What is Financial Planning?

Financial planning is the process in managing your financial resources in order to achieve your short-term, medium term and long-term financial goals within the time frame. A holistic financial plan includes financial status analysis, insurance planning, tax planning, investment planning, education planning, retirement planning, estate planning etc. As a new era modern female, a success financial plan is important for us to secure and protect our future.

Understand each module of personal financial planning:

The first basic step to start a financial plan is to set your short, medium or long-term financial goals. Then, we will go into deeper part of analysis and review which listed below:

1.       Financial Health Check – In this stage, you will have to sit down to gather all your income statements, record all your monthly expenses including fixed expenses e.g housing loan, car loan, insurance premium etc. and variable expenses e.g foods, groceries, entertainment, petrol, toll and parking, phone and internet etc. By putting all these info together, you will easily able to see the whole picture of your cash flow. On the other hand, listing out all your assets and liabilities, you will be able to know whether you are in debt. With some simple calculation, you will get to know whether your saving, liabilities are within a healthy range.

2.       Tax Planning – Taxation is mandatory for all Malaysians who have generated income, so this is an important part for all of us and taxation is the responsibility of all Malaysians to help in developing a better country. However, a lot of Malaysians are confusing how to calculate how much tax they are supposed to pay and what are the sector that they can entitle for a tax relief.

3.       Insurance Planning – Everyone has exposed to different risks. The purpose of insurance is to transfer your potential risk to insurance company by paying a small amount of premium. So that, when the specific risk happens, you and your family will not face to financial difficulties. Everyone needs a different type and different amount of insurance coverage e.g a bread winner and a housewife, their financial responsibilities and risk exposure is different, so the needs in insurance will be different. For a bread winner, he/she is the one who bring money back home, so his/her life cover is the first priority, then hospitalization & surgical and critical illness cover will also require if one day he/she could not work and earn money due to sickness. For a housewife, hospitalization & surgical cover is the first priority as they do not bring in money, so critical illness and life cover will be the secondary needs.

4.       Investment Planning – To achieve your goals, sure you will want to have a relax journey, right? If rely on your hard earn money, you may have to become a superman or superwoman in order to achieve your goals. Why not working smarter by letting your hard earn money to work for you? This is why we need investment to help us achieve our financial goals faster and easier. Everyone has only 24hrs in a day, you have limited time to actually exchange your time to money because we are human, we need rest. However, investment can help you earn money even when you are resting. Investment planning is including education planning, retirement planning etc.

5.       Estate Planning - Estate planning is a process to determine how an individual’s asset will be preserved, managed and distributed which can be after death or alive. If a person’s asset is simple, the most common way to manage and distribute a person’s asset is Will writing or/and set up a Trust. Many people have a misconception that estate planning is a need for rich people only. The answer is “No”. In fact, if you have a property or a car or monies in saving etc., and you wish to distribute your valuable items to the person you loved, you can start with your estate planning. Estate planning could be as simple as just a Will writing. What if a person dies without a Will? For non-Muslim, the distribution of the deceased person’s estate is governed by the laws of intestacy which is the Distribution Act 1958 as below:

Intestate Leaving Surviving	Entitlement
Spouse only (no issues/parents)	Spouse - Whole estate
Issue only (no spouse/parents)	Issue - Whole estate
Parents only (no spouse/issue)	Parents - Whole estate
Spouse and issues (No parents)	Spouse - 1/3, Issues - 2/3
Parents and issues (No spouse)	Parents - 1/3, Issues - 2/3
Parents and Spouse (No Issue)	Parents - 1/2, Spouse - 1/2
Parents, Spouse and Issues	Issues - 1/2, Spouse - 1/4, Parents - 1/4

Can you imagine if you own a house without a Will? One day when you are not around anymore, what will happen to the house? Your spouse, parents and children will share the ownership of the house, it is great that all of them got something from you. However, if parents want to sell the house but the wife and children want to keep the house, then it will become a complicated case.

To become a woman who can actively manage our own money and achieve financial freedom, you must understand what you want to achieve and be disciplined in this journey. Alternatively, you can also engage me as your financial planner, I will assist in this entire journey and give all the guidance to help you achieve your goals.