This document discusses the objectives and principles of financial planning. Financial planning aims to help people achieve financial goals in a disciplined way by maintaining their standard of living, paying less tax, providing for heirs, and more. It involves planning investments and finances to meet long and short-term goals. Key steps include listing goals and cash flows, understanding risk tolerance, making a realistic plan, and regularly reviewing and taking action. Effective money management involves allocating income across necessities, savings, and discretionary spending accounts. Frugality is also emphasized as important for building wealth over time.

1. Financial Planning
~ Planning To Achieve ~

2. OBJECTIVE
• To help people to achieve their financial targets in a disciplined way;
• It’s about creating a lifestyle that’s just right for you
• Maintain your standard of living during retirement
• Pay less tax
• Maintain your family’s standard of living in the event of your death or disability
• Become financially independent
• Preserve your estate for your heirs
• Provide for your children’s education
• Pay off your mortgage and other debts
• Stay ahead of inflation
• Earn a higher rate of return
• Buy a home or recreational property
• Learn to invest and manage money more wisely
• Start your own business

3. What is Financial Planning???
• Financial planning a process where you plan your Investments in such a way which
meets your financial goals over time.
• It’s about anything you do or plan to do that affects your financial state of affairs -
career planning, business planning, transportation planning, food planning, hobby
planning, vacation planning, entertainment planning e.t.c.;

4. Fundamental Principles of Financial
Planning
• Controlling day to day finances:The $ Adds Up...
• Daily Cup of Coffee $547/yr,
• 2 Packs of Cigarettes/Day $2555 - $3285/yr,
• 1 Hardback & 3 Paperback Books/Mo.$690/yr,
• Lunch Take-out 5 days/wk @ $5- 10/day $1300 - $2600/yr,
• 3 Drinks at a Bar/Wk.$936 - $1092/yr,
• 3 Six-packs of Beer/Wk.$624 - $936/yr
• Long term financial goals:
• Retire in 20 years with an annual retirement income of $40,000 (today's $),
• Save for your child who will be attending university in 15 years and will require $10,000 (today's $) / year for a period of
4 years,
• save $20,000 for a down payment on a home to be purchased in 5 years.
• Financial safety net:
• an emergency fund,
• health insurance,
• homeowner’s or renter’s insurance,
• auto insurance etc.
Spend less than you earn: INFLOW < OUTFLOW

5. STEPS to Financial Planning
1. List down your Goals
2. List down Your Cash Flows and Cash Inflow
3. Understand and figure out your Risk-appetite
4. List down your Financial Goals
5. Make sure your Goals are realistic
6. Make the Plan
7. Review and Take advice
8. Take Action and keep Reviewing

6. Asset Allocation/
Income Distribution
Income :
(+)Pension, child support, government benefit, rental income, etc
Expenses:
(-) Housing: Mortgage, rental, maintenance, bills, property tax, home insurance
(-) personal & living: eating out, personal care, groceries, clothing & gifts, etc
(-) Transportation: license and registration, gas/oil, parking, taxi, toll, repair
(-) Debt repayment: credit cards, loads, personal loan, student loan
Savings:
1. Emergency Fund
2. Major purchase savings
3. Vacation

7. Cash Flow Statement

8. Effective Money Management
The FFA (Financial Freedom Account) – 10% = RM 150
The LTSA (Long Term Savings Account) – 10 % = RM 150
The Income Protection Account – 10 % = RM 150
The Education Account (EDUC) – 10% = RM 150
The Necessities Account (NEC) – 45 % = RM 675
The Leisure Account – 10 % = RM 150
The Giving Account – 5 % = RM 75
GRAND TOTAL = RM 1500

9. FRUGALITY???
“Without frugality none can be rich and with it very few would be poor” - Samuel L. Jackson
“The way to wealth depends on just two words, industry and frugality” Benjamin Franklin
"Beware of little expenses; a small leak will sink a great ship"-- Benjamin Franklin
"He who does not economize will have to agonize"--Confusius
agonize"--Confusius
“Being frugal does not mean being cheap, it means being economical and avoid waste” - Catherine Pulsifer

10. The Practise
• Plan to achieve
• Live on your means of basic income and invest the rest
• Needs VS. Wants
• Asset VS. Liability
• Data book of expenses