Personal Financial Management

DPA10203 PERSONAL FINANCIAL MANAGEMENT
PROJECT

LECTURER: MADAM NUR RIANA

GROUP MEMBERS;
1. NICOLIA ANAK NYALAU (20DSK21F1004)
2. MITCHELL ANAK WELFRED (20DSK21F1013)
3. HANIS YASMIN BINTI HARDYNORHAN

(20DSK21F1801)

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INSURANCE

What is insurance?

Insurance is a financial safety net that helps you and your loved ones recover after
something bad happens, such as a fire, theft, lawsuit, or car accident.

When you buy insurance, you will receive an insurance policy, which is a legal contract
between you and your insurance provider. If you have insurance that covers losses, your
insurance company will pay you or a designated beneficiary, called a beneficiary, based on
the terms of your policy.

Insurance can be a hassle because you are always paying for something that you hope you
never have to use. Nobody wants to be unlucky or have bad things happen to them. If you
lose money without insurance, you may have trouble paying your bills.

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1. Help to pay for medical expenses, Benefits of 5. Insurance plans can help protect the
hospitalisation, contraction of any illness Insurance future of your child's education. The
and treatment, and medical care required family will make sure that your
in the future. children have enough money to pursue
their dreams and ambitions, even if
2. The family's financial loss due to the you're not around.
death of the sole breadwinner can be
covered by insurance plans. The 4. Insurance protects your home in the
family can repay any debts the person event of an unforeseen calamity or
insured may have incurred in their damage. Your home insurance policy
lifetime. will help you get coverage for damage
to your home and cover the cost of
repairing or rebuilding, whichever is
needed. If you have homeowners’
insurance, you can use the insurance
money to replace items that are
valuable inside the house.

3. Insurance plans will help your family maintain their current standard of living should you not be available 3
in the future. This helps them cover the cost of running a household through the payment of a lump sum
insurance payment. The insurance money will help your family to have some much-needed breathing
space, as well as coverage for all expenses in case of death, accident, or medical emergency of the
policyholder.

How does insurance work?

Insurance is a way to protect yourself and your loved ones in case of an unexpected
expense. It's a fund that many people (policyholders) share and is managed by an insurance
company. The insurance company uses money it collects from policyholders (premiums) and
other investments to pay for its operations and to fulfill its promise to policyholders when
they file a claim. An insurance company's main goal is to remain financially stable in the
event of any natural disasters, so it can help policyholders who may be affected.

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General Insurance TYPE OF INSURANCE

Insurance contracts that do not come under A contract between an insurance policy holder
the ambit of life insurance are called
general insurance. The different forms of and an insurance company, where the insurer
general insurance are fire, marine, motor, promises to pay a sum of money in exchange for a
accident, and other miscellaneous non-life premium, upon the death of an insured person or
insurance. after a set period

Life Insurance 5

General • Motor - covers motor vehicle against theft, accident or fire
insurance • House - covers the building only against fire, lightning or explosion
• Travel - protects against travel-related accidents, flight delays or interruptions,
Life
insurance baggage lost in transit, medical and other expenses
• Personal belongings - covers items such as computers, hand phones, notebooks and

cameras against loss or theft

• Whole life - offers lifelong protection. The claim amount including bonuses, will be
paid upon death, total and permanent disability or critical illness.

• Term life - offers protection for a limited period. The money will be paid only upon
death, total and permanent disability or critical illness during the term of the policy
and according to the amount agreed upon when buying the policy.

• Endowment - combines protection and savings, the coverage period is determined
by the buyer

• Investment-linked - combines investment and protection. Under this policy, you
can choose the type of investment fund you want to invent, and the amount of life
insurance coverage you want. The amount of premium is flexible.

• Medical and health - help to cover the cost of medical treatment particularly in
regard to hospitalisation and surgery.

• Mortgage reducing term

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FINANCIAL RESPONSIBILITIES OF GETTING MARRIED

Planning Your Wedding

How much you will spend on the wedding and who will pay for it are two of the first big
financial questions that engaged couples need to answer together. Your decisions can have a
major effect on how the marriage starts off, which can set the tone for your partnership.

Who pays?

Traditionally, the father of the bride pays for the entire wedding but sometimes neither of the engaged couple’s
families has the means to contribute to the wedding. So the couple has to pay by themselves, especially if they’re
a young couple with little money saved up and many unmet goals, it’s imperative to establish an affordable
wedding budget.

Even if they stick to their budget, be aware of how expensive they can be. They have to put off at least one major
financial priority, like saving house, starting a family or saving for retirement, in order to pay for their wedding.

Sticking to a wedding budget can be harder than it sounds but once the start researching wedding costs and

talking to vendors, they might learn that the cost would be double or even triple than what they expected or can

afford. It’s either they choose whether go into debt, scale back their expectations or get creative or do of all the

three. 7

Handling money after tied the knot

Getting married does not involves feelings and emotional benefits but also a financial one. The financial
benefits can include reduced housing costs, saving on health insurance and car insurance. These savings can
increase short and long-term financial stability by providing cash for emergencies and to save for retirement.

It’s important to decide which strategy for managing money as a couple and married couples often establish
new joint checking and savings accounts and may want to add their spouse as a joint owner on existing
accounts. After the wedding is also a good time to update account beneficiaries. It is important to have financial
openness and honesty in relationship because as a couple, they actually can discuss and prevent if something
that involves finances to not get worse like if a spouse who tend to overspend might need a monthly allowance
or they ask them to control themselves to not overspend.

Sharing financial responsibilities

In marriage, it’s common for one partner to handle budgeting and bill paying and another to handle all the investment
or for one partner to do all the financial tasks. It’s better to do financial tasks together at least some of the time or
trade off each other each month so both spouses know how to manage the household’s money.

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FINANCIAL A financial obligation is a requirement to pay
OBLIGATIONS money to another party, such as a lender,
landlord, or service provider. Obligations may be
What is fixed or variable and are an important part of
financial budgeting. Many come with legal ramifications. If
obligation? a debtor fails to pay, the creditor can take action
in a court of law to recover damages, including
the amount owed along with additional fees to
compensate. Under certain circumstances, debts
may be forgiven, usually as part of a bankruptcy
proceeding.

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Example of financial obligations

Some examples of a financial obligation can include debt service, utility bills, and agreements
to pay for products or services. Debts can make up a substantial component of expenses,
particularly for people or organizations with large loans. Companies may take on additional
legal obligations of this nature in the form of bonds, a type of debt instrument used to finance
business activities. The company needs to pay out interest on the bond in addition to preparing
to repay the principal when it matures.

People take on a financial obligation when they sign contracts for services provided in
exchange for financial consideration. This can include agreements to receive health care, obtain
repairs from a mechanic, or order products for delivery. The contract creates a legal relationship
that can be used in the event the debtor doesn’t pay or attempts to contest charges. Physicians,
for example, can pursue payment for services even if patients didn’t get better, because the
financial obligation isn’t contingent on whether the treatment works.

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Consequences of unfilled With so many obligations to keep
financial obligations up with, lack of fulfilment, whether
intentional or unintentional, can
have serious negative impacts on
both parties involved. Not fulfilling
these financial obligations may give
the lender the right to seek
recourse in court.

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RESPONSIBILITIES OF What are the important
MARRIED COUPLE responsibilities of a
married couple?
In households where one
spouse shoulders all of the As a wife, she is expected to serve
financial responsibility, that her husband, preparing food,
spouse is typically the clothing and other personal needs.
husband. It is also common As a mother, she has to take care of
for wives to handle bill the children and their needs,
paying and shopping while including education. As a worker,
husbands manage the big she has to be professional,
picture planning, such as disciplined and a good employee
retirement accounts,
insurance and tax planning.

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Getting To Know Each Other Sharing Bank Accounts

Get to know each other’s financial beliefs and There is no one size fits all. Your
spending habits. Understand where your household arrangement depends on
partner is coming from and adapt if necessary. your marital assets, income levels, and
If your partner is a spender, agree on financial commitments. Think about
establishing some limits. If your partner is which expenses you want to keep
prudent, agree on the things you would like to separate and which you want to share.
prioritize. Make your expectations clear to You open a joint account for their
arrive on the same page. household bills.

Working On Same Financial Goals Avoiding Financial Infidelity

Find a way to work on shared financial goals. Financial infidelity refers to hiding financial
Agree on the amount of personal contributions information behind your partner’s back.
depending on your income. Some of the common Failing to mention a significant expenditure
themes that most financial goals share are having to your spouse may cause problems in the
a budget, living frugally, getting out of debt, and long run. Top money lies include under-
having a good credit score. Do not forget to save declaring one’s income or hiding one’s
for your emergency fund and retirement plans. debts. Such dishonesty can diminish the
level of trust between a couple

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The responsibilities vary from state to
state, but commonly include the following:

Who should pay the financial support of liability for
bills in a relationship? the children of the certain kinds of
marriage
You need a system for paying bills family
that feels fair to both of you. Some expenses
couples pay their household bills
from a joint account to which both sharing financial
spouses contribute. Others divide income and responsibility for
the bills, with each partner paying your spouse in
his or her share from their individual property
accounts. What's important is to acquired the case of a
make it an equitable division during the divorce
marriage
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What are the keys to a The Keys to a Successful Marriage
successful marriage? • Communicate clearly and often. ...
• Tell your spouse that you're thankful
for having him or her in your life. ...
• Make time for you two as a couple. ...
• Plan for some personal time. ...
• Understand that it's OK to disagree. ...
• Build trust. ...
• Learn to forgive

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REFERENCES 16

1. Icici Prudential Life. The Importance of Insurance. Retrieved from https://www.iciciprulife.com/insurance/insurance-
importance.html

2. Grange Insurance. What is insurance and why is it important. Retrieved from
https://www.grangeinsurance.com/tips/what-is-insurance-why-is-it-important

3. The Economic Times (2022, May). What is General Insurance. Retrieved from
https://economictimes.indiatimes.com/definition/general-insurance

4. Amy Fontinelle (2021, November). Getting Married. Retrieved from https://www.investopedia.com/so-you-re-
getting-married-4687193

5. Upcounsel. Financial Obligations. Retrieved from https://www.upcounsel.com/financial-obligation
6. Mary McMahon (2022, May). What is a Financial Obligations? Retrieved from

https://www.smartcapitalmind.com/what-is-a-financial-obligation.html
7. True North Wealth (2015, September). Sharing financial responsibility in marriage. Retrieved from

https://www.truenorthwealth.com/sharing-financial-responsibility-in-
marriage/#:~:text=In%20households%20where%20one%20spouse,accounts%2C%20insurance%20and%20tax%20pl
anning
8. Anna Agoncillo (2021, February). Financial responsibilities of newly married couples. Retrieved from
https://www.moneydigest.sg/financial-responsibilities-of-newly-married-couples/
9. AKPK. MONEY SENSE Getting Smart With Your Money. Agensi Kaunseling dan Pengurusan Kredit

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