child expenses per month 500
Children pocket money 200
Quit rent 950
Textbooks expenses 900
Saving at Tabung Haji 5,500
Car maintenance 350
Medical insurance for Spouse and children 175
Life insurance for personal 120
Donation to Rumah Titian Kasih 250

8
 MONTHLY EXPENSES

January February March April May June July August September October November December
Monthly Expenses
RM RM RM RM RM RM RM RM RM RM RM RM
Monthly installment on Double storey house 1,658 1,658 1,658 1,658 1,658 1,658 1,658 1,658 1,658 1,658 1,658 1,658
Monthly installment on Honda City 761 761 761 761 761 761 761 761 761 761 761 761
Electricity and water bill 340 340 340 340 340 340 340 340 340 340 340 340
Unifi™ 150 150 150 150 150 150 150 150 150 150 150 150
Water dispenser COWAY 85 85 85 85 85 85 85 85 85 85 85 85
Food and household supplies 500 500 500 500 500 500 500 500 500 500 500 500
Dining out 200 200 200 200 200 200 200 200 200 200 200 200
Transportation- fuel, parking and toll 500 500 500 500 500 500 500 500 500 500 500 500
Clothing expenses 500 1,700 800
Parents allowances 400 400 400 400 400 400 400 400 400 400 400 400
School children expenses for 4th child 350 350 350 350 350 350 350 350 350 350 350 350
3rd child expenses 500 500 500 500 500 500 500 500 500 500 500 500
3rd child university fees 3,000
Children pocket money 200 200 200 200 200 200 200 200 200 200 200 200
Textbooks for children 300 100 320
Car insurance and road tax 1,800 390
Car maintenance 200 150
Purchase Smartphone on August 2019 1,780
Quit rent 950
Vacation 1,500
Medical insurance for spouse and children 175 175 175 175 175 175 175 175 175 175 175 175
Life insurance for personal 120 120 120 120 120 120 120 120 120 120 120 120
Annual Zakat 1,300
Donation to Rumah Titian Kasih 250
EPF 858 858 858 858 858 858 858 858 858 858 858 858
Income tax 234 234 234 234 234 234 234 234 234 234 234 234
Total Monthly Expenses 7,831 7,481 10,031 7,031 8,831 8,731 7,131 8,811 7,031 7,421 9,331 9,751

9
BALANCE SHEET STATEMENT

En Ahnaf
Balance Sheet as at 31 December 2019
Assets RM RM Liabilities RM RM
Liquid Assets Current Liabilities
Saving account 3,270 Credit card 3,000
Cash on hand 450 Unifi™ outstanding 150
Total Liquid Assets 3,720 Total Current Liabilities 3,150

Lifestyle Assets Non Current Liabilites

Market value of Honda City 53,800 Honda City loan balance 45,639
Market value of Double storey house 550,000 Double storey house loan balance 398,000
Market value of Perodua Axia 24,600 Total Non Current Liabilities 443,639
Market value of Motocycle 4,200
Laptop and dekstop 2,300
Household furniture 8,000
Purchase Smartphone on August 2019 1,780
Clothing 5,000
Total Lifestyle Assets 649,680

Investment Assets
Market value of Apartment 125,000
Saving at Tabung Haji account balance 5,500

Total Investment Assets 130,500 Total Liabilities 446,789

Net Worth 337,111
Total Assets 783,900 Total Liabilities and Net Worth 783,900

10
 Total
Assets
RM 783,900

Total
Liabilities
RM
446,789

Net Worth
RM 337,111

Based on the balance sheet as at 31 December 2019, En Ahnaf and family have the amount of total assets
is RM 783,900 which is quite high. The liquid assets are on saving accounts and cash on hand at RM 3,720
in total. Then, the lifestyle assets En Ahnaf’s have own 2 cars which is Honda City, still has loan
outstanding and Perodua Axia fully owns by his family because fully paid to the bank last year ago.
Usually, En Ahnaf and family always used Perodua Axia as a daily used car rather than Honda City as a
family car for them. During 2013, En Ahnaf has bought a double storey house located at Subang Jaya for
his family that they are living there until now with the market value of RM550,000 from RM350,000 of
the purchase price. It is a good asset that has a high value in the future. Also, it owns the motorcycle year
of 2013 which sometimes used for work and mosque. The laptop and desktop are very important that used
by their child for studies and also when En Ahnaf works from home. Then, due to En Ahnaf’s wife like
buying house stuff their household furniture current value is RM8,000. En Ahnaf's family has four children
whose love reading in current value at RM900 and Clothing at RM5,000. That year, suddenly his phone
was broken cannot function well and En Ahnaf decided to a purchased new smartphone at RM1,780.

Besides that, the investment assets of En Ahnaf family own an apartment located in Kuala Lumpur that
used as a side income to them. He bought that apartment a long time ago when he got married to his wife
but right after their second child they move to the double storey house. Other than that, En Ahnaf's family
has a saving at Tabung Haji as backup money for the future used in case an emergency incurred.

11
The current liabilities are only on credit card and UnifiTM outstanding at the amount of RM3,150 in total.
The non-current liabilities of En Ahnaf family is Honda City and mortgage house loan balances. En
Ahnaf's family has got a mortgaged house and their balance on the mortgage is RM398,000. They
purchased the house about 15 years ago by paid the deposit of 20%. Also, the car loan balance is
RM45,639. They purchased in the year of 2016 by paid the 15% down payment. The following shows the
details of the balance of the loan: -

Double-Storey House (RM) Honda City (RM)

Purchased price 350,000 76,100

Down payment 70,000 11,415

Loan balance 280,000 64,685

Interest rate 4.25% 3%

Tenure/months 35 years/ 420 months 9 years/ 108 months

Total loan 696,500 17.465

Annual Installment 19,900 9,128

Outstanding Tenure 20 years 5 years

Outstanding balance 398,000 45,639

12
CASH FLOW STATEMENT
En Ahnaf
Cash Flow Statement for year ended 31 December 2019
Income : RM
Salary (7800x12) 93,600
Bonus (7800x2) 15,600
Rental Income of Apartment (650x12) 7,800
Total Income 117,000

Less: Expenses
Monthly installment on Double storey house (1658x12) 19,896
Monthly installment on Honda City (761x12) 9,132
Electricity and water bill (340x12) 4,080
Unifi™ (150x12) 1,800
Water dispenser Coway (85x12) 1,020
Food and household supplies (500x12) 6,000
Dining out (200x12) 2,400
Transportation- fuel, parking and toll (500x12) 6,000
Clothing expenses 3,000
Parents allowances (400x12) 4,800
School children expenses for 4th child (350x12) 4,200
3rd child expenses (500x12) 6,000
3rd child university fees 3,000
Children pocket money (200x12) 2,400
Textbooks for children 720
Car insurance and road tax 2,190
Car maintenance 350
Purchase Smartphone on August 2019 1,780
Vacation 1,500
Quit rent 950
Donation to Rumah Titian Kasih 250
Medical insurance for Spouse and children (175x12) 2,100
Life insurance for personal (120x12) 1,440
Zakat 1,300
EPF (7800x11%x12) 10,296
Income tax (7800x3%x12) 2,808
Total Expenses 99,412
Contributions to Savings 17,588

13
Basically, the main income of En Ahnaf and family is totally depending on the salary of 81% in which
RM93,600 annually. Therefore, En Ahnaf is the sole breadwinner and earns RM 7,800 per month and a
bonus of two months’ salary, 14%. Thus, the side income of the family is coming from the rental income
of apartment 5% in which En Ahnaf will receive RM650 per month from the tenant. Next, to state further
the below shows the details of the annual expenses of En Ahnaf and family: -

14
RATIOS

Liquid assets to
Debt service
take-home pay Current ratio Debt ratio
coverage ratio
ratio 1.18 times 57.00%
2.77 times
4.62%

Asset Liquidity
𝐿𝑖𝑞𝑢𝑖𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
i. Liquid assets to take-home pay ratio = 𝑇𝑎𝑘𝑒−ℎ𝑜𝑚𝑒 𝑝𝑎𝑦

3,720
=
93,600 − 2,808 − 10,296
= 𝟒. 𝟔𝟐% @ 0.55 months

Regarding liquid assets to take-home pay ratio, the liquidity condition is 4.62% which is not good because
it is not between 25% - 50% range. En Ahnaf’s must achieve liquid assets equal to three to six months’
worth of take-home pay in order to be on the safe side.

𝐿𝑖𝑞𝑢𝑖𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
ii. Current ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

3,720
=
3,150

= 𝟏. 𝟏𝟖 times
Regarding the current ratio, the ratio is 1.18 in which should be more than 2 in order to maintain liquidity.
En Ahnaf’s has a low liquidity position.

15
Level of Debt
𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
i. Debt ratio = 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

446,789
=
783,900
= 𝟓𝟕. 𝟎𝟎%
Regarding debt ratio, En Ahnaf’s ratio is very high 57.00% because for a person working in the private
sector should be less than 30% and for the public sector, the worker should be higher as 40%. Thus, as En
Ahnaf’s in the public sector it might face difficulties in getting a new loan since En Ahnaf’s ability to pay
debts has decreased.

𝑇𝑎𝑘𝑒−ℎ𝑜𝑚𝑒 𝑝𝑎𝑦
ii. Debt service coverage ratio = 𝐷𝑒𝑏𝑡 𝑠𝑒𝑟𝑣𝑖𝑐𝑒 𝑐ℎ𝑎𝑟𝑔𝑒𝑠

93,600 − 2,808 − 10,296

=
19,896 + 9,132
= 𝟐. 𝟕𝟕 times
Regarding the debt service coverage ratio, it shows that En Ahnaf earns RM2.77 in take-home pay for
RM1.00 of required debt repayment and interest. The higher the ratio, the better because it means that En
Ahnaf”s ability to meet his current debt obligation.

16
INCOME TAX YEAR ASSESSMENT 2019

En Ahnaf
Income Tax year for the Assessment 2019
Income: RM
Salary 93,600
Add:
Rental income of Apartment 7,800
Bonus 15,600
Total Aggregate Income 117,000
Less:
Donation to Rumah Titian Kasih 250
Aggregate of Total Income 116,750

Tax relief:
Individual 9,000
Spouse 4,000
Children:
Nur Natasya 2,000
Nur Athirah 8,000
Nur Ainaa 2,000
Parents Allowances 3,000
Lifestyle (Textbooks, Smartphone) 2,500
Life insurance for personal 1,440
Medical insurance for spouse and children 2,100
EPF 4,000
Total relief 38,040
Total chargeable income 78,710
Income tax computation:
Tax rate:
First RM70,000 4,600
Next RM8,710 @ 21% 1,829
Total Income Tax 6,429
Less: Tax Rebate:
Individual Rebate -
Zakat 1,300
Tax payable 5,129
Less: Tax deduction 2,808
Net Tax Payable 2,321

17
COMMENT AND ADVICE

Based on the balance sheet, it is good for En Ahnaf's family because the family has a contribution
to savings where the assets are large enough to cover the liabilities in which the total assets are RM783,900
and total liabilities RM446,789. So, it is not a major problem for him to pay its current debts based on the
percentages of ratios. In the future, En Ahnaf can pay its long-term debt with ease if he invests more in
the future to gains more income. Thus, the net worth is RM337,111 with his net worth represents true
measurements of his wealth and is a good starting point when developing a financial plan. In current
liabilities, En Ahnaf has a credit card amount of RM3,000. Generally, it knows that credit cards can be
major debt traps but it is unrealistic not to own any in the contemporary world, and they have applications
other than as a tool to buy things. The main in the future En Ahnaf just needs to manage his money wisely
in which can contribute more to saving and investments.

Referring to the cash flow statement, En Ahnaf and family experiences a contribution to savings
because the total income is bigger than the total expenses in which the amount to savings is RM17,588.
Thus, En Ahnaf not only earns on income but got two months bonus every year and rental income every
month from the tenant as well. Currently, it shows positive in cash flow even though the expenses are
quite high. En Ahnaf spends more on car expenses due to his own two cars such as the need to pay for
insurance, road tax, and transportation cost every year. Also, En Ahnaf’s children are still studying it
makes him spend more on his children's expenses. In that cases, it is good if En Ahnaf could cut off certain
of their expenses in the future because it can free up more money in En Ahnaf budgets and it can make
them less inclined to rely on credit cards or loans to cover spending gaps. Moreover, En Ahnaf still have
non-current liabilities to settle for another 20 years due to his debt, adding extra money back into En Ahnaf
budget can help to pay it off faster or even can pay more than the minimum payment. With that, the lesser
outflows En Ahnaf and family could help more to boost his emergency fund or grow retirement savings.

Insurance planning is one of the parts and parcel of today’s life. As En Ahnaf build his wealth,
it is important to protect his assets against any unforeseen events while not as direct a way of saving as
investing. Insurance planning can save significant amounts of money over the long-term. Currently, the
insurance planning has been carried by En Ahnaf and family are medical insurance for spouse and children

18
and life insurance for himself. The protection plans En Ahnaf has taken for his family are just a medical
card for his wife and 3 children not included his oldest child who is already married. Thus, En Ahnaf paid
RM3,540 annually total for both insurance and that is not a huge deal because he can cover the monthly
to pay more. Moreover, En Ahnaf got deduction in the tax relief for medical insurance for family and life
insurance. In the future, En Ahnaf should take education insurance for his children, especially for his
youngest child to pursue her study later on. For instance, a good suggestion is En Ahnaf can take premier
education savers under Maybank Malaysia (Maybank2u, 2020) in which an investment-linked lifetime
plan with a mix of coverage and strategic investments for his child’s education. The lifetime investment
option can upon reaching 25 years of age, his child can choose to take over the policy ownership and
continue saving in which the plan expires at age 100. Based on the inflows and outflows, En Ahnaf is able
to pay for the minimum premium RM100 per month. Besides that, if En Ahnaf prefers education planning
by investing in SSPN there is also beneficial to his children.

Investment planning is a crucial part of gains more income. Besides savings, En Ahnaf should
invest his money to get returns for future used. Thus, an increase in cash flow can lead to an increase in
capital. It is can allow En Ahnaf to consider investments to improve his overall financial well-being.
Referring to the balance sheet, En Ahnaf’s investment asset is on the apartment and saving at Tabung
Haji. The apartment fully owns by En Ahnaf for almost 8 years after settling all the settlement at the bank.
The investment assets on the apartment make him gains more profits because the purchase price is
RM75,000 but for now the market value RM125,000. Also, throughout the year En Ahnaf and family have
savings on Tabung Haji account balance at RM5,500. In a total of investment assets amounting
RM130,500. He still can add his investment before he retires. Currently, En Ahnaf already at the age of
45 years old and it is actually not suitable for him to invest in real estate due to his age. It might be a
problem with the requirements of the loan. In the future, En Ahnaf can choose to invest either the term of
5 to 10 years or for the long term due to En Ahnaf only have an investment on the property and Tabung
Haji only. He can do investment in Public Mutual unit trust by putting his money in the right fund that
matches his family investment objective will definitely help to grow the net worth over the long term.
Thus, it is the affordability as unit trust are one of the collective investment schemes, the investors can
start with an investment amount as low as RM100. Also, wide diversification to minimize risk and ease
of transactions (mutual, 2020).

19
 Retirement savings needs to become a priority instead of an afterthought. This is involved in the
process of estimating and other needs and determining how these needs can be met if En Ahnaf no longer
working. It is beneficial to those who are working that rely on pensions, gratuity, and any other employer-
sponsored retirement plans during retirement. En Ahnaf who is working on the public sector in which
fully depending on Employees Provident Fund (EPF) contributed 11% every month from his gross salary
for future retirement. Regarding the outflows, he contributed RM10,296 annually for EPF. It is actually
not enough for En Ahnaf to cover the debt and other expenditures after his retirement due to his
commitments. In the future, En Ahnaf wants to retire early, but he is not sure when he can do so. He
wants it at the age of 55 but can take it up to the age of 60 to adjust with his financials. Moreover, En
Ahnaf should invest in Private Retirement Scheme (PRS) and it can declare tax relief not exceed RM3,000.
Due to recently, the EPF revised its target minimum savings (the recommended amount to have in your
EPF at the age of 55 to see you through 20 years of retirement) from RM196, 800 to RM228, 000 (Group,
2020). En Ahnaf’s as an active contribution to EPF alone may not be sufficient for achieving his retirement
goal. In the PRS, each provider must choose out of three core funds as a default option. The most suitable
for En Ahnaf is moderate funds because of the focus on growing the portfolio whilst seeking income.
Even more, the range of age from 45 until 54 years old (PRS, 2020).

Estate planning is the act of preparing for the transfer of a person's wealth and assets after
his or her death. En Ahnaf and family estate have comprised everything his own such as assets, life
insurance, investment, real estate, cars, personal belongings, and debts are all part of his estate. Currently,
most of all the estate is the name by En Ahnaf’s and certain of his wife’s name. In the future, En Ahnaf
and the family need to ensure that assets their leave behind or insurance policies that his buy are given to
the right beneficiaries. Although it's important to have a valid Will, an estate plan covers many other
aspects relating to the transfer of his wealth after pass away. Family trusts, powers of attorney, and the tax
implications for beneficiaries can all be managed with an estate plan. (Estate planning, 2019).
Furthermore, by having an estate plan it will help En Ahnaf’s beneficiaries avoid difficulties and
disagreements because he can stipulate the amount of ownership and control each of his beneficiaries has
over his assets. Thus, reduce the tax payable on the income and capital gains earned on assets, and ensure
En Ahnaf’s assets are protected if the beneficiary is involved in any legal difficulties such as bankruptcy.
Lastly, En Ahnaf should update his will in which assets, liabilities, and goals all change from time to time,

20
and his will should reflect these changes. It is good reviewing En Ahnaf and family will on a regular basis
with experts who can point out any problems that will lead to too much risk, inefficient taxation, and other
issues that may interfere with his goals.

21
REFERENCES

Estate planning. (2019, October 1). Retrieved from Investing answers:

https://investinganswers.com/dictionary/e/estate-planning
Group, A. (2020). Do I need a PRS if I already have an EPF? Retrieved from AIA Group :
https://www.aia.com.my/en/what-matters/finance/prs-incentive-increase.html
Maybank2u. (2020). Education , Premier education savers. Retrieved from Maybank2u:
https://www.maybank2u.com.my/maybank2u/malaysia/en/personal/insurance/education/premier
_education_savers.page?
mutual, P. (2020). Grow Your Wealth with Unit Trust. Retrieved from Public Mutual:
https://www.publicmutual.com.my/Menu/Financial-Planning-Services/Grow-your-wealth-with-
Unit-Trust
PRS. (2020). Structure of PRS. Retrieved from Private Pension Administration: https://www.ppa.my/prs-
and-you/structure-of-prs/

22