Family\'s Financial Planning Hani (Fin533) PDF

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FACULTY OF BUSINESS MANAGEMENTUNIVERSITY TEKNOLOGI MARABANDARAYA MELAKABA 243 – BACHELOR OF HUMAN RESOURCES (HONS)FIN 533FAMILY’S FINANCIAL PLANNING INDIVIDUAL ASSIGNMENTPREPARED FOR:MADAM SHAREENA BINTI DAUDNUR HANI ATIRA BINTI ABU HANIFPAH 2020996909TABLE OF CONTENTNo. Title Pages 1. Acknowledgeme...

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FACULTY OF BUSINESS MANAGEMENT UNIVERSITY TEKNOLOGI MARA BANDARAYA MELAKA

BA 243 – BACHELOR OF HUMAN RESOURCES (HONS)

FIN 533 FAMILY’S FINANCIAL PLANNING INDIVIDUAL ASSIGNMENT

PREPARED FOR: MADAM SHAREENA BINTI DAUD

NUR HANI ATIRA BINTI ABU HANIFPAH

2020996909

TABLE OF CONTENT No.

Title

Pages

1.

Acknowledgement

3

2.

Biodata of the family

4

3.

Monthly expenses January till December 2020

5

4.

Balance Sheet as at 31 December 2020

6

5.

Cash Flow Statement for year ended 31 December 2020

7

6.

Ratios and comments

7.

Income Tax year assessment 2019

10

8.

Comments and Recommendation

11 - 12

9.

Conclusion

13

ACKNOWLEDGEMENT

2

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In the name of “Allah”, the most beneficent and merciful who gave me strength knowledge to complete this assignment. This assignment is part of my course ‘PERSONAL FINANCIAL PLANNING (FIN533)’. This assignment has proved to be a greater knowledge and experience. The success and the final outcome of the assignment required a lot of guidance and assistance from many people and we extremely fortunate to have got this all along the completion of my assignment work.

I’m grateful because I managed to complete this assignment on time within time given by our lecturer Madam Shareena binti Daud although now we have big issue of Corona Virus that affect our country. Giving my respect and thank to Madam Shareena binti Daud for giving us opportunity to do this assignment and providing me all the support and guidance which made I complete the assignment on time. Madam Shareena binti Daud also gave me moral support and guided in different matters regarding the topic of my assignment. I would also to thank Encik Hafis who is my brother that participated in this assignment. He really helps me to complete this assignment with all the information given.

And last but not the least, our thanks and appreciations also go to the people who are directly or indirectly helped me out in developing this assignment.

a) Bio data of the family: 3

For subject Fin 533, I have assigned to conduct an interview about financial planning to my family. Regarding on this task, I choose my brother as my interviewee for this case study. Encik Hafis and Puan Hana have been married for 4 years. Encik Hafis is 35 years old while Puan Hana is 34 years old. Encik Hafis works as Assistant Manager at Toyota that located at Shah Alam, Selangor. He already works at Shah Alam for 7 years. Encik Hafis’s monthly income is around RM 7500. Puan Hana is full time housewife and just finished her Master on December last year. Puan Hana and Encik Hafis have one child, Umar Afiq who is now 3 years old. At the end of this year, Puan Hana is expecting to deliver a baby. Puan Hana decides to deliver a baby at private hospital near her house. Since Puan Hana’s parents and Encik Hafis are not able to take care of Puan Hana after deliver a baby, Encik Hafis decides to hire confinement lady for Puan Hana for 2 months. Encik Hafis and Puan Hana currently stay at Klang, Selangor. Usually, Encik Hafis will go to work using his car every day.

Since Puan Hana does not have any transport at home, she decides to buy a new car for herself. This is because, Puan Hana is having a problem to go to the market to buy groceries during weekdays. But, Puan Hana is worried if her husband having a financial crisis when a new car is purchased. Hence, Puan Hana and Encik Hafis is required to do financial analysis to determine whether they should increase their monthly commitment by purchasing a new car or not since Covid-19 exist.

b) Monthly expenses from January till December 2020 4

5

c) Balance Sheet as at 31 December 2020 The table below is Encik Hafis’s family balance sheet as at 31 st December 2020. It states the value of their assets, liabilities and total net worth in a year.

d) Cash flow statement 6

The following statement is Encik Hafis’s family cash flow statement for a year ended 31 st December 2020. It contains all the income that they receive and the total expenses in a year.

e) i) Ratios

7

Ratios calculated are divided into two which are assets liquidity and level of debt. The assets liquidity ratios consist of liquid assets to take home pay and current ratio while the level of debt which are debt ratio and debt service ratio. These are the following findings:

8

ii)

Comments For liquid assets to take home pay ratio, Encik Hafis’s family have 4.79 month. The

ratio shows that Encik Hafis’s family have a high liquid asset which is very good and can maintain the adequate liquidity. Encik Hafis’s have liquid asset to take home pay ratio equal to three to six months and able to meet all their short-term obligation. Second, Encik Hafis’s family current ratio is 17.25 times which is very good for the family. The higher current ratio means Encik Hafis’s has higher ability to pay back their debt and meet their short-term obligation. This is because, for every RM17.25, they can cover every RM1 of current liabilities. Next, for the debt ratio in Encik Hafis’s family is 72% which is very high and not good for the family. This is because, for individual who is working in private sector, this ratio should not more than 30%. The higher percentage in debt ratio will affect Encik Hafis in getting new loan since their ability to pay debt has decreased. Lastly, Encik Hafis’s family debt service ratio is 3.27 times. It shows that Encik Hafis earns RM 3.51 in take home-pay for each RM 1 of required debt repayment and interest. The higher the ratio, the better because it means that Encik Hafis’s family can make the payments.

9

f) Income Tax year assessment 2019

10

g) Comments and advice on the Encik Hafis’s current and future financial plans

After analysing Encik Hafis’s family balance sheet and cash flow statement, it shows that their family have a stable financial standing. This is because, if we refer to their balance sheet, the total net worth shows a higher value which is RM 129 500. The amount is quite high, and it is good for their family. Other than that, Encik Hafis’s family also shows a positive balance in their cash flow statement. It means that, Encik Hafis’s family income able to cover their monthly expenses without any obstacle. However, there are few parts that can be improve by the family to increase their savings for the future. Firstly, according to their family balance sheet, they have a credit card balance worth RM 2 000. Encik Hafis should pay off the balance immediately to avoid any interest charge from the bank. Encik Hafis can pay the balance by using his net worth balance. This is because, if Encik Hafis able to settle the balance as soon as possible, he might save or spend the extra cash without the financial commitment. Hence, being a debt-free will let the family to raise their credit score. Secondly, Encik Hafis can open new investment account to enjoy the dividend earning. For example, Puan Hana can register ASB account and the dividend can help to generate income to her family. Plus, Encik Hafis also can open SSPN account for his son, Umar Afiq. Other than enjoying the dividend, SSPN also provides many benefits to an individual especially in education sector in the future. Moreover, Encik Hafis can register Tabung Haji account for his son. The advantages for invest in SSPN or Tabung Haji is the deposits or savings are exempted from tax. Thirdly, Puan Hana needs a side income as preparation for their new-born child. She can start with an online business or being a dropship to generate more income to her family. Thus, this way can help to reduce his husband’s burden. This is because, Puan Hana can pay some of the family expenses using her income without depends on his husband. Puan Hana also can use her income to increase their savings since she is planning to deliver her baby at private hospitals. The savings can help his husband to pay the hospital bills or any emergency case that might be happen.

11

Lastly, Encik Hafis’s family can cut off some expenses to increase their savings. For example, they can minimize the expenses for holiday or maybe cut their Astro bills. So, the money used for those expenses can be used to open an investment account for their second child. Moreover, since her husband is planning to hire the confinement lady for her wife soon, this savings can be used to pay the confinement package.

12

Conclusion What I learn from this project paper is I can know all the debt that my brother had and what he needs to pay. Now I know how hard he trying survive in this bad situation, and also due to Corona Virus that also impact the economy and business. From this project I will make sure that my brother can settle his debt as soon as possible before he retired to make him feel better. I will make sure my brother will follow the method to help him avoid from having more debt and deficit.

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