E-book of Personal Financial Management

Page 146

IMPORTANCE OF PAYING BACK

ONE’S STUDENT LOAN

01 02

A student loan is
Once you start

an obligation and
working, begin paying


should not be
back your student

taken lightly loan, if you have one

03 04

It is a legal as well as a
If you do not pay back

moral obligation to
your student loan, it

pay it back so that
may hamper your

others can enjoy the
chances of working for


same benefit that you
a good employer
did

Page 147

PAY PERSONAL INCOME TAX

& HOW SELF-ASSESSMENT


WORKS

As an employed young adult, you need to pay your income tax.
Your income tax is deducted from your monthly salary and sent


directly to the Inland Revenue Board (IRB) by your employer.
Sources of income that are taxable include:

Gratuity Commisions Bonus Salary and

wages

Dividen
Pension
Directors
Allowance

and
and
' fees (In cash/
otherwise)
interest
annuity
income

Rental,

ROyalty and


premium

income

Page 148

Tips in buying

car

Shop around for a
car that is reliable

If you decide to apply
Work out the budget

for a car loan, shop
based on your

monthly salary
around for a package

based on affordability

Try to pay for petrol, annual
Do not use your credit

road tax, insurance with
card to pay for a down

cash instead of using

credit card payment

Avoid upgrade or modify

your car with a sound

system, better tyres or

additional accessories

Page 149

HOUSE

Why should you buy a

house instead of

renting one?

By buying a house, you will increase

your net worth as you pay down your


housing loan.

Owning your own home brings a sense of

pride and accomplishment. Not only is


there more freedom with house ownership,

there is also a greater sense of security in

having a permanent roof over your head.

Page 150

FINANCIAL ANGLE
OWN OR RENT??

Each monthly payment
Rental rates can

that you make is like
increase from year to

putting money into a
year
savings account The principal on your

Each time the mortgage is going

mortgage is paid, a
down with each

percentage goes
payment you make.
toward your net worth. Housing market grows,

Like having money in
the value of your house

the bank because it is
increases as long as it

something you can
is in a good location.
draw upon later in life if

needed.

Page 151

When buying a

house, do the

following

before

committing

yourself:

Drive around the
Check the area

neighbourhood at
for features that

different times of
can add value to

the day and week
the house, such

to see how your
as schools
potential

neighbours are

like

Check if the
Talk to property

property is
experts who can

located on
give you sound

freehold or
advice about the

leasehold land. property market,

suitable locations

or types of

property

Page 152

THE FINANCIAL

RESPONSIBILITIES OF


GETTING MARRIED

Explain the financial obligations and

responsibilities of a married couple

Page 153

THE WEDDING

Be realistic about your wedding expenses.
You will be surprised at how much gifts, ceremonies,


dinners, clothes, shoes, and wedding photos can

add up to.

List the things
Discuss with your

that are
spouse-to-be on

how much money

necessary for

the wedding you both can

afford to spend

Do not try to live
Get tips and

up to the
advice from those


expectations of
who have been

other people through it all

Page 154

MARRIAGE & FAMILY

It is extremely important that you and your

spouse see eye-to-eye on money matters
please note that these pointers assume both of


you are working:

Your financial plan
Decide on how to

has to move from
handle routine bills,

being an individual to
paying for the family

a shared one involving

and children
your spouse

To pay for a

common expenses,

save money on a

monthly basis in a


joint account

If both decide to use
Just as in your individual

credit card to pay
financial plan, you need to

some of the common

expenses set aside an emergency

funds as a couple to take


care of unexpected

expenses

Page 155

FINANCIAL

DEBT

Both of you should
Both of you must

make a commitment to
agree on the terms of

payment and period

settle personal debts
within a period of time
to settle the debt.

after the wedding

You and your spouse
Some marriages are

should not hide from
reported to fail due to

each other the topic

financial debts

of debt. incurred by spouses.

Page 156

THE IMPORTANT OF

RETIREMENT

PLANNING

Explain the basics of retirement planning

and why it is wise to start saving for

retirement at a young

Page 157

BASIC OF

RETIREMENT

PLANNING

How much savings or

assets do you have now?
What is your monthly

income?
What is the percentage of

your income contributed to

EPF or other retirement

plans?
What rate of return do you

want on your investment?
How many years do you

have until retirement to

earn your money?

Page 158

RETIREMENT TIMELINE

Sign up for EPF
Earmark a portion

on your first day
of each raise or

yearly bonus to

of work. your retirement

savings.

For each increment in
While you are saving

your age, increase
for retirement, review


your savings in your
your investment

personal retirement
portfolio for retirement


fund by a certain
annually to ensure

percentage of your
that your money is

disposable income per
growing according to

your retirement plan.
year.

Page 159

A BALANCED

LIFE

While money is necessary in today’s

world, it is not everything.

Do not make it the sole reason for

what you do in your life.

Health, family and spiritual wellbeing

are important elements that contribute

to happiness.

We should also make regular donations

and give to the less fortunate to alleviate
their hardships and misfortunes.

It is very important to create a

balance in your life.

Page 160

BLOW YOUR MIND

1. What is the step that you must be follow

before you buying a house?

2. Before you start your career, what is the
importance of career planning?

3. Based on your understanding, explain the

basics of retirement planning and why it is

wise to start saving for retirement at a

young

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Page 162

Chapter 8

Getting out of

Financial

Problems

Page 163

CONTENTS

#1 Discuss the effects of being a

bankrupt

#2 Describe the signs of getting into

financial trouble

#3 Explain the importance of maintaining

personal creditworthiness

#4 Describe the implications of being

bankrupt

#5 The role of Credit Counseling and

Debt Management Agency (AKPK)

Page 164

THE EFFECT OF BEING

BANKRUPT

Being financially distress will

affect your reputation, be

emotionally troubled

Looking for money to pay off your

debts and eventually your

relationships with family and

Affect your physical health,
mental and emotional stability.

Page 165

THE SIGN OF GETTING

INTO FINANCIAL TROUBLE

Credits
Loans
card

Savings

Expenses
Ignorance

Page 166

SIGN

Card Credts

Paying only the minimum balance each

month.
Increasing the outstanding balance

every month
Going over your credit limit.
Taking frequent cash advances.

Loans

Using the overdraft or automatic loan

features on your current account

frequently.
Receiving second or third payment

notices from banks or creditors for

non-payment of debts.
Being denied credit because of a

negative credit bureau report.
Borrowing money from family or

friends to pay your debts.

Page 167

SIGN

Savings

Using up your savings at an

alarming rate.
Having little or no savings to handle

unexpected expenses or
emergencies.

Expenses

Depending on part-time jobs,

overtime, commissions or bonuses

to pay for your living expenses.
Living from pay check to pay check.

Ignorance

Not talking to your spouse or family

members about money problems or

arguing when you talk about money

to them.
Not knowing how much money you

owe until the bills arrive.

Page 168

The Credit Bureau of
System and

Bank Negara Malaysia
financial


(BNM) maintains
institutions

credit information on
are able to

check on your

borrowers in its

Central Credit
status.
Reference Information

THE


IMPORTANCE OF


MAINTAINING


PERSONAL


CREDITWORTHIN


If you are in
ESS These include the

serious debt, you
borrowers’

will be seen as a

bad credit risk to
character, attitude

any banker you
towards their loan

may approach for
obligations as well
as their capacity to

a loan.
pay their loans.

Financial institutions

have various criteria


to assess the

creditworthiness of

potential borrowers.

Page 169

WHAT CAN HAPPEN ???

If the loan is a car loan, the financial

institution will act to repossess and sell the

car.

If it is a housing loan secured by property, the

financial institution will foreclose on your

property and sell it by public auction.

If it is a housing loan secured by property,

the financial institution will foreclose on

your property and sell it by public auction.

If it is a housing loan secured by property,
the financial institution will foreclose on
your property and sell it by public auction.

THE IMPLICATIONS OF
Page 170
BEING BANKRUPT

Hold any public office without the

approval of the Director-General


(DG)

Pursue any court action without the

DG’s permission

Leave the country without the

court’s or DG’s approval

Be a company director or carry

out your own business

be an employee of a company

that is owned by your spouse or


close relatives

Page 171

ROLE OF CREDIT

COUNSELING AND DEBT

MANAGEMENT AGENCY


(AKPK)

Set up by BNM, AKPK’s

vision is “to make prudent

financial management a


way of life for all

Malaysians”.

It seeks to equip

Malaysians to live their

lives with good money

management skills and


debts that are

manageable.

Page 172

THREE MAIN SERVICES TO

MEMBERS OF THE PUBLIC TO HELP

THEM TO BETTER MANAGE THEIR


MONEY

Financial education

programmes and

materials on the proper

use of credit and basic

money management skills

as well as tips on how to

use credit responsibly

Through which AKPK works

with individuals in


developing personalised

debt repayment plans and

consults with their financial


services providers to

structure manageable

repayment schemes.

Financial counselling

and advice, providing

individuals with an in-

depth evaluation of their


problems and how

these may be resolved

Page 173

THE DMP IS PROVIDED TO

INDIVIDUALS WHO:

Have positive
Are unable to

net income
manage their


after meeting own debts
their expenses

Have loan
Have loans

exposure of less
taken from

institutions

than RM2
regulated by

million (as at

BNM
time of

publication).

Not under any
Are not

advanced legal bankrupts

action.

Page 174

BLOW YOUR MIND

1. Interpret your answer, what is the effects of

being a bankrupt?
2. Tell me what is the implications of being
bankrupt?
3. Based on your opinion, what is the AKPK?

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GAMES

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