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Introduction

Personal Finance
prepared for En Basarudin Shah Basri

July 2009
Presenter:
 ‘AFIFAH BT ABDUL HAMID
2008279422
 ANISAH BINTI ZAINI
2008279504
 ILY NADRAH RAZMAN SHAH
2008279506
 NIK NUR SHAFIKA MUSTAFA
2008279264
 NOOR SHARENA BT ISMAIL
2008279488
 NUR SYAERAH BT PAING
2008279444
SITI FAUZIAH ROSMANI
B5L4 Introduction to Personal Finance
Contents

1 Definition

2 Info and Tips

3 News and Statistic

4 Agency

5 Islamic and Conventional View

Past Sem Questions

B5L4 Introduction to Personal Finance


Definition
Personal Finance

July 2009
PERSONAL FINANCE

► Obtain maximum benefit from

limited financial resourses.


► The study of individual and
household financial decision .
► Help you make better decision
about money.
Personal financial Planning
Developing and implement on
integrated , comprehensive plan
to meet financial goal and
prepare for financial emergency.
B5L4 Introduction to Personal Finance
COMMON FINANCIAL PROBLEMS

Not planning
Overspending
Delaying saving for
retirement
Very little life insurance
Not prepared for medical
emergencies
Financial illiteracy

B5L4 Introduction to Personal Finance


IMPORTANCE OF
FINANCIAL PLANNING

Proper long-term savings


Responsible for setting up our
own retirement plans
protect you against inflation
Allow us to maintain our
lifestyle.

B5L4 Introduction to Personal Finance


IMPORTANCE OF
FINANCIAL PLANNING
Income
Cash flow
Capital
Investment
Family security
Financial understanding
Savings

B5L4 Introduction to Personal Finance


FINANCIAL PLANNING PROCESS

1.Listen closely to understand our life and financial goals.


2. we determine what it will take for you to achieve your
goals.
3.Working with us, we create a written analysis of your
situation and a recommended action plan based on the
priorities you have identified.
4.Then we follow-up to make sure our plan stays on track.

B5L4 Introduction to Personal Finance


ADVANTAGES OF
FINANCIAL PLANNING
 Savings for Those Tight Spots
 Better Control of Your Money
 Paying Down Debts is Another
Advantage of Good Financial
Planning
 Invest In Your Own Future
 Set Out Clearly The Money To
Be Well Used

B5L4 Introduction to Personal Finance


DISADVANTAGES OF
FINANCIAL PLANNING
 It can take a lot of time
 It can be costly process because
we will need the assistant of our
accountant r financial adviser
 A financial plan merely forecasts
and the accuracy will depend on
the information which it is based
 It can tend to discourage us if
our actual results are far off the
projected results in our financial
plans

B5L4 Introduction to Personal Finance


HOW TO MAKE
FINANCIAL PLANNING WORK

 Set measurable financial goals


 Understand the effect of each
financial decision
 Re-evaluate your financial
situation periodically
 Start planning as soon as you
can
 Be realistic in your
expectations
 Realize that you are in charge

B5L4 Introduction to Personal Finance


Information and
Tips

July 2009
TOP FOUR FINANCIAL TIPS

1. Get Paid What We're Worth and Spend Less


Than We Earn.
 No matter how much or how little we're paid, we'll never get
ahead if we spend more than we earn.
2. Stick to a Budget.
 List all what really we want to buy, an ensure that all the
things are really needed and necessarily.
3. Pay Off Credit Card Debt.
 Try to a avoid having credit card because this will give
financial obligation in our life.
4. Have a Savings Plan.
 Teach ourselves to make saving by save at least 5% or 10%
from our salary or earning.

B5L4 Introduction to Personal Finance


DISCOUNT FOR SAVINGS
u Shopping with Discounts
 Do not shop at any place that does not offer a discount.
 Buy only at outlets that have a sale or discount on offer. Try
to target the 50% off sales.
3. Promotion Offers
 Look around for promotion offers. Buy something we can get
a free on.
 For ex: buy 1 free 1 such as bags, shampoos and so on.
4. Festival Offers
 Almost all stores have festival offers. This is usually a good
time to buy clothes and household goods.
 For ex: During Hari Raya Aidilfitri or Chinese New Year.
u Exchange Offers
 Rather than throw old thing away, its better we trade in the
old thing and changes for new one.
 For ex: television, washer machine or microwave oven.

B5L4 Introduction to Personal Finance


MONEY IN FAMILY
1. Prioritization of Expenses
 Spend on something are important such health and
education day to day expenses personal expenses
expenses for comforts and luxuries.

2. Personal Privacy
 When allowances are handed out there should not be
too many questions about personal expenses especially
teenagers.

3. The Family Money Pool


 This conceptually means that everyone contributes
money to the person who runs the house and makes
the day to day expenses.

4. Keep Family Bonds Strong


 This is done by helping each other out when needed.
Shared responsibilities and values go along with shared
finances.

B5L4 Introduction to Personal Finance


THE INTELLIGENT SPENDER
u Planning The plan includes a long term plan for a
lifetime estimate and short term plans for the year.

u Responsibility responsible and fulfills his


responsibilities before making other expenses by using
money carefully and avoid wastage.

u Charity The sum given away to charity should not


be disproportionately high.

u Saving The right attitude is to save money for the


future where it can save us from any contingency happen.

u Support to the Family In case anyone in your


family needs money or is going through a bad financial
phase we must contribute support.

u Gifts Do not gift away large sums of money or


expensive gifts to anyone not closely related.

B5L4 Introduction to Personal Finance


Understand the value of money
Control it
Save it
Invest regularly and diversify
Shield it
Evaluate your spending habits
Organize your financial life

B5L4 Introduction to Personal Finance


RETIRE EARLY WITH THE FINANCIAL PLANNING
DO’S AND DON’T
DO DON’T

 Do know what we Don’t buy into


are getting into something just
 Do have an exit because
strategy everyone is
 Do invest only in Don’t invest in
what we are the stock
comfortable with market
 Do remember: Do not borrow
nothing is sure in money just so
the world of we can head off
investment immediately

B5L4 Introduction to Personal Finance


FINANCIAL PLANNING FOR
BUSINESS OWNER

There some financial planning


for business owner:
Assess
Prioritize
Recognize
Understand
Action
Review

B5L4 Introduction to Personal Finance


Agency

July 2009
AKPK
(Agensi Kaunseling dan Pengurusan Kredit)
Credit Counselling and Debt Management Agency

Financial Education
•Credit and basic money management skills
•Tips, guide & method for disciplined management

Counselling and Advice on Financial Management


•Counselling& advice on managing finance wisely
Title •Learn to handle debt responsibly

Debt Management Programme


•Personalised debt repayment plans
•Consult with the financial services providers to
structure manageable scheme

B5L4 Introduction to Personal Finance


Diagram

Hijrah
Wealth
Management

Financial Certified
Planning Islamic
Advisor Financial
(islamic) Planning
(CIFP)

B5L4 Introduction to Personal Finance


MAIN ASPECT OF
ISLAMIC FINANCIAL PLANNING

Protection Planning

Islamic
Alms Planning Financial Investment
(Sadaqah) Planning Planning

Zakat Planning Estate Planning


and Heritage

B5L4 Introduction to Personal Finance


WARISAN MUKMIN SDN BHD
Agency of personal financial and
wealth management based on
islamic principle
Located at Seksyen 9 , Shah Alam
Corporate agent of Amanah Raya
Bhd, Takaful Malaysia and Philip
Mutual Fund.

B5L4 Introduction to Personal Finance


OBJECTIVES
 To organize the socio-economic system and
muamalat Islam in term of structure, strategy
and action mechanism

 To enhance the understanding and awareness


of the importance of economic and financial
planning among muslim through academic
activities and practical in term of Islamic
Financial Planning and Managing.

 Offering the full services or product regarding


the muamalat Islam through Pengurusan
Muamalat Mukmin (PMM) package

 To open up Muamalat Mukmin Service Centre


over Malaysia and act as non-banking financial
to give better, efficient and full services in
order to fulfill customer aspiration

B5L4 Introduction to Personal Finance


MODEL MUAMALAT MUKMIN

B5L4 Introduction to Personal Finance


OTHER ALTERNATIVES

Television talk show


-BIJAK WANG
-STOCK WATCH
*Sponsored by Maybank

I SQUARE TRAINING &


CONSULTANCY

B5L4 Introduction to Personal Finance


News &
Current Issues

July 2009
IBFIM AND FPAM PRODUCE THE
FIRST BATCH OF ISLAMIC FINANCIAL
PLANNER
IFP is joint collaboration between
IBFIM and FPAM - produce qualified
Islamic financial planning professionals
which is the 1st in Malaysia and the
world.

Approval from SC and BNM for


licensing purposes.

Introduce Islamic financial planning


courses into their academics and
professional programs.
B5L4 Introduction to Personal Finance
 In light of uncertainties in the global
financial markets and economic growth
prospects – need for effective financial
planning.
 IBFIM is looking to export IFP overseas –
planning
 Received requests from potential education
providers
 Recipients – 22 non-Muslim from 57 :-
shows the acceptance of Islamic finance
among non-Muslim

B5L4 Introduction to Personal Finance


FPAM AND IBFIM RECEIVED RM1.15 MILLION
GRANT FROM CMDF FOR ISLAMIC FINANCIAL
PLANNING CERTIFICATION PROGRAM

 Received rm1.15m for their joint


collaboration in the dev of
certification program for Islamic
financial planning
 Targeted at all professionals and
executives serving the retails
segment of IFM
 Lacked of skilled resources in
Islamic finance
 To produce qualified professionals
and help build up a pool of talent
B5L4 Introduction to Personal Finance
FINANCING PLANNING -
STAGES OF LIFE

B5L4 Introduction to Personal Finance


Malaysian not have enough saving for
future
• total yearly saving below RM 18, 000
Economy downturn
Criminal cases increase

B5L4 Introduction to Personal Finance


B5L4 Introduction to Personal Finance
Money work for us not us work
for money
Money is very IMPORTANT
A smart financial management
= a quality of individual,
family, organization and
country

B5L4 Introduction to Personal Finance


1) JAPAN
2)
GERMAN
3)
FRANCE
4)
CANADA
5) UK

6) US
B5L4 Introduction to Personal Finance
Spend less than we have
Buy that we really need
Realize that not everything we can
get

 and
Sediakan payung sebelum hujan

B5L4 Introduction to Personal Finance


Islamic and
Conventional Views

July 2009
ISLAMIC FINANCIAL
PLANNING

new concept being developed


nowadays and it has a
relationship with the definition
of Islamic Financial Marketing
which defined by Ibnu Abu
Yusuf & Ibnu Taimiyyah and
Ibnu Khaldun. This means that
we need to practice Islam
while we perform our business
and economic activities.

B5L4 Introduction to Personal Finance


Provides a worldview that is
harnessed to private and
public life of muslims based
on revelation, quran and
sunnah.
Wealth is considered as a
bounty of God and thus not a
scarce:
Allah says, "God is rich but you
are poor" (Qur'an 47:38).

B5L4 Introduction to Personal Finance


ISLAMIC PERSPECTIVE
 In Islam, financial planning is not
just merely a process of acquisition
and accumulating wealth but it has a
broad definition which relates to the
concept of vicegerent (kalifa).

Behold, thy Lord said to the angels:


"I will create a vicegerent on earth."
They said:” Wilt Thou place therein
one who will make mischief therein
and shed blood? - Whilst we do
celebrate Thy praises and glorify Thy
holy (name)?" He said: "I know what
ye know not."
(Surah Al-Baqarah, Verse 30)

B5L4 Introduction to Personal Finance


Cont..
One of the important sources
of unjustified earnings is
receiving any monetary
advantage in a business
transaction without giving a
just countervalue.”
(Umar Chapra in, ‘Towards a
Just Monetary System’)

B5L4 Introduction to Personal Finance


INSPIRATION
 Prophet Yusuf a.s persuades
King of Egypt and the citizens to
cultivate crops in 7 years in a
row, then save the efficacious.
Then it comes the difficult year
to the citizens and they can eat
the crops efficacious which they
save from the beginning. While
on the rainy years, they squeeze
grapes. From this situation, King
of Egypt finds out the specialty
of Prophet Yusuf and establishes
him to be finance minister.
Quran (surah Yusuf : 47-49).

B5L4 Introduction to Personal Finance


FIVE SIMPLE POINTS CAN HELP
ADVISERS INTEGRATE SHARI’A-
COMPLIANT FINANCIAL PLANNING
SERVICES INTO THEIR BUSINESSES

The generic financial needs of


the Muslim client are no
different from those of other
clients
Integrating noneconomic
considerations into financial
planning is already being done
for the client concerned about
environmental, social, and
governance issues
B5L4 Introduction to Personal Finance
Cont..
 principles of Shari’a are fairly
easy to grasp

 expertise in conventional
products is important for clients
seeking Shari’a compliance

 Islamic financial institutions


have already put into place
structures and processes for
obtaining and maintaining
Shari’a compliance that could be
used by the personal finance
industry.

B5L4 Introduction to Personal Finance


CONVENTIONAL FINANCIAL
PLANNING
 conventional approach asks
households to specify how much
they want to spend

 It then determines the amounts of


saving and life insurance needed to
achieve these targets

 This operational level will be


translated in the personal budget in
every stage of creation,
accumulation, protection and
distribution of wealth

 Is not based on syariah

B5L4 Introduction to Personal Finance


CONVENTIONAL PERSPECTIVE
appear consonant with such
consumption smoothing, the
actual practice of conventional
planning is anything
but consumption smoothing is
the notion that consumers will
spend on average 70 to 80
percent of their pre-retirement
income per year once in
retirement.

B5L4 Introduction to Personal Finance


Cont…
Setting spending targets that
are consistent with
consumption smoothing is
incredibly difficult, making
large targeting mistakes
almost inevitable
Conventional planning’s use of
spending targets also distorts
its portfolio advice

B5L4 Introduction to Personal Finance


Quotes …
 Two weeks of solid financial planning
on an estate may be worth to the
owner more than the financial gains
of the last 10 or 15 years"

--- Price Waterhouse 1967

 Did you know that people spend more


time planning their vacations than
they do their financial planning?"

--- Harold A. Lowe, CLU, CFP

B5L4 Introduction to Personal Finance


Cont..
 Financial planning is a process
not a product. It is a delivery
system for financial security"
-- James P. Ruth, CLU, ChFC

 "In preparing for battle I have
always found that plans are
useless, but planning is
indispensable"
-- Dwight D. Eisenhower (1890 -
1969)

B5L4 Introduction to Personal Finance


Cont..
“Becoming wealthy is not a
matter of how much you earn,
who your parents are, or what
you do.. it is a matter of
managing your money
properly.”
(Noel Whittaker)

B5L4 Introduction to Personal Finance


Past Semester
Question

Oct 2008,April 2007,April 2006

July 2009
Q & A Session

July 2009