Making Life Rewarding


 Through
Financial Planning
A Public Financial Literacy Outreach Talk (FLOAT) brought to you by FPAM

FPAMFLY
Workbook

This workbook is designed and developed by Tang Wee Hen (CFP) and Catherine
Khoo Eng Ngo (CFP) to complement the FPAM-FLY 2020 Financial Literacy Outreach
Talk (FLOAT) for learning and experience purpose. No parts of it forms any opinion and
advice from the speaker/trainer or FPAM. Should you need further clarification and
financial advice, pleases contact mfly@fpam.org.my.
 1 Personal Details

Your Name DOB

Occupation Annual income

Spouse Name DOB

Occupation Annual Income

Child 1 Age

Child 2 Age

Other
Dependents Age

Age

Retire by Mortality

Hand phone Email

Home Address

1
2 What Are Your Current Financial Needs and Concerns?

Identifying your financial needs concerns will assist you to define and prioritize your financial goals.

NEEDS CONCERNS

1 Protection/ Insurance Planning Very Moderate Not

. In the event I am no longer around/disabled/striken with critical
illness, I want to:
I. Have replacement income if disabled / stricken with critical
illness.
II. Ensure dependents to maintain same living standards.

III. Pay off mortgages and debts.

Your current life Insurance: RM__________________

2 Investment Planning
. Maximize investment returns.

Choose the right investment options.

Structure a more efficient investment portfolio.

3 Education Planning
. Provide funds for children’s/grandchildren’s education.

4 Cash Flow Management

. Reduce liabilities/debts.

5 Retirement Planning
. I. To determine retirement plan options.
II. Select the most appropriate investments for retirement
funds.
III. Provide for long term care. (nursing home & medical care.)
\

6 Estate Planning
. I. Ensure survivors are adequately provided in the event of my
death.
II. Assure distribution of my estate according to my wishes.

III. Determine the best way of disposing business interests.

IV. To provide regular income / gift to my grandchildren

Do you have a Wasiat/ Will? Yes / NO

2
 3 Quantify and Prioritize Your Life Goals

Rank your life goals according to the below rating. No 1 = most important, No 4= the least important.

YOUR LIFE GOALS

1. Retirement RANK

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

2. Children Education – For Children/ Grandchildren

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

Amount = ___________________

4
3
From Year = ___________________ 2
1

To Year = ___________________

3
3. Traveling (vacation)

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

4. Others : ______________________(eg: clear debts, buy car, house)

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

Amount = ___________________
4
3
2
From Year = ___________________ 1

To Year = ___________________

4
 4 What Is Your Money Attitude?

What does money mean to you? It's helpful to know because any of these attitudes taken to the extreme
can sabotage your dreams. Are you a spender, a saver, giver builder or something in between? (From
"How Much Is Enough? Balancing Today's Needs with Tomorrow's Retirement Goals" by Diane McCurdy )
(Answer A, B, C, or D for each)

1. What do you think about shopping?

A. Shopping is my favourite sport.

B. I shop when I need something.
C. Shopping can be fun sometimes, especially if I'm shopping for other people.
D. Shopping is torture.

2. What is your opinion about credit cards?

A. Credit cards allow me to have what I want without worrying if I can afford it.
B. If I can't afford something but it's an investment, why not use credit cards?
C. I give my kids credit cards to teach them the value of money.
D. Credit cards are a good way to build up a credit rating and a handy alternative to carrying cash.

3. When I go out for dinner with friends:

A. We check out the latest hot restaurant, and we split the bill evenly.
B. Sometimes I pay, sometimes they pay -- it all works out eventually.
C. I usually fight for the check.
D. We ask for separate checks.

4. If I see something I like, I:

A. Buy it.
B. Buy it if it’s into my game plan.
C. Get one for me and one for somebody else if it's a good deal.
D. Usually talk myself out of buying it.

5. If I won a big lottery, I would:

A. Never have to think about money again.

B. Use it to create something important.
C. Spend a lot of it on friends, family, and charities, and keep enough to live on.
D. Make sure my family was taken care of, pay off the mortgage, then live on the interest.

6. If I don't have any money in the bank, I:

A. Use my credit cards and line of credit --isn't that why they're there?
B. Use credit to leverage opportunities.
C. Worry that I won't be able to fulfil people's expectations of me.
D. Get anxiety attacks (or I would if it ever happened).

7. I love to use my money to:

A. Enjoy life to the fullest

B. Follow my interests and stretch myself.
C. Make other people happy.
D. Build up a nest egg.
8. Where does your money go?
A. I don't know where all my money goes.
B. I always have a pretty good idea of how much money I have available, but never let that stand in the
way of a good idea.
C. Most of my money is allocated to family, charity, or trying to make a difference.
D. I keep close track of all my bank accounts and investments.

5
9. When I go shopping for something I need, I:

A. Usually come home with a few extras.

B. Find it, buy it, and go home.
C. Look around to see if there's anything I can pick up for anyone else while I'm out.
D. Shop around to make sure I'm getting it for the best price.

10. When somebody has a new car, I ask:

A. Did it come loaded?

B. What kind of car is it?
C. Are you happy with it?
D. How did it rate in Consumer Reports?

11. When I give to charity, I:

A. Give to the ones that appeal to my heart.

B. Choose charities that most closely match my aims and beliefs.
C. Give as much as I can because others need it more than I do.
D. Allocate a specific amount to the charities of my choice.

12. How do I allocate my retirement account?

A. What retirement account?

B. My home / business / hobby is my retirement plan.
C. My financial adviser takes care of all of that.
D. Carefully, very carefully.

13. When I go on vacation, I like to:

A. Pamper myself.
B. Get some use out of the trip.
C. Take lots of friends or family with me.
D. See how cheaply I can do it and still have fun.

Your Score: Find out by adding up the As, Bs, Cs, and Ds you have:

Answers Total Type

A Spender
B Builder
C Giver
D Saver

6
5
Where Are You Now? (Current Situation) – Personal Cash Flow Statement
Annual Income You Ref

Personal Income (before tax)

Business/Trade Income
Other Income (/rental/investment etc)
Total Annual Inflow / Income 8.2

Annual Savings & Investments ( good financial behavior : save first) 8.2

EPF/PRS
Education Savings
Investments ( eg: FD, shares, Unit trust regular savings)
Total Annual Inflow after savings & investment
Annual Expenses
Deduction at Source- Income Tax/Socso/Others
Household Expenses (utilities/groceries/clothing/mobile phone)
Dependent Care/Tuition Fees
Transport Expenses (vehicle loan/ maintenance/fuel/toll/insurance/parking) 8.4

Accommodation Expenses (mortgage/rent/maintenance/insurance/tax) 8.4

Personal Expenses (personal care/premiums/entertainment/memberships)

Personal Loans/ Study Loans/PTPTN 8.4

Credit Card Payments 8.4

Charitable Donations
Total Annual Outflow 8.1

Net Annual Cash Flow – surplus(deficit)

6 Where Are You Now? (Current Situation)- Your Personal Balance Sheet Net Worth

Net Worth is the basic measure of financial health /overall financial standing. Net Worth constitutes assets
(items you own) minus liabilities (amounts you owe).
(I) Personal Use
Asset (A1) Liabilities(L1) Net ( A1) – (L1) Ref
(RM) (RM) (RM)
Residence-/home loan
Emergency Fund 8.1
Car / Car Loan
Jewelry/Arts
Credit Card Balance
Education Loan
Personal Loan
Others Assets/Loans
Total A1 L1 8.3

7
 (II) Business
Asset (A2) Liabilities( L2) Net ( A2) – (L2) Ref

(RM) (RM) (RM)

House/Loan ( for
rental income)
Land(Plantation)/loan
Business /loan
Others Business/loan
Total A2 L2 8.3

III) Investments
Liabilities ( L3) Ref
Asset (A3) Net ( A3) – (L3)
(RM)
(RM) (RM)

Savings/Fixed 8.1
Deposit/
Shares/ stocks
Unit Trust
EPF Ac 1 Balance
Investment Loans
Others
Total A3 L3 8.3

Total Assets Total Liabilities

Net Worth (A1+A2+A3) Minus
(L1+L2+L3)
Equal to
- =

RM
RM___________ RM ____________

8
7
What Type Of Investor Are You?
Instructions
When making investment recommendations, it’s important to recognize your comfort with investment risk. The
following questions will help you to assess what type of investor you are. For couples, you both can respond to the
questions below, or if only one of you is the decision maker relative to investing, that person can complete these
questions.

You

1. Very low risk taker

1) Compared to others, how do you rate your willingness to take 2. Low risk taker
financial risks? 3. Average risk taker
4. High risk taker
5. Very high risk taker

1. No
2) Have you ever invested a large sum in a risky investment mainly 2. Yes, very rarely
for the "thrill" of seeing whether it went up or down in value? 3. Yes, somewhat rarely
4. Yes, somewhat frequently
5. Yes, very frequently
1. Very small
3) What degree of risk have you taken with your financial decisions 2. Small
in the past? 3. Medium
4. Large
5. Very Large

1. None
4) How much confidence do you have in your ability to make good 2. A little
financial decisions? 3. A reasonable amount
4. A great deal
5. Complete

5) Suppose that 5 years ago you bought stock in a highly regarded

company. That same year the company experienced a severe 1. Definitely not
decline in sales due to poor management. The price of the stock 2. Probably not
dropped drastically and you sold at a substantial loss. The 3. Not sure
company has been restructured under new management, and 4. Probably
most experts now expect it to produce better than average
5. Definitely
returns. Given your bad past experience with this company,
would you buy stock now?

6) You are considering placing one-quarter of your investment funds 1. Zero, i.e. no chance of any
into a single investment. This investment is expected to earn loss
about twice the Fixed Deposit rate. However, unlike a FD, this 2. Very low chance of loss
investment is not protected against loss of the money invested. 3. Moderately low chance of loss
How low would the chance of a loss have to be for you to make 4. 50% chance of loss
the investment? 5. More than 50% chance of loss
1. Always toward lower risk
2. Mostly toward lower risk
7) In recent years, how have your personal investments changed? 3. No changes or changes with
no clear direction
4. Mostly toward higher risk
5. Always toward higher risk
Your risk Profile Score is _________________
Interim Conservative Moderately Moderate Moderately Aggressive
Risk Profile Conservative Aggressive
Score 7-12 13-17 18-23 24-29 30-35

9
 8a How’s your personal financial health? Financial Pulse Check

You can also do a quick financial pulse check on your financial situation by using some simple personal
financial ratios. While they may not tell a complete story, these ratios provide a practical tool to analyze your
personal finances and track the progress you are making towards financial well-being. Please refer details
in 5 & 6 above.

1. Liquity Ratio ( Emergency Fund)

Q: How many months of income do you set aside for emergency? See 5,6
Liquidity ratio = Cash (near cash) / monthly expense
Ideal Liquidity Ratio/ Emergency funds ( depends on your life style and needs) :

● < 3 months income : risky

● 3-6 months : acceptable/Ideal
● >6 months : desirable

2. Savings Ratio
This ratio reveals the amount a person should keep away as savings for his/her future goals.
Q: How much do you save from the income you earn? 5
5

Savings Ratio = Monthly Savings X 100%

Total Monthly Income

Ideal Savings Ratio: At least 10% of annual/monthly gross income

3. Debt to Asset Ratio

It helps you to understand whether you have over-borrowed (or) are in some uncomfortable position i.e. they
are facing solvency issues.

Q: How much % of loan/liabilities over your assets? What is the % of how much
6
you owe over how much you own? See

Debt to Asset Ratio = Total liabilities

Total assets

Ideal Debt to Asset Ratio: < 50% Desirable

50% Acceptable
> 50% Not advisable

10
 4) Debt Servicing Ratio
Debt Service Ratio measures the amount of instalments you are committing a month for your debt in relation
to your total monthly income. These debts are inclusive of a mortgage, car loan, credit card, personal loan,
PTPTN … etc.
Q: Do you have enough cashflow/income to pay your debts?
5
Debt Service Ratio Formula: = Monthly Debt Instalments x 100%

Total Monthly Income)

Ideal Debt servicing ratio: < 40%

5. Insurance Coverage Ratio 5

Insurance Coverage Ratio measures the amount of total income replaceable from your current insurance sum
assured in the occurrence of your premature death.

Q: How much insurance coverage do you have?

Insurance Coverage Ratio Formula: = Total Sum Assured

Total Monthly Income x 12 Months)

Rule of thumb /Ideal : At least 5-10 times your annual salary

8b A Quick Self-Assessment (ballpark amount):

1 point if
within ideal
Ratios Questions Yours Ideal * Score

Liquidity/Emergency 1. How many months of income do you set 3-6

Funds aside for emergency? months

Savings Ratio 2. How many % do you save from the monthly Min
income you earn? 10%
Debt to Asset Ratio 3. What is the % of how much you owe over how 50%
much you own?
Debt Service Ratio 4. Do you have enough cashflow/income to pay <40%
your debts?
Insurance Coverage 5. How much insurance coverage do you have 5-10
Ratio times of
annual
salary
Total Score

 Ideal is only a benchmark, it varies according to needs, priorities, age,background

 What’s your score? What actions will you take?
9
Journey towards a more Rewarding Life! Let’s us support you ….
YES!!! Not only we will support you, we will reward you for taking actions and persevering towards a better
financial life! Good financial behaviors bring healthier financial situation. Without actions, changes will not
happen. To support your action towards achieving a more rewarding life, we invite you to join our online
classroom to track the progress of your actions taken. Consequently, you will be entitled to take part in a
series of on-line contest. Points will be awarded for the actions you take from the day you register the class till
October. Seize the opportunity, ask your trainers for the invite code and sign up now!!
11