Financial Plan Assignment z5056522 Hezheng Wang PDF

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Financial Plan Assignment

GENC 3004 Personal Finance

Z5056522 Hezheng Wang

Table of Contents Current Situation...........................................................................................................2 Goals and Objectives....................................................................................................2 Reducing Expenses......................................................................................................2 Financial Strategy.........................................................................................................2 Budget...........................................................................................................................2 Plan of Action................................................................................................................2

1. Current Situation

Age Sex Residence Work Status Study Status

Current Assets

Income Insurance Will

22 Male 49/2A Hollywood Avenue Bondi Junction 2022, living with parents Currently working as part time in ‘Bread Top’ food manufactory Full time student studying in UNSW, Bachelor of Construction Management & Property, will be graduating on November 2018  Master Card 

MSI Gaming Laptop



2011 Subaru Forester



iPhone 6s

 Superannuation fund Fortnightly income of $502 after tax. Bupa Premium membership N/A

Current expenses Category

Income

Subcategory Salary from work after tax Tuition fee received

Monthly

Annually

$1,004

$12,048

N/A

$40,000

$1,004 N/A $300 $80 $50

$52,048 $39,000 $3,600 $960 $600

$40 $20 $490 $514

$480 $240 $44,880 $7,168

from parents

Total Income Expanses

Tuition fee Food and drinks Public transportation Leisure (gaming, movies and etc.) Cloths Personal care

Total Expanses Total

2. Goals and Objectives Short-term goals (from now to graduation): 

Seek an internship/cadetship before graduation, 01/03/2018



Buy a new gaming desktop (approx. $3000) before 2018 mid-year,01/07/2018



Go to Europe or US for holiday with self-earned money after graduation, 01/12/2018



Achieve average Distinction (75+) grade by the end of semester 2, 2018

Mid-term goals (within 5 years): 

Save up to $100,000 to pay for deposit of first apartment by 01/01/2022



Buy a second hand car (Mercedes Benz) that under $100,000 in three years



Getting married in five years, at the end of 2021



Have a child at year after 2022

Long-term goals (after 5 years): 

Getting promoted from current work that provide higher income of $100,000+ before 2025



Travelling around the world with wife and children before 30 years old, 2025



Buy a new car after successfully getting higher paid, 2026



Have 2nd child on the year of 2027



Retirement at about age of 65

3. Reducing Expanses  Lifestyle  Reduce public transportation fee by walking to the non-faraway places  Prepare food at home rather than go outside for meals may help a lot on the expanses of food and drinks  Tuition fee has already been cutting down since the permanent residency granted on 11/10/2017  Minimise the chance of going shopping on a regular basis

 Leisure  Watch movies at home rather than go to cinema  Reduce the cost on the gaming apps  Reduce the chance of buying new clothes  Always make plans before going to travel or even small trips, which may enables me to effectively control the money expanses

 Everyday expanses  Cancel unnecessary premium membership  Use cheaper digital products or 2nd handed product  Sell not often used valuable belonging  Find another part job enables me to have more money on hand

4. Financial Strategy Income:  I’m currently having $1,004 every month, in order to accumulate more wealth before graduation, I might have to get another jobs or additional jobs so as to increase my regular payments.

 I’m currently using Commonwealth bank master card, and may have to change to higher rate account since the current ones has no rate at all.

 As mentioned above, I’m going to seek for a study related (Quantity Surveyor) job next year. According to the salary statistic websites, it shows that QS jobs

will have around at least $60,000 salary per year, and considering construction industry is booming in nowadays Australia, it provides a good opportunity for me to potentially reach my set up goal with higher paid salary.

 Set up a new account as ‘Saving for your first home’ with Westpac, as long as my deposit reaches 5% of my target property’s purchase price, I’ll have a chance to begin to buy it.

 After several year of purchase of my new house, I may refinance it to get some cash out, hopefully around $200,000, which enables me to start up a local business such as cafe or brunch restaurant.

Expanse  Considering moving out from current residence, I will find somewhere cheap to rent after graduating university, since I have never rent so far, and thus, the estimate cost for my rent is around $200-$250 each week.

 Consistently using snowballing app to alert myself if my expanses has reached my set up limits and therefore to decrease unnecessary purchase.

 The current expanse of my food and drinks are relatively high, over $600 per month (considering I’m living with parents), so that, it will be a good way for me to cook myself rather than go out to eat, excepting necessary expanse, this strategy will help me to decrease the expanse of food and drinks every month by at least $300.

 Try to walk to work or university if not in a hurry, will help me to save expanse on public transportation cost from $80 to $40 per month.

Investment

 It’s a good idea to save all my moneys into a fixed rate account (Commonwealth Bank 12 months 2.3% pa) before graduation, since I may not tolerate any financial losses at this stage.

 And after several years of accumulating money from works (assume I have a $60,000 annually payment), I will start to invest into real estate properties.

 According to researches, Sydney’s housing price has been increasing steadily for past few decades, and optimistically double the original purchase price in future ten years. Thus, buying property is deemed as most beneficial investment and due to the physical fact that it can strongly resist financial impacts and money inflation.

 I may going to invest a property in the region of ‘Green Square. As Sydney government announced that 13 billion of money has been invested into that area, as a result, an expected housing price boom will come true once the government plan and light rails are fully completed. Meanwhile, considering its convenient geographical location, it also makes the investment wisely and rewardingly.

Superannuation  I’m currently using Australian Super, in order to maximise the benefit of my superannuation, I may going to switch this one to AMP, which is one of the most known superannuation fund that may possibly provide me best return.

 Sacrifice about 1% of my salary to put into retirement investment and meanwhile gaining co-contribution.

 Set up my retirement age at 65 rather than 60

 Consolidate supers into a single fund 

Sacrifice more money into super account, since super contributions are taxed at 15%, which makes voluntary super contributions attractive for anyone paying more than 15% in income tax.

Taxation 

It better to find a trustful professional accounted to check my accounts on a regular basis so as to secure my income `and avoid unnecessary tax.



Download ATO apps, and self-check income regularly.



Since I will invest a new property, it will help me to pay less by utilising negative gearing tax.



Once I have successfully purchased a property, an offset account will be generated at mean time. I can deposit my redundant funds into this account to avoid tax legally.

Insurance 

I’m currently using Bupa as my personal health insurance, and will continuously using it since it provides me a great experience.

 After I purchased my first new car, I’ll buy 3 rd party insurance as well as comprehensive coverage.

 Travel insurance will be bought as long as I’m travelling via plane to remote places such as go abroad.

 According to ‘Canstar’ website, the most suitable life insurance will be Allianz that provides funeral benefits of $15,000, and minimum insured sum of $100,000.

Estate Planning  In order to draft a valid will, I will find a good lawyer who has good reputation in the industry, and witnesses to testify my will.

 Once I getting married, the beneficiaries will be my wife and my child if I have any, meanwhile, my parents will also be benefited from my will if I die young.



According to my will, all my belonging and value properties will be evenly distributed to my relatives, such as house, cars and bank accounts and etc.

 My will might be modified in the future along with the circumstance of future myself.



5. Budget I’m currently on 3rd year study of my degree and will be graduating at the end of next year. Assuming I will successfully having a cadetship with paid next year and meanwhile retaining current part time job, and ready to move out from current residence. Category

Subcategory Salary from work

Income

Monthly

Annually

$1,004

$12,048

Tuition fee Rent Gas electricity and

$3,333 $4337 N/A $600 $150

$40,000 $52,048 $8,000 $7,200 $1,800

internet Food and drinks Public transportation Gasoline Leisure (gaming,

$600 $50 $100 $50

$7,200 $600 $1,200 $600

$60 $20 $1630 $2,707

$720 $240 $27,560 $24,488

after tax Internship salary

Total Income Expanses

movies and etc.) Cloths Personal care

Total Expanses Total

6. Plan of action 

Check my financial plan regularly and modify it if necessary



Find intern/cadetships in the final year of university



Strictly control my expanses and savings



Buy a 2nd hand car in 3 to 5 years



Saving up to $50,000 to pay off my deposit of the first home



Get in touch with insurance companies to seek advice of life insurance, vehicle insurance and travel insurance, will keeping using current health insurance



Get married and have child



Construct a will that benefits my family



Pay off the loan of my house



If possible, I will try to start up my own business in the future stage after accumulating enough wealth



Retire at age of 60 to 65...