● You need money to live in this society, therefore you work for salary income, you spend the money to purchase goods or services. You save it if you have extra money left, you borrow money if there are not enough money for you to buy or pay the neccesities.
● Financial planning is all about how you handle your money, Earn it ? Spend it ? Save it? Or Invest it ?
● If you want quality life, to enjoy life without worring about money, then you need sufficient money / wealth to support this kind of living standard. Financial planning is the tools to help you to achieve it : Manage your personal money properly, to understand your personal cash flow, to accumulate your wealth by start saving as early possible, allocate a portion of your saving for investment, invest intelligently by getting 15%-20% yearly returns in the long term period.
● You will enjoy quality life without worring about money if you succeeded in proper financial planning & invest intelligently.
Below are 2 examples of how your life will be affected by how you handle your money.
A) John aged 35, is a worker in one factory, he earned RM1,600 a month. His monthly expenses is car installment ( 600 ), petrol ( 300), food & misc expenses (300 ). He has extra 400 after deducting the monthly expenses. Sometimes he save it, sometimes he use it to buy things that he love. ie latest handphone model or expensive fish.
He has work for 15 years, no saving basically, he got married recently, plan to have baby in 2 years time, his expenses was increased by 300 for flat rental, the monthly expenses will go higher when they got his 1st baby in 2 years time.
He finally realise that his income will barely enough to pay off his monthly expenses, he has no saving now and could not save untill he retired at aged of 60, even he got his increment yearly.
B) Peter, aged 32, is a accounts clark in a trading company. he earned 1,500 a month. He spend 200 for food, 200 for bus fare to travel to work by bus, use another 300 for daily expenses. He save the extra 800 monthly.
Peter has saving of 20,000 in bank account. He plan to use 10,000 to invest in shares and expected to get a returns of 15% yearsly. the balance of 10,000 to save in FD & get a returns of 3.7% yearsly.
Peter gets an increment of 200 from his current employment, he is now planning to buy a 15,000 second hand car, pay monthly installment of 300. He will incurred another 200 of petrol fee. He still have 500 extra money to save monthly.
Occationally he will use part of its extra money to buys things he love.He also feel more secure because he knew that when he retired at 60, his investment income & saving will be there to support his living cost.
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