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Basic Financial Planning

What will you do with this money and why? .000 (ten thousand ringgit) to spend as you wish.5-Minute Assignment Your uncle just gave you RM10.

Borrowing: credit cards and consumer loans 3.Personal Financial Planning What are some major personal financial issues that individuals and families encounter in their lives? * major acquisitions (car. house) * insurance claims * bankruptcy Our course covers 5 major areas of personal finance: 1. Insurance 4. Investments 5. Management and acquisition of assets 2. Retirement .

What is personal financial planning? Personal financial planning is the process of managing your money to achieve personal economic satisfaction. .

.Rewards of Financial Planning 1.the necessities. Maintain and improve our standard of living . . comforts and luxuries that we have or desire.

. . Control consumption patterns to live well today and tomorrow! Average propensity to consume ... Rewards of Financial Planning 2.% of each dollar of income that is spent rather than saved. continue.

.. Rewards of Financial Planning 3.. Accumulate wealth. Personal financial planning helps us direct our financial resources to the most productive areas . continue.

Benefits of a Plan A financial plan helps people: • live within their income • identify financial priorities • allocate funds to meet expenses • meet financial emergencies and reduce credit use • reduce uncertainty and conflict about financial affairs • gain a sense of financial independence and control • save and invest to reach financial goals .

FINANCIAL PLANNING PROCESS Determine current financial situation • Develop financial goals • Identify alternative courses of action • Evaluate alternatives • Create and implement financial plan • Re-evaluate and revise the financial plan .

DEVELOPING PERSONAL FINANCIAL GOALS • • • • Types of financial goals Timing of goals Goals of different financial needs Goal-setting guidelines .

INFLUENCES ON PERSONAL FINANCIAL PLANNING • • • • • • Life situation and personal values Economic factors Market forces Financial institutions Global influences Economic conditions .

OPPORTUNITY COSTS AND THE TIME VALUE OF MONEY • • • • • • • Personal opportunity costs Financial opportunity costs Interest calculations Future value of a single amount Future value of a series of deposits Present value of a single amount Present value of a series of deposits .

ACHIEVING FINANCIAL GOALS • Components of personal financial planning – Obtaining – Planning – Savings – Borrowing – Spending – Managing risk – Investing – Retirement and estate planning • Developing a flexible financial planning • Implementing financial plan .

do a reassessment on your first plan on how you are going to spend the RM10. .000 your uncle gave you.ASSIGNMENT 1 After going through the first lecture and learning about the importance of preparing your short-term and long-term plans.

• • • . intermediate and long-term goals. Figure how much money to save each month in order to reach the goal. Record the amount of money already saved to meet this goal. Estimate the cost of each goal and when you expect to reach the goal.ASSIGNMENT 2 SETTING GOALS WORKSHEET • List several important short-term.

COST WHEN ALREADY SAVED MONTHLY SAVINGS WHERE SAVED 2. 3. 3. 2. .SHORTTERM GOALS 1. LONGTERM GOALS 1.