e-Book GROUP 1

1

THE IMPORTANT OF INCREASING
PERSONAL NETWORTH AND

INITIATE OF THE BASIC FINANCIAL
REQUIREMENT IN STARTING OUT

IN LIFE

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Contents

What is personal net worth? Page
Why your net worth is important? No.
The important increasing personal 3
net worth 4
5
Initiate of the basic financial
requirement in starting out in life 6-7

How to start working life 8-15
How to pay off education debt 16-20
What is income tax 21-23

WHAT IS PERSONAL 3
NET WORTH ?

• Your assets are anything of value that you own
that can be converted into cash. Examples
include investments, bank and brokerage
accounts, retirement funds, real estate and
personal property (vehicles, jewelry,
and collectibles)—and, of course, cash itself.
Intangibles such as your personal network are
sometimes considered assets as well. Your
liabilities, on the other hand, represent your
debts, such as loans, mortgages, credit card
debt, medical bills, and student loans. The
difference between the total value of your assets
and liabilities is your net worth.

Source:

https://www.thebalance.com/what-is-your-net-worth-
1289788

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WHY YOUR NET WORTH
IS IMPORTANT ?

• When you see financial trends in black and
white on your net worth statements, you are
forced to confront the realities of where you
stand financially. Reviewing your net worth
statements over time can help you determine
1) where you are, and 2) how to get where you
want to be. This can give you encouragement
when you are heading in the right direction
(i.e., reducing debt while increasing assets)
and provide a wake-up call if you are not on

track. Getting on track may include the
following:

THE IMPORTANT OF 5
INCREASING PERSONAL

NET WORTH

1. SAVING FOR EMERGENCIES

• In life, there are many uncertainties that you might face.
Unexpected events, which may be disastrous and unfortunate
in nature, can happen to you or members of your family.
From a minor breakdown of your vehicle to the death of the
sole breadwinner in your family.

2. REDUCING DEBT AND
INCREASING ASSETS

• The first step to increasing your net worth is by wiping
away debt. Net worth is equity minus debt, so lowering
that debt increases net worth considerably.

• Making smart investments, not just in stocks, is a
surefire way to increase net worth. Buying a sensible car
or a house, and keeping luxury expenses low, are all
important steps.

• Net worth doesn't need to mean rich. For some, a
positive net worth is a goal they should be proud of.
People with high levels of debt like those with medical
bills and student loans should celebrate when their net
worth finally turns positive.

6

INITIATE OF THE BASIC
FINANCIAL REQUIREMENT
IN STARTING OUT IN LIFE

•The First Income Stage

• When you first begin earning an income, budgeting is
the critical financial skill that you need to master.
Develop a suitable budget and build the discipline to
live within your income so that you don’t fall into a debt
trap. Once you learn to contain your expenses to
available income, start building savings into your
budget. The emergency fund will have the first claim on
your savings and this is an urgent and important task.

• Initiating some investments for retirement is an
important task at this stage even though the goal may
seem too much in the future to be relevant now.
Investments for other goals are optional at this stage
and can commence once your income and savings
stabilise.

• Unless you have dependants on your income, life
insurance is optional at this stage and you need not
assign scarce funds for life cover. However, a basic
health insurance is important, particularly if you don’t
have a health cover from your employee. Other
products such as auto insurance and personal accident
insurance should also be included as required.
Servicing debt that you may have, such as student
loan, is an important element, as is controlling debt use
and building your credit history. A misstep can have
long-term consequences on your borrowing ability in
the future.

• Estate planning is optional at this stage and you can
consider it in the future when wealth has been created.

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• The Dependants Stage

This is the phase that is the most
demanding since many of the elements of
financial planning need to be serviced. You
are likely to have dependants on your
income and, therefore, life insurance is a
critical element for security. Consider term
insurance which gives you the required
protection at the most efficient cost. Expand
health insurance to cover your family too
Use a professional to help you do this
efficiently if you find yourself procrastinating.
Build basic estate planning into your
finances by making clear nominations on
your investments and insurance.

Debt management is a critical function at
this stage given that your needs are likely to
be more than availability of funds. Keep your
ability to repay in mind while adding debt
and ensure you do not harm your credit
score or credit history. You should not have
to meet debt repayment obligations at the
cost of your retirement savings, insurance
protection and essential goals like housing.
Borrow primarily for appreciating assets
where it will help grow your net worth over
time.

HOW TO START 8
WORKING LIFE

Always be Solution Oriented!

• It is expected that those who work for the first
time adopt to their jobs and perform in the right
direction. During this time, all negative factors which
contribute to under performance should be avoided.
Even if a possible error in a process becomes a major
problem, it will be helpful to try to endure it. At the very
least, your efforts will have a positive impression on
your executives. Make decisions with other employees
in the office when there are common problems. For
example; a few solutions you develop may perhaps
completely eradicate the problem.

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STEPS OF THE
CAREER PLANNING
PROCESS

• Depending on your path, you may complete
each step just once, or you may revisit the
process to change direction and discover
new career options. Here are the
chronological stages of the career-planning
process:

1. Self-exploration and assessment
2. Career research
3. Exploration and experimentation
4. Decision-making and career selection
5. Final planning and action
6. Job search and acceptance

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1. Self-exploration
and assessment

You first need to understand your to make informed
academic and career decisions. You can determine
these items on your own by making a series of lists
or through a variety of tests, including:

• Value evaluations
• Interest evaluations
• Personality evaluations
• Atitude evaluations

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2. Career research

After you determine your qualities and aptitudes,
you can decide which types of careers you are
interested in with research. Start with a list of roles
and industries provided by your assessments or
compile a list of characteristics in the work
environment, responsibilities and advancement
opportunities you want in your career. Using those
characteristics, determine more roles and industries
you may want to consider.

Start further research by gathering basic information
about each of the careers on your list. Look at the
general description of each profession, along with
general labor market information, such as median
salary, common benefits, educational and training
requirements and the likelihood of being hired after
meeting all the requirements.

Continue narrowing down your list of possible
careers by learning what working in different fields is
really like. Consider using your professional network
to find people already in those roles and industries,
or reach out to current professionals on career-
focused social media platforms. You can also read
company reviews for specific roles to find out as
much as you can about the advantages and
disadvantages of the field. Reading first-person
perspectives could be invaluable when it is time to
make a choice.

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3. Career exploration
and experimentation

After you have narrowed down your list
of possible careers, find ways to
experience each career in person. Here
are some ways you can get a first-hand
look at what a role entails:

• Infromational interviews
• Job shadowing
• Volunteering
• Internships
• Part time work
• Find a mentor in a industry
• courses

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4. Decision-making
and career selection

Weigh the advantages and disadvantages of
all of your options. You will need to consider
many factors, including the possible balances
between pay and enjoyment, the pros and
cons of relocation, and the work-life balance.

Go over all of your previous research as well
as any related experiences very carefully,
and organize them by preference from
highest to lowest. This strategy helps you
rank certain factors and roles over others to
identify your top choice. Consider also
identifying alternative yet similar options
should your desires change as you progress
or your job search does not lead to that role.

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5. Final planning and
action

Gather all the information you have learned and
determine an action plan. This plan should
include background information, such as your
employment history, education, level of training,
volunteer and other unpaid experience. It
should also include your professional licenses
or certifications, the results of the self-
evaluations mentioned in the first section, and
career counselor advice you have received.

Create detailed lists of short- and long-term
goals you will need to achieve before you reach
your final career goal. These lists should
include all of the occupational, educational and
training goals required to pursue your chosen
career path. You should also consider the
barriers to reaching those goals and how you
plan to overcome them. These barriers could be
financial, educational, vocational or personal,
such as the cost of college, family obligations,
or the need for tools and supplies for your
chosen career.

Consider writing out each step for your intended
career path, including the steps you’ve already
taken to see the progress you’ve already made.
You can also do this for your alternative options
to ensure you are prepared to follow them
should your ideal option not work out.

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6. Job search
and acceptance

Use your career plan to begin your job search.
Identify specific roles and companies you’re
interested in applying to, and compare those
preferences and requirements to your career
plan. See if there are steps you still need to
take or if you’re qualified to apply.

You can also use your goal-setting strategy
and career plan to write an effective cover
letter that demonstrates your passion for the
role, field and employer. You can use your
career plan to identify the steps you’ve taken
on your path thus far and highlight your goal-
setting skills and dedication. You can also
apply these items during the interview process
to prove your interest and qualification to
prospective employers.

If you receive a job offer, determine whether
the salary, benefits, location, work-life balance
and responsibilities match your self-
assessment and action plan.

HOW TO MANAGE YOUR 16
EDUCATION DEBT

If you're one of the many people who took out
student loans to pay for college, your first question
might be how to pay off these debts. There are no
magic tricks to making student loan debt pay off, but
there are a variety of ways that can help you
manage it.

This overview will help you understand the various
options available to you when it comes to student
loan debt. You'll also learn about how to pay off
these debts and put aside money for a down
payment. Finally, we'll talk about loan forgiveness
programs and other ways to get on track with your
education debt.

it’s IMPORTANT Understand how much money you
owe, who you owe it to, and what your monthly
payment and interest rate are for each loan.

1. Recognize what you owe

Knowing how much you owe is the first step in repaying
student debt. If you haven't already, spend some time
figuring out:

The total amount of money you owe on all of your
debts.
Which student loan servicers you owe money to, and
how much each loan is worth
What percentage of your loans are federal and what
percentage are private?
Each loan's minimum monthly payment
The rate of interest for each loan

After that, you can go to the following stage, which is
deciding on a repayment plan.

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2. Consider your options for repaying
your student loans.

The type of loans you owe, how much you can afford
to pay, and your financial goals all influence how you
repay your debts.

"Everyone's financial goals are different," says Joseph
DePaulo, co-founder and CEO of College Ave Student
Loans. "Some people may prefer a longer repayment
plan that gives them more monthly financial flexibility,
while others may want a repayment plan that allows
them to pay off their student loans as soon as
possible."

There are several choices for repaying student loans
to consider. You can consider an income-driven
repayment plan if you require flexibility and owing
federal student loans. There are numerous options
that compute your monthly payment depending on
your income and household size and provide you
extra time to repay your debts than a traditional 10-
year repayment plan would provide.

On the other hand, if you want to pay off your debts as
quickly as possible, you might wish to choose the
shortest payback plan. You'll pay a greater monthly
payment because of the trade-off. Using a loan
repayment calculator, such as the one provided by the
Department of Education, is the best approach to
examine loan payback choices.

Loan forgiveness is possible with income-driven
repayment programmes after a certain number of
years, however any forgiven loan sum may be
considered as taxable income.

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3. Take Advantage of the Grace Period

With private student loans, the lender determines whether you
have a grace period and how long it lasts. The grace period is the
period during which you are not compelled to make loan
instalments.

The grace period on federal student loans usually lasts for the first
six months after you graduate.

Keep in mind that interest is still charged on private loans and
unsubsidized federal loans during your we) once the grace period
ends. grace period, and it will be capitalised (added to the total
amount you o

Making forward payments on your loans is one method to make
the grace period work for you. Paying down portion of the principle
reduces the amount of interest that accumulates over time. At the
absolute least, throughout the grace period, make interest-only
monthly payments to reduce your debt.

4. Consolidate or refinance your student loans

Consolidating and refinancing student loans are two options for
simplifying repayment. You combine numerous debts with debt
consolidation (or student loan consolidation) at an interest rate that
represents the average rate paid across all of your loans. To
consolidate numerous debts (and monthly loan payments) into
one, this can be done with federal student loans.

Refinancing is a unique experience. Because you're taking out a
new loan to pay off the previous ones, you'll just have one monthly
payment to make. However, if the new loan has a lower interest
rate than the average rate you were paying on your previous
loans, you may be able to save money—as long as you don't
prolong the term.

One thing to keep in mind when refinancing private student loans
is that you'll need solid credit, which may demand enlisting the
help of a co-signer.

Avoid student debt scams, which are especially common if you try
to refinance your loans or look into loan forgiveness options.

5. Pay Your Loans Automatically 19

Your credit score may be harmed if you make late payments. You
won't have to worry about paying late or harming your credit if you
have your loan payments automatically withdrawn from your checking
account each month.

If your lender gives a rate discount for using autopay—federal loan
servicers and many private lenders do—you could save money on
interest. Even if the reduction is only a quarter of a percentage point, it
can make a significant difference in how quickly you pay off your loans.

6. Be Consistent and Pay Extra

Paying only the minimum amount owing on your student loans can
cause them to take longer to pay off. Joshua Hastings, the founder of
the personal finance blog Money Life Wax, was able to pay off
$180,000 in school debts in three years by sticking to a strict budget
and paying extra on his loans every month.

If you have additional money, you might wish to focus on one debt at a
time while paying the minimum on the rest. Do you employ the debt
snowball approach or the debt avalanche method?
"When determining which student debt to pay off first, choose the one
that will allow you to free up cash quickly. You'll have more money to
throw at the next debt this way "According to Hastings. "Transitioning
to high-interest loans as your cash flow grows is a wise strategy."

7. Apply the 'Found Money' to the outstanding loan
balances

The change you find between your couch cushions isn't always the
same as "found money." It does, however, include money that hasn't
been planned as part of your monthly income. Another strategy to get
ahead on student loan payback is to use money you've found. Among
them are:

• Tax refunds
• Rebates
• Annual salary bonuses
• Income earned from a side job
• Cash gifts you receive for birthdays or holidays

You can use these funds to pay down a portion of your debt at once by
applying them to your loan principle. Inheriting money from family or
receiving a settlement as part of a lawsuit are two more ways to use
unexpected money to pay down loans faster.

8. Investigate Forgiveness and Reimbursement

20Options

For students pursuing professions in public service, Public
Service Loan Forgiveness is designed to provide debt relief.
You make a certain amount of payments while working for the
government, and the rest is forgiven.

If you don't qualify for loan forgiveness, your employer may be
able to assist you with your student loans. Check with your
human resources department to see if student debt repayment
is available as an employee benefit and what you need to do to
be eligible.

A debt relief company may be able to help you negotiate lower
payments or even a partial debt reduction in some cases.

9. Consider making bi-weekly payments.

Switching from monthly to bi-weekly payments is another option
for paying off student loans. This strategy is similar to making
bi-weekly mortgage payments in that you'll have to make one
more loan payment per year. You'll need to check with your loan
servicer to see if automatic bi-weekly payments are available,
but if they aren't, you may be able to make additional principal
payments at any time using your online account access.

The advantage of making extra bi-weekly payments yourself
rather than automatically is that you can make them when it fits
your budget and miss them if you don't have the extra income in
a given month.

Final Thoughts

Taking proactive steps to pay off your student debts will help
you pay them off sooner rather than later. There are several
strategies to better manage your debt, but the worst thing you
can do is do nothing.

"Don't ignore the situation or assume there are no choices if
you're having trouble paying your federal or private student loan
instalments," DePaulo advises. "Talk to your loan servicers
about your position and try to come up with a plan to get back
on track," says the author.

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WHAT IS
INCOME TAX

An income tax is a tax
imposed on individuals or

entities (taxpayers) in
respect of the income or
profits earned by them
(commonly called taxable

income). Income tax
generally is computed as
the product of a tax rate
times the taxable income.
Taxation rates may vary
by type or characteristics
of the taxpayer and the

type of income

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CLASSES OF
INCOME TAX

a) gains or profits from
a business;

b) gains or profits from
an employment;

c) dividends, interest or
discounts;

d) rents, royalties or
premium;

e) pensions, annuities
or other periodical

payments not falling
under any of the
foregoing classes

f) gains or profits not
falling under any of the

foregoing classes

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Income taxes in
Malaysia are
“territorial,” which
means an individual
or entity is taxed only
on incomes earned in
the country. Personal
income taxes are
categorised either as
progressive or flat,
depending on one's
type of work and
tenure in Malaysia.

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RESOURCES

CONTENTS LINK

WHAT IS https://www.investopedia.com
PERSONAL /articles/pf/13/importance-of-
NET WORTH knowing-your-net-worth.asp

INITIATE OF https://www.livemint.com/Mo
THE BASIC ney/r946kZa4ZiqNghWh6GUP
FINANCIAL 1H/4-financial-life-stages-and-
REQUIREMENT how-to-plan-for-them.html
IN STARTING
OUT LIFE

CAREER https://www.indeed.com/care
PLANNING er-advice/career-
development/career-planning-
process

https://www.mbaskool.com/b
usiness-concepts/human-
resources-hr-terms/4033-
career-planning-.html

HOW TO PAY https://www.investopedia.com
OFF YOUR /how-to-pay-off-your-student-
STUDENT loans-4772422#toc-5-pay-
LOANS your-loans-automatically

INCOME TAX https://www.britannica.com/to
pic/taxation/Classes-of-
taxes#:~:text=Proportional%
2C%20progressive%2C%20an
d%20regressive%20taxes,-
Taxes%20can%20be
https://en.wikipedia.org/wiki/I
ncome_tax

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E-BOOK INFO

PUBLISH BY GROUP 1 :

DANIEL ANAK POHIN (20DSK21F1017)
BILLY ANAK JOHN GINDA (20DSK21F104)
MOHAMMAD SYAHIERAN ADIB BIN RAMLIE (20DSK21F1016)
ADIB SYAZWI BIN SAPIAN (20DSK21F1040)

COURSE : DIPLOMA IN SECRETARIAL SCIENCES
SUBJECT : PERSONAL FINANCIAL MANEGEMENT

LECTURER : 1. NUR RIANA ABDUL RAHIM
2. RIZAL BIN REJLI

DEPARTMENT : JABATAN PERDAGANGAN