European Journal of Economics, Finance and Administrative Sciences

ISSN 1450-2887 Issue 16 (2009)

© EuroJournals, Inc. 2009
http://www.eurojournals.com

An Empirical Analysis of Personal Financial Planning in an

Emerging Economy

Ming-Ming Lai
Faculty of Management, Multimedia University
Jalan Multimedia 63100 Cyberjaya
Selangor Darul Ehsan Malaysia
Tel: 603-83125722; Fax: 603-83125590
E-mail: mmlai@mmu.edu.my

Wei-Khong Tan
Faculty of Management, Multimedia University
Jalan Multimedia 63100 Cyberjaya
Selangor Darul Ehsan Malaysia
E-mail: tan_wei_khong@yahoo.com

Abstract
This paper examines the attitudes of the Malaysians toward personal financial planning,
which encompasses money management, insurance planning, investment planning,
retirement planning, and estate planning. A survey data was obtained from 400 Malaysians
by using a set of structured questionnaire. We associated personal financial planning efforts
with three measures: attitudes towards personal financial planning, factors influencing
various aspects of personal financial planning decision, and frequency of managing for
various aspects of personal financial planning. The results show that the job status of a
respondent is the primary factor in influencing attitudes towards personal financial
planning and the frequency in managing for various aspects of personal financial planning.
Demographic characteristics such as age, race, marital status, gender, and education level
are the secondary factors where concerned. This paper has implications on financial
planners in formulation strategies on how to successfully deploy a personal financial
planning programme for their customers.

Keywords: Financial planning, personal finance, money management, retirement

planning, Malaysia

1. Introduction
The burgeoning of the personal financial planning has drawn great interests in financial services
industry. “Personal financial planning is a fairly new and growing discipline. It deserves academic
financial recognition as investment and corporate finance, and additional financial research and
specialized centre are greatly needed,” (Altfest, 2004, p.53)”. Kapoor et al. (2004, p.4) stated that
“personal financial planning is the process of managing your money to achieve personal economic
satisfaction”. Individual needs and goals change when he or she moves through different stages of life,
therefore, making financial planning is a dynamic process (Gitman and Joehnk, 2005).
103 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
People are investing their own assets and personal income efficiently to ensure that their
economic security can be guaranteed, not only during their working life but also after retirement. The
gradual increase in the aged population, together with a longer life expectancy, points to the need and
importance of well-planned personal financial planning. Nonetheless, little attempt have been
conducted to provide comprehensive evidence in measuring attitudes toward personal financial
planning and its associated issues. This paper, thus, fills the gap by examining the attitudes and
management of general public, i.e., Malaysian towards personal financial planning, which
encompasses money management, insurance planning, investment planning, retirement planning, and
estate planning. We further explored the factors most influencing the decisions. This paper contributes
interesting and additional empirical evidence to factors influencing the respondents’ attitudes, and
managing personal financial planning in an Asian and different environment setting from western
countries. The findings will be extremely useful for effective financial plan in tailoring the needs of
individuals based on job status, age, gender, education level, income, race, and marital status. It is
hoped that the findings of this study contribute to the financial planner profession and industry in an
emerging economy such as Malaysia.

2. Literature Review
To achieve personal economic satisfaction when one moves through the life cycle, several major types
of financial planning--insurance, investment, retirement, and estate planning--are required. A person’s
life situation such as income, age, gender, education may influence decisions of his or her personal
financial planning. It is worth noting that the role of money and money management are closely linked
to personal behavior and financial planning.
Tang et al. (2002a) examined on people’s endorsement of the money ethic across Taiwan,
United States (USA), and the United Kingdom (UK). The respondents comprised 78 full-time
employees in Taiwan, 137 employees in the USA, and 93 professional in UK. Data were measured
through exploratory factor analysis, confirmatory factor analysis, multivariate analysis of variance, and
multiple regression analysis. American men considered money as their success, in contrast, British men
considered money as evil. As for British women, they budgeted their money carefully.
Tang et al. (2002b) studied the money ethic scale (budget, evil, equity, success, and motivator),
self-reported income, demographic variables, and life satisfaction among 207 professors in the USA
and 102 professors in Spain. American faculty reported higher scores on factors budget, equity, and
success, and lower scores on factor evil than their Spanish counterparts. Further, gender (male),
budget, education, and work experience were predictors of American professors’ income, while work
experience, gender (male), education, and factor motivator were predictors of Spanish professors’
income. For the American sample, marital status (married), budget, gender (male), a low level of
education, and a low level of factor success were predictors of life satisfaction, whereas for the Spanish
sample, marital status (married), young age, and budget were predictors of life satisfaction. There is no
difference in money as a motivator between professors in these two samples. It is also interesting to
note that income was not related to life satisfaction in both samples. This is because most of the
professors in higher education are less interested in making money, compared to those (with the same
qualifications) working in industry and business. It is in line with the process of self-selection in the
teaching profession.
Hwang and Gao (2003) used a time series analysis, which showed that the main factors which
influenced people in China to purchase life insurance products are directly associated with the
successful economic reform leading people to progress to higher layers of economic security, the
increase in the level of education, and the change in social structure. However, this research has not
found a negative effect of inflation on life insurance consumption, even as China experienced high
inflation in the mid-1990s. The significant relationship between the demand for life insurance and the
104 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
level of income in China suggests that the life insurance industry can be reasonably developed in a
low-income country.
Graham et al. (2002) indicated that female investors appear both to be more risk averse and to
have less confidence in their investment decisions than male investors in equivalent circumstances. On
a larger scale, since women are more comprehensive information processors, and thus, trade less often
than their male counterparts, it might be hypothesized that the increasing participation of women in
investing will have a moderating effect on the stock market.
Glamser (1981) and McPherson (1991) indicated that respondents had generally favorable
attitudes toward retirement during pre-retirement years. The favorable attitudes were associated with
high levels of income, health, education, and high degree of support from family and work. It is
interesting to note that the younger the respondents, the greater the favorable attitude towards
retirement. At the same time, Glamser (1981) and Prothero (1981) pointed out that negative attitudes
were found towards retirement and the negative attitudes were related to the fear of financial
difficulties after retirement, high commitment, and satisfaction from work.
Ryan (2001) conducted a survey of 700 retired people and the results revealed that men and
women adjust differently to retirement. She stated that there was no clear reason associated with men
having most of their identity tied to their working environment. This is consistent with McPherson
(1991) who indicated that work is a primary concern as it influences life, chances, income, social
status, lifestyle, and even friendship. Similarly, Butters (2002) indicated that people retire differently.
Some men behave differently from woman in view of the men involvement of work and value of work
to men.
Lim (2003) analyzed via questionnaire surveys in Singapore towards the attitudes of 204 senior
workers towards work and retirement, retirement planning, and their willingness to continue working
after retirement, and to undergo retraining. The results showed that work occupied a salient part of the
lives of employees in their 40s and above. Respondents held rather ambivalent attitudes with regard to
the prospect of retirement, i.e. while they did not view retirement negatively, they were nevertheless
anxious about certain aspects of retirement. In addition, respondents also generally have not planned
for retirement. Those aged 50 years and above were more likely to engage in retirement planning
involving discussion about retirement with others, financial planning, and planning for holiday trips
compared with those below 50 years old. The majority of them preferred to remain employed and
willing to undergo retraining after they have retired.

3. Data and Method

This study was conducted via questionnaire survey. The researcher himself has conducted the pre-test
initial questionnaire administration over a period of four days to a total of 200 respondents from three
different professions (senior workers, executives and professionals, and college students) at different
areas in Klang Valley, Malaysia in July 2004. Reliability and validity of the items in the questionnaire
were carried out for both pilot study and actual study.
The final survey was self-administered over a period of eight days on a random sample of 400
Malaysian general public in September 2004, in Klang Valley, Malaysia. The questionnaire was
divided into three main sections. Each section is further divided into five sub-sections, and respondents
are asked to give their opinions according to the questions following the instruction provided in each
section.
The first section was a series of questions on a five-point Likert-type scale concerning attitudes
towards various aspects of personal financial planning. Respondents indicated whether each response
was “strongly disagree”, “disagree”, “neither agree nor disagree”, “agree”, or “strongly agree” on their
attitudes towards money, insurance, investment, retirement, and estate planning.
The second section was a series of questions on a three-point Likert-type scale involving factors
influencing decision on various aspects of personal financial planning. Respondents indicated whether
105 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
each response was “not an influence”, “moderate influence”, or “great influence” on the factors
influencing their decision on money, insurance, investment, retirement, and estate.
The third section was a series of questions on a five-point Likert-type scale comprising how to
manage for various aspects of personal financial planning. Respondents indicated whether each
response was “never”, “rarely”, “neutral”, “sometimes” or “often” on the frequency engage in
managing for their money, insurance, investment, retirement, and estate.
As for the demographic characteristics section, the questionnaire included social-demographic
variables concerning gender, race, marital status, age, education level, income, and job status.
Respondents are given an opportunity to provide their own opinion on how they feel about completing
this questionnaire. If there are certain items/questions on certain set of the questionnaires collected are
left blank or unanswered, the researcher has to handle these blank responses to an interval-scaled item
with a mid-point of the scale as the response to that particular item. Appropriate and robust statistical
tests like T-test, ANOVA, and Tukey method were employed to test the hypotheses and they are
discussed as follows:

3.1 T-test
Two null hypotheses that are examined by using T-test are as follows:
H1o: There will be no difference between individuals’ gender in the opinions on various
aspects of personal financial planning.
Statistically expressed, H1o is: μı = μ₂
where μı and μ₂ signify the means in the opinions on personal financial planning by respondents who
are female and male, respectively.
H2o: The opinions on various aspects of personal financial planning will be the same
irrespective of the individuals’ marital status.
Statistically expressed, H2o is: μı = μ₂
where μı and μ₂ signify the means in the opinions on personal financial planning by respondents who
are married and not married, respectively.

3.2 Analysis of Variance (ANOVA)

While the t-test would indicate whether or not there is a significance mean difference in a dependent
variable between two groups, an analysis of variance or ANOVA is a statistical method for testing the
null hypothesis that the means of several populations are equal.
ANOVA helps to examine the significance mean differences between more than two groups on
an interval or ratio-scaled dependant variable. In this study, the variables are age, race, income, job
status, and education level. The results of one-way analysis of variance show whether or not the means
of the various groups are significantly different from one another, as indicated by the p-value. The null
hypothesis tested for job status, for example by ANOVA is as follows:
Ho: There will be no difference between individuals’ job status in the opinions on various
aspects of personal financial planning.
Statistically expressed, H1o is: μı = μ₂ = μ₃
where μı, μ₂ and μ₃ signify the means in the opinions on personal financial planning by respondents
who are employed, self-employed, and unemployed, respectively.
106 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
3.3 Tukey Method
When significant mean differences among the groups are indicated by the p-value, there is no way of
knowing from the one-way ANOVA results alone as to where they lie, that is, whether the significance
difference is between groups A and B, or between B and C, or A and C, and so on. Therefore, it would
be unwise to use multiple t-test, taking two groups at a time.
Tukey test, however, is chosen to conduct post hoc test for this study. The test statistic for
Tukey test is found by dividing the difference between the means by the square root of the ratio of the
within group variation and the sample size.

4. Analysis and Discussion

The profile of the respondents is shown in Table 1. Overall, 266 respondents were employed while 134
respondents were unemployed.
107 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
Table 1: Demographic Characteristics of the 2004 Survey Participants

Variables/Characteristics Respondents % Respondents (n)

Gender
Female 49.5 (198)
Male 50.5 (202)
Age
Under 20 14.5 (58)
20 – 30 35.5 (142)
31 – 40 14.5 (58)
41 – 50 13.3 (53)
51 – 60 11.5 (46)
Over 60 10.8 (43)
Race
Malay 32.8 (131)
Chinese 30.0 (120)
Indian 26.3 (105)
Other (specify) 11.0 (44)
Education Level
Standard Six/UPSR 0.0 (0)
N-Level/PMR/O-Level/SPM 11.5 (46)
A-Level/STPM 10.3 (41)
Diploma/Higher Diploma 22.0 (88)
BA/BS 24.3 (97)
MA/MS/MBA/MPhil 12.0 (48)
Professional Degree 12.0 (48)
DBA/PhD 8.0 (32)
Marital Status
Married 40.0 (160)
Single 60.0 (240)
Income
Under RM2,000 33.0 (132)
RM2,000 – RM4,000 17.0 (68)
RM4,001 – RM6,000 20.0 (80)
RM6,001 – RM8,000 8.3 (33)
RM8,001 – RM10,000 12.8 (51)
Over RM10,000 9.0 (36)
Job Status
Employed
Top Management 8.8 (35)
Middle Management 22.0 (88)
Low Management 13.0 (52)
Nonmanagerial 10.8 (43)
Total Score 54.5 (218)
Self-Employed 12.0 (48)
Unemployed
Students 18.5 (74)
Housewives 7.5 (30)
Homemakers 0.0 (0)
Retired Persons 7.5 (30)
Total Score 33.5 (134)
Note: n = 400 and no missing value

Table 2 reports the attitudes and significant differences of the Malaysian respondents towards
money management, insurance, investment, retirement, and estate planning. First of all, the results
show that respondents demonstrated positive attitude towards money. This finding is consistent with
Tang et al. (2002a) in which people have positive attitude towards money. People viewed money as
budget factor in which they spend their money very carefully and budget them very well. The results
108 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
are also consistent with Tang et al. (2002a) and Tang et al. (2002b) in which money are a symbol of
success and achievement.
We move the discussion to the respondents’ attitude toward insurance. The result indicates that
insurance is served as a protective mechanism rather than as an investment instrument. This can be
seen from Chow-Chua and Lim (2000) when they pointed out that insurance is a common way to
reduce personal exposure to loss by guaranteeing a specific sum of money when a particular event
occurs.
The mean values of 3.94 to 4.20 of investments presented in Table 2 show that Malaysian
respondents have a positive attitude toward investment. They perceived that investment has always
been an important part of building wealth and security.
On the other hand, respondents held a rather negative attitude with regard to the prospect of
retirement. The survey results suggest that respondents were anxious about certain aspects of
retirement and it is a difficult adjustment on lifestyle for respondents.
Lastly, the Malaysian respondents were reasonably familiar with estate planning, they
understood that estate planning involves the planning and documentation of how their assets will be
distributed whey they die. It is also meant to minimize the taxes on assets when they ultimately transfer
the assets to their beneficiaries. As a whole, the Malaysian public have shown positive attitude with
mean scores of more than 3.0. Nonetheless, there are not much significant statistical differences when
all these items were tested across the demographic characteristics.
Results show that Chinese respondents viewed money much more positively and budgeted their
money very well compared to Malay and Indian respondents. This finding is consistent with Tang et al.
(2002a) that the Chinese equate their levels of achievement to money, and because of these attitudes
towards money, the Chinese are more driven towards accomplishment.
Respondents who earn under RM2,000.00, are mostly younger adults, lack of knowledge on
insurance products. On the other hand, those respondents who earn between 8,001.00 and
RM10,000.00, are having enough insurance policies, but still in difficulty to make decisions about
purchasing additional insurance. At the same time, married respondents were more proud of their
investment and let their friends know about them when compared with unmarried respondents.
Job status of an individual appears to be the most statistical significant among these
demographic characteristics, and therefore, the results are reported in Table 3. Table 3 presents the
result of Tukey method on the respondents’ attitude on various aspects of personal financial planning
when linked to job status of the respondents. The employed and self-employed respondents generally
viewed money much more positively when compared to unemployed respondents. This finding is
consistent with Wernimont and Fitzpatrick (1972) in which money was seen by those employed as
desirable, important, and useful. However, the unemployed seem have a tense, worrisome, and
unhappy view of money. The 134 unemployed respondents are students, housewives, and retired
people.
109 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
Table 2: Respondents’ Demographics and Attitudes towards Personal Financial Planning

Standard Significant Different*

Items Mean
Deviation Means are in parentheses
Money Management
1. I spend my money very carefully. 3.89 1.07 Indian (3.71) < Chinese (4.14)
Indian (3.46), Malay (3.60) <
2. I budget my money very well. 3.65 1.05
Chinese (3.94)
3. Money is a symbol of success. 3.71 1.20
4. Money represents one’s achievement. 3.68 1.15
Insurance Planning
5. Insurance is my major investment. 2.90 1.13
6. Insurance is a form of retirement savings plan. 3.55 1.06
7. Insurance is a form of forced savings to ensure a continual
3.82 1.07
stream of income to family in event of death or accident.
8. I have an adequate insurance program. 3.22 1.15
9. If I should ever become disabled a replacement income
3.59 1.17
insurance would be essential.
RM6,001-RM8,000 (2.33) <
10. I often have difficulty making decisions about purchasing
3.09 1.12 Income under RM2,000 (2.96)
insurance.
& RM8,001-RM10,000 (3.16)
Investment Planning
11. Investing is becoming more important nowadays. 4.20 0.85
12. Investment is the commitment of funds to achieve long-
4.18 0.65
term goals or objectives.
13. Investment is the long-term financial success. 3.94 0.86
14. I am proud of my investment and let my friends know
3.32 1.03 Married (3.41) > Single (3.27)
them.
15. I believe that a person’s investment is revealing in
3.61 1.00
assessing their ability.
Retirement Planning
16. Retirement causes people to suffer from mental problems 3.31 1.11
17. I am afraid I will become a useless man. 3.48 1.31 Married (3.48) > Single (3.47)
18. I am afraid I will feel lonely after I retire. 3.50 1.17 Married (3.51) > Single (3.50)
19. Retirement is a difficult adjustment on lifestyle. 3.23 1.22
RM6,001-RM8,000 (3.58) &
20. Retirement will give me new opportunities to do things over RM10,000 (3.61) <
3.92 0.99
that I was not able to do while I was working. Income RM8,001-RM10,000
(4.24)
Estate Planning
Female (3.46) < Male (3.65);
Below RM2,000 (3.36) <
21. I know what income my family will receive from the
3.56 0.78 RM4,001-RM6,000 (3.69),
proceeds of my estate.
RM6,001-RM8,000 (3.73);
M8,001-RM10,000 (3.79)
Age 20-30 (3.37) < Age 31-40
22. I understand how taxes will be applied to my estate. 3.39 0.88
(3.86)
23. My estate plan provides for inflation and standard of
3.50 0.87 Female (3.43) < Male (3.56)
living changes that will occur over time.
Note: Respondent evaluated the attitudes towards various aspects of personal financial planning on a scale of 1 (strongly
disagree) to 5 (strongly agree). * denotes p < 0.05

The result also shows that the employed respondents had generally greater belief that
investment is becoming more important nowadays, and investment is the commitment of funds to
achieve long-term goals or objectives.
110 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
Table 3: Comparison of Job Status of Malaysians on Attitudes towards Personal Financial Planning

Mean
Items
R1 R2 R3 F Significance Tukey’s
Money Management
1. I spend my money very carefully. 3.95 4.25 3.65 6.637 0.001* R3<R1,R2
2. I budget my money very well. 3.69 4.00 3.46 5.077 0.007* R3<R2
3. Money is a symbol of success. 3.63 3.83 3.78 1.001 0.368 -
4. Money represents one’s achievement. 3.64 3.85 3.67 0.692 0.501 -
Average Score 3.73 3.98 3.64 5.443 0.005* R3,R1<R2
Insurance Planning
5. Insurance is my major investment. 3.02 2.85 2.72 3.128 0.045* R3<R1
6. Insurance is a form of retirement
savings plan. 3.56 3.42 3.57 0.412 0.663 -
7. Insurance is a form of forced savings to
ensure a continual stream of income to
family in event of death or accident. 3.82 3.73 3.86 0.254 0.775 -
8. I have an adequate insurance program. 3.29 3.25 3.08 1.371 0.255 -
9. If I should ever become disabled a
replacement income insurance would be
essential. 3.56 3.60 3.63 0.172 0.842 -
10. I often have difficulty making decisions
about purchasing insurance. 2.94 2.79 2.90 0.356 0.700 -
Average Score 3.37 3.27 3.29 0.743 0.476 -
Investment Planning
11. Investing is becoming more important
nowadays. 4.29 4.27 4.03 4.204 0.016* R3<R1
12. Investment is the commitment of funds
to achieve long-term goals or objectives. 4.25 4.19 4.07 3.427 0.033* R3<R1
13. Investment is the long-term financial
success. 3.99 3.98 3.86 0.974 0.379 -
14. I am proud of my investment and let my
friends know them. 3.38 3.50 3.17 2.463 0.086 -
15. I believe that a person’s investment is
revealing in assessing their ability. 3.70 3.77 3.42 3.981 0.019* R3<R1
Average Score 3.92 3.94 3.71 5.380 0.005* R3<R1
Retirement Planning
16. Retirement causes people to suffer from
mental problems. 3.26 3.21 3.43 1.134 0.323 -
17. I am afraid I will become a useless man. 3.59 3.60 3.25 3.084 0.047* R3<R1
18. I am afraid I will feel lonely after I
retire. 3.57 3.67 3.34 2.059 0.129 -
19. Retirement is a difficult adjustment on
lifestyle. 3.24 3.35 3.18 0.375 0.688 -
20. Retirement will give me new
opportunities to do things that I was not
able to do while I was working. 3.93 3.63 4.02 2.897 0.056* R2<R3
Average Score 3.52 3.49 3.44 0.419 0.658 -
Estate Planning
21. I know what income my family will
receive from the proceeds of my estate. 3.62 3.58 3.43 2.544 0.080 -
22. I understand how taxes will be applied
to my estate. 3.44 3.48 3.28 1.809 0.165 -
23. My estate plan provides for inflation
and standard of living changes that will
occur over time. 3.53 3.40 3.49 0.470 0.625 -
Average Score 3.53 3.49 3.40 1.457 0.234 -
Note: R1 refers to the sample respondents who are employed; R2 refers to the sample respondents who are self-
employed; R3 refers to the sample respondents who are unemployed. * denotes p < 0.05
111 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
The factors affecting the various aspects of personal financial planning decisions are reported in
Table 4. The results indicated that undertaking transactions, emergency reserves, and the store of
values are the factors that respondents take into consideration for money management decisions. The
range of coverage offered by insurance policy, fringe benefits offered by the insurance company, and
the service quality provided by insurance agents are the factors that influence the decisions on
insurance planning and purchase.
In the case of investment decisions, expected returns, growth, and the liquidity of investment
are the influential factors in making investment decisions. Subsequently, in the aspect of retirement
planning, respondents viewed that personal health problems, excessive managerial duties, and the
pressures outside the work situation are the factors that respondents take into considerations for
retirement decisions. The results also point out that wealth protection and assets management,
minimizing inconvenience to family members, and appointing agents are the factors affecting the estate
decisions.

Table 4: Factors Influencing Various Aspects of Personal Financial Planning Decision

Not an Moderate Great

Items
Influence (%) Influence (%) Influence (%)
Money Management
1. To undertake daily transactions. 16.0 64.5 19.5
2. To have a cash reserve in case of an emergency. 4.5 30.8 64.8
3. To have a temporary store of value. 12.0 61.8 26.3
Insurance Planning
4. Range of coverage offered by the policy. 9.0 51.0 40.0
5. Fringe benefits offered by the company. 14.8 45.3 40.0
6. Service quality provided by agents. 17.5 41.3 41.3
Investment Planning
7. Expected returns of the investments. 7.8 23.8 68.5
8. Growth in the investments. 1.5 36.0 62.5
9. Liquidity of the investments. 5.8 40.0 54.3
Retirement Planning
10. Own health problem. 27.0 41.8 31.3
11. Excessive managerial duties. 12.5 55.0 32.5
12. Pressures outside the work situation. 23.8 48.5 27.8
Estate Planning
13. To protect my wealth and management of assets. 8.0 39.8 52.3
14. To minimize inconvenience to family members in
10.5 37.3 52.3
the event of my death.
15. To appoint an agent through a durable power of
19.0 41.8 39.3
attorney to administer my affairs in the event of
Note: n = 400 and no missing value

Table 5 shows the frequency of respondents in managing various aspects of personal financial
planning. Overall, money management and investment planning appear slightly better and actively
managed as compared to insurance, retirement, and estate planning. About 10% respondents indicated
that they often discussed, read, and actively planned for all aspects of personal financial planning. The
lack of proper management of personal financial planning sends worrying signals, as discussed below.
The lack of money management is worrisome as money has been shown to be an important
process, as well as the use of money and budget, and success factor. Insurance planning has become a
critical part of the personal financial planning as it provides protection for lives and assets. The lack of
retirement planning is in worrying as preparing for retirement is another key part of a sound personal
financial planning. By doing the right retirement plan, it will provide enough wealth to enjoy golden
age. However, most people start their retirement planning too late, and eventually, their retirement
112 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
income is insufficient or reduced when inflation is increased. This implies that there is a great need of
financial planner experts in the financial services industry.

Table 5: Frequency of Managing for Various Aspects of Personal Financial Planning

Never Rarely Neutral Sometim Often

Items/Frequency
(%) (%) (%) es (%) (%)
Money Management
1. Discussed money management with others? 8.0 20.8 23.8 37.5 10.0
2. Actively planned for your finances on money
management? 9.8 11.5 17.5 40.3 21.0
3. Read about money management? 10.3 21.5 17.0 37.0 14.3
Insurance Planning
4. Discussed insurance planning with others? 19.3 20.3 23.0 31.8 5.8
5. Actively planned for your finances on insurance
planning? 17.0 21.5 26.3 26.5 8.8
6. Read about insurance planning? 21.8 21.3 15.8 31.3 10.0
Investment Planning
7. Discussed investment planning with others? 12.3 16.5 22.5 36.0 12.8
8. Actively planned for your finances on investment
planning? 13.5 15.5 32.5 26.0 12.5
9. Read about investment planning? 17.3 17.0 27.8 25.5 12.5
Retirement Planning
10. Discussed retirement planning with others? 21.3 19.3 24.3 28.8 6.5
11. Actively planned for your finances on retirement
planning? 18.0 19.8 20.0 33.0 9.0
12. Read about retirement planning? 38.5 17.0 21.0 16.0 7.5
Estate Planning
13. Discussed estate planning with others? 22.5 16.3 30.3 26.0 5.0
14. Actively planned for your finances on estate
planning? 21.5 28.3 29.8 17.0 3.5
15. Read about estate planning? 31.8 17.3 27.5 21.0 2.5
Note: n = 400 and no missing value

When the personal financial planning was associated with other demographic characteristics,
the results were interesting. Married respondents were more likely to read and engage in insurance
planning as compared to unmarried respondents. It might be true that married respondents need to
provide protections for their dependants and family members. The results also reveal that self-
employed and employed were more likely to engage in money management discussion, insurance,
investment planning involving reading about investment planning as compared with those unemployed
respondents.
Chinese respondents were more likely to engage in investment planning for their finances as
compared to Malay and Indian respondents, in particular. Lastly, male respondents were more likely to
engage in estate planning discussions when compared to female respondents.
In managing personal financial planning, the results show that age, race, job status, and
education level produced statistically significant with job status appears as the primary factor.
From Table 6, under the age classification, the sample respondents who are 51 to 60 have total
average score of 2.54 in managing insurance planning when compared to age of 31 to 40 with total
average score of 3.17. It is possible that the respondents of age 31 to 40 have more savings and income
in consideration that they are in the consolidation stage of investment life cycle and career
development (Reily & Brown, 2003). The need of insurance planning is crucial and timely especially
after they have considered their car and home purchases as well as their family. Those who are in the
age of 51 to 60, most of them should already have insurance policies and if he or she does not have, it
may be difficult and expensive for them to purchase when their age increases.
113 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
The race demographic showed statistically significant difference in terms of investment
planning. It is interesting to note that the Indians have relatively lower mean scores when compared to
other races especially the Chinese.

Table 6: Comparisons of Age, Race, and Education Level of Malaysians on Managing for Various Aspects
of Personal Financial Planning

Items Mean
Insurance Planning A1 A2 A3 A4 A5 A6 F Significance Tukey’s
1. Discussed insurance
2.88 2.94 3.17 2.70 2.43 2.65 2.467 0.032* A5<A3
planning with others?
2. Actively planned for
your finances on 2.84 2.89 3.29 2.87 2.52 2.79 2.195 0.054* A5<A3
insurance planning?
3. Read about insurance
2.86 2.80 3.03 3.00 2.65 2.91 0.597 0.703 -
planning?
Average Score 2.86 2.88 3.17 2.86 2.54 2.78 1.735 0.125* A5<A3
Investment Planning R1 R2 R3 R4 F Significance Tukey’s
4. Discussed
investment planning 3.33 3.33 2.92 3.18 2.736 0.043 -
with others?
5. Actively planned for
your finances on 3.18 3.24 2.79 3.07 3.110 0.026* R3<R2
investment planning?
6. Read about
3.08 3.17 2.69 2.98 3.021 0.030* R3<R2
investment planning?
Average Score 3.20 3.24 2.80 3.08 3.694 0.012* R3<R1,R2
Retirement Planning E1 E2 E3 E4 E5 E6 E7 F Significance Tukey’s
7. Discussed retirement
3.04 2.76 2.69 2.82 2.96 2.65 2.72 0.686 0.661 -
planning with others?
8. Actively planned for
your finances on 3.15 3.02 3.05 2.81 3.29 2.83 2.44 2.031 0.061* E7<E5
retirement planning?
9. Read about
2.50 2.63 2.28 2.27 2.77 2.33 1.84 2.090 0.053* E7<E5
retirement planning?
Average Score 2.90 2.80 2.67 2.64 3.01 2.60 2.33 1.663 0.129 -
Note: A1 refers to the sample respondents who are under 20; A2 refers to the sample respondents who are 21-30; A3
refers to the sample respondents who are 31-40; A4 refers to the sample respondents who are 41-50; A5 refers to
the sample respondents who are 51-60; A6 refers to the sample respondents who are over 60. * denotes p < 0.05
R1 refers to the sample respondents who are Malay; R2 refers to the sample respondents who are Chinese; R3
refers to the sample respondents who are Indian; R4 refers to the sample respondents who are other ethnic
minority. * denotes p < 0.05 E1 refers to the sample respondents who have N-Level/PMR/O-Level/SPM; E2 refers
to the sample respondents who have A-Level/STPM; E3 refers to the sample respondents who have
Diploma/Higher Diploma; E4 refers to the sample respondents who have BA/BS; E5 refers to the sample
respondents who have MA/MS/MBA/MPhil; E6 refers to the sample respondents who have Professional Degree;
E7 refers to the sample respondents who have DBA/PhD. * denotes p < 0.05

Tukey results as reported in Table 7 indicated that job status of respondents serve as primary
factor in managing the money, insurance, and investment. It can be explained that job and work
provide the main source of income for every person. This is consistent with findings of McPherson
(1991) who indicated that work is primary concern as it influences life, income, and lifestyle.
The results revealed that respondents who have DBA/PhD qualifications are less read and
actively planned for retirement when education level of respondents was tested by using Tukey test.
Instead, the results indicated that those who have Masters Degree are more actively planning and well
read about retirement planning.
114 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
Table 7: Comparison of Job Status of Malaysians on Managing for Various Aspects of Personal Financial
Planning

Mean
Items
R1 R2 R3 F Significance Tukey’s
Money Management
1. Discussed money management with
3.27 3.46 3.01 3.553 0.030* R3<R2
others?
2. Actively planned for your finances on
3.58 3.60 3.37 1.326 0.267 -
money management?
3. Read about money management? 3.38 3.48 2.91 7.365 0.001* R3<R1,R2
Average Score 3.41 3.51 3.10 5.187 0.006* R3<R1,R2
Insurance Planning
4. Discussed insurance planning with others? 2.93 3.17 2.59 5.219 0.006* R3<R1,R2
5. Actively planned for your finances on
2.97 3.21 2.63 5.316 0.005* R3<R1,R2
insurance planning?
6. Read about insurance planning? 2.92 3.04 2.72 1.422 0.242 -
Average Score 2.94 3.14 2.64 4.709 0.010* R3<R1,R2
Investment Planning
7. Discussed investment planning with
3.25 3.46 3.04 2.486 0.085 -
others?
8. Actively planned for your finances on
3.17 3.25 2.88 3.008 0.051 -
investment planning?
9. Read about investment planning? 3.07 3.29 2.75 4.348 0.014* R3<R1,R2
Average Score 3.17 3.33 2.89 4.013 0.019* R3<R2
Retirement Planning
10. Discussed retirement planning with
2.80 2.94 2.75 0.383 0.682 -
others?
11. Actively planned for your finances on
2.97 3.06 2.89 0.378 0.686 -
retirement planning?
12. Read about retirement planning? 2.46 2.42 2.21 1.493 0.226 -
Average Score 2.74 2.81 2.62 0.758 0.469 -
Estate Planning
13. Discussed estate planning with others? 2.70 3.10 2.70 2.389 0.093 -
14. Actively planned for your finances on
2.55 2.71 2.43 1.155 0.316 -
estate planning?
15. Read about estate planning? 2.48 2.69 2.32 1.777 0.170 -
Average Score 2.57 2.83 2.49 2.029 0.133 -
Note: R1 refers to the sample respondents who are employed; R2 refers to the sample respondents who are self-
employed; R3 refers to the sample respondents who are unemployed. * p < 0.05

5. Conclusion
The overall results revealed that the job status of an individual serves as the primary factor in
influencing the attitudes and management of personal financial planning. Self-employed and employed
respondents showed statistically significant higher in their mean values as compared to unemployed
respondents. Employed and self-employed respondents appear to be more positive and active in money
management, insurance, and investment planning. The lack of active involvement in personal financial
planning by individuals implies that there is a great need of awareness of well-planned and
sophisticated financial planning. The demand of personal financial planning professional has opened
an additional avenue for financial practitioners.
The survey results contribute important implications to the financial planners in tailoring their
customer needs and achieving personal economic satisfaction when the customers move through
different stages of their life cycle. The growth of personal financial planning as a profession and the
financial discipline in the financial services industry are very promising. It would be of interest that
future research further extend the job status factor in which examining the personal financial planning
115 European Journal of Economics, Finance And Administrative Sciences - Issue 16 (2009)
on different professions and stages of an individual’s career in a particular industry to gauge further
and different insights.

Acknowledgement
The earlier version of this paper was presented at the 18th Australian Finance and Banking Conference
2005, 14-16 December 2005, Sydney, Australia. The comments of the anonymous paper reviewers and
the conference participants are acknowledged.

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