Introduction and Overview

1. 2. 3. 4. 5. 6. 7. Course synopsis Course objectives Course outline Schedule and calendar Students responsibilities and grading Suggested mode of students preparation About myself

Course Synopsis
Covers the management of household and personal finances. Provides an overview of financial concepts with special emphasis on their application to issues faced by individuals and households. Review principles and techniques for the management of a households assets and liabilities during the first half of the course. Overview of financial institutions and their relationship to households, along with a discussion of financial instruments commonly held by individuals and families during the second half of the course.

Course Objectives
Upon completion of this course of study, each student will be able to : Explain the process of financial planning Apply financial planning principles to life situations Evaluate financial planning tasks in various stages of the life cycle Recognise job opportunities in the financial planning area

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11 12. 13 14.

Basic financial planning Factors that influence financial decisions Preparing personal financial statement Preparing personal budget Cash and savings management Time Value of Money Basic Personal Taxation Credit and personal loan management Fundamentals of personal risk management Basic concepts in insurance planning Investing in the Malaysian capital market Personal investment planning shares, bond, unit trusts and real estate Retirement benefits planning Basic concepts in estate planning

Lecture 1
Basic Financial Planning

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

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. Management and acquisition of assets 2. Borrowing: credit cards and consumer loans 3. Insurance 4. Investments 5. 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. Maintain and improve our standard of living - the necessities, comforts and luxuries that we have or desire. .

.. continue.. Rewards of Financial Planning

2. Control consumption patterns to live well today and tomorrow! Average propensity to consume - % 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

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

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

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

SHORTTERM GOALS
1.

COST

WHEN

ALREADY SAVED

MONTHLY SAVINGS

WHERE SAVED

2.

3.

LONGTERM GOALS
1.

2.

3.