Jason is twenty-three years old male Malaysian, he was born on 8 August 1993. He is currently graduated from UCSI University of Degree programme Finance & Investment. He is offering a job by Kenanga Investment Bank Berhad at located at Wisma Genting, 28, Jalan Sultan Ismail, Kuala Lumpur, 50250 Kuala Lumpur. He works as a financial analyst position with a monthly salary of RM 4,250 with an increment of 10% per year as he has experience in financial analyst during his internship (Financial Analyst Salary, 2018). He is living with her parents in Taman Midah, Cheras. He plans to pay RM1,200 per month for living in his parents’ house and an extra of RM100 each year as the expression of gratitude of love and care given by his parents since childhood. His transportation to his workplace is by public transport, MRT. Hence, every Monday to Friday he will go to work by MRT from MRT Taman Midah Station to MRT Bukit Bintang Station and walk about 120m (about 2 minutes) to Kenanga Investment Bank Berhad. His cost of transportation each working day is RM4.60 by using touch n go which one trip costs RM2.30. The total transportation fees for a week is RM 23. Jason also purchases a medical plan from AXA which is affordable and can reduce his financial burden. Because of his job does not involve manual work with heavy machinery, so he gets the plan 50 without deductible: RM48.99/month, this plan is cover for hospitalization expenses up to RM50,000, including surgery, ambulance, ICU and prescription drugs, cashless admission to AXA panel hospitals, cover for room and board up to RM250 a day (AXA eMedic Plan 50,2018). Jason has borrowed a loan from Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) a total of RM 31,650 to pursue his degree programme. PTPTN is a national higher education fund corporation where Malaysian students can borrow loans for their tertiary education. The borrowing amount depends on the programme of the person studying. Jason is a finance and investment student, his household is RM6,000. Based on Jason’s household income situation, he got a PTPTN loan of 75% of maximum loan rate, which is RM31,560; RM10,520 per year is the money he can borrow from the PTPTN (Afterschool.my, 2018). The summary of the PTPTN loan is stated in the table below:
Total Loan Amount RM 31,875.94
Takaful RM 315.94
Remaining loan balance to be paid RM 31,560.00
Payment period 50% in 5 Years
Interest (remaining loan x 1% x payment period) RM 796.90 (RM 15,937.97 x 1% x 5)
Total of 50% PTPTN in 5 years RM 16,734.87
Payment per month (Total/60) RM 278.91
Setting Personal Financial Goals
Description Amount Needed Months to Achieve Action to be Taken Priority
Short-Term Monetary Goals
Set up an emergency fund and put it into current account and fixed deposit account. Year 1=RM 10,000
Year 2=RM 10,000
Total = RM 20,000 24 months and complete in year 2 Reducing spending and save money from current income High
Save Money for Investment Year 3=RM 14,587.27
Year 4=RM 19,082.95
Year 5=RM 22,373.89 12 months and complete in year 3 and action is continued for year 4 and year 5. Save money from current income and use the savings to invest in stock to get a dividend.
High Intermediate-Term Monetary Goals
Save money for CFA Level I examination RM4,410 36 months Save money from current income and study for CFA Level I exam.
Long-Term Monetary Goals Payback 50% PTPTN in 5 years RM 16,734.87 60 months Save money from current income.
There is a current account balance of RM5,000 which includes the savings from previous part-time works, pocket money collected since young and savings of RM50 monthly. The balance in the current account act as an emergency fund. Another asset in Jason’s balance sheet is the fixed deposit. The fixed deposit saving comes from the part of the surplus. The RM10,000 are deposited into Public Bank PLUS Fixed Deposit Account with deposit period of 12 months and effective interest rate of 3.35% at the end of the year 2018 and year 2019 (PLUS Fixed Deposit Account, 2018). The interest is calculated in the table below. Since Jason is a fresh graduate, he does not have any valuable asset that can be considered as his asset. For example, properties. He lives with his parents, so he does not have any property in our asset. For liability, the only liability that we bear is PTPTN loan after graduated. He is owing RM31,560 and targeted to pay back 50% of the PTPTN loan in 5 years’ time. Year Money deposited into fixed account Interest (3.35%) Balance in fixed deposit account
1 RM10,000 – RM10,000
2 RM10,000 RM10,000(0.0335)= RM335 RM10,000(1+0.0335)+RM10,000= RM20,335
3 – RM20,335(0.0335)= RM681.22 RM20,335(1+0.035)= RM21,016.22
4 – RM21,016.22(0.0335)= RM705.55 RM21,016.22(1+0.0335)= RM21,766.77
5 – RM21,766.77(0.0335)= RM729.19 RM21,766.77(1+0.0335)= RM22495.96
Personal Cash Flow Statement
The expected monthly salary of a financial analyst in Kenanga Investment Bank Berhad is RM4,250 with an increment of 10% per year. However, there is 11% contribution of EPF which is RM467.50, SOSCO with RM19.75 per month, EIS of RM8 monthly and income tax of RM59.27 deductible. For monthly fixed expenses, Jason is paying RM1,200 as the allowance to his parents, and RM48.99 for insurance medical plan from AXA. Therefore, the total fixed outflow per month will be RM1,248.99. For monthly variable expenses, Jason estimated RM350 for food, once in two months of RM180 for buying new clothing, RM75 for water and electricity bill, Jason is using the U Mobile Hero Postpaid P38 Plan which costs RM38 to have 4GB of data and unlimited calls to all network (Hero Postpaid Plans, 2018), public transportation fees to travel to workplace of RM92, entertainment such as socializing with colleagues or clients of RM100, fixed donation to orphanage or old folks’ home of RM 20, education such as attending financial seminars for career development of RM300 and other necessity of RM100, in a total of RM1,245 for variable expenses. The total expenses are RM2,493.99 per month. After deducting all the expenses, it is estimated to have a surplus of RM1,201.49 for the odd month and RM1,381.49 for the even month. Jason saves the surplus of salary for emergency fund savings of RM50 per month and fixed deposit of RM10,000 a year where at the end of the year 2018 the accumulated savings will deposit into current and fixed deposit account respectively, CFA examination fee of RM122.50 per month and pay back PTPTN loan which costs RM278.91 per month.
In the year 2019, Jason’s monthly salary increase of 10%. After the deduction, the net pay is RM4,042.33 per month. Jason gives his parents with extra of RM100 monthly. As his salary raise, he saves RM250 per month for the emergency fund and deposited in his current account at the end of the year 2019.
The net pay of Jason in the year 2020 is increasing to RM4,421.01. Jason gives his parents RM1,400 monthly as his salary raise. In this year, Jason got a girlfriend as he is 25 years old in the year 2020 and he decides to get married at the age of 30 to have his own family. Hence, he allocates RM200 per month for outings with his girlfriend. He also saves money for stock investment. At the end of the year 2020, he accumulates RM14,587.27 for investing in MAYBANK stock. Malayan Banking Berhad, Maybank is the largest bank in Malaysia by market capitalization and total assets and providing various banking and financial services. Let’s make an assumption based on past data. Assume that the share price of MAYBANK will increase to RM13.25 per share end of the year 2020. Jason plans to buy 1,100 shares which cost RM14,575 (RM13.25 x 1,100 shares) and he allocates the balance of RM12.27 for brokerage fee. Assume that the dividend of MAYBANK of final dividend raises to RM0.39 per ordinary share in April of the year 2021 and interim dividend also raises to RM0.30 per ordinary share in September of the year 2021. Hence, he will receive the dividend of RM429 (RM0.39 x 1,100 shares) in April year 2021and RM330 (RM0.3 x 1,100 shares) in September of the year 2021.
In the year 2021, the net pay of Jason is increasing to RM4,823.15. Jason gives his parents RM1,500 monthly as his salary raise. He allocated an extra of RM100 monthly for outings with his girlfriend. He also saves money for another new stock investment to diversify his portfolio. He accumulates RM19,082.95 at the end of the year 2021 for investing in BURSA stock. Bursa Malaysia Berhad is an exchange holding company which operates the securities, derivatives as well as offshores exchanges in Malaysia. Assume that the share price of BURSA will increase to RM9.53 per share end of the year 2021. Jason plans to buy 2,000 shares which cost RM19,060 (RM9.53 x 2,200 shares) and he allocates the balance of RM22.95 for brokerage fee. Assume that the dividend of BURSA of final dividend raises to RM0.25 per ordinary share in March of the year 2022 and interim dividend also raise to RM0.23 per ordinary share in July of the year 2022. Hence, he will receive the dividend of RM500 (RM0.25 x 2,000 shares) in March the year 2022 and RM460 (RM0.23 x 2,000 shares) in July of the year 2022.
Net pay of Jason is increasing to RM5,247.40 in the year 2022. Jason gives his parents RM1,600 monthly as he does in the past few years. Similar to last year, he allocates an extra of RM100 monthly for outings with his girlfriend. He accumulates RM22,373.89 at the end of the year 2022 for investing in TENAGA stock. Tenaga National Berhad is operating in thermal and hydro power plants and is engaged in generating, transmission and distribution of electricity of Malaysia. Assume that the share price of TENAGA will increase to RM18.62 per share end of the year 2022. Jason plans to buy 1,200 shares which cost RM22,344 (RM18.62 x 1,200 shares) and he allocates the balance of RM29,89 for brokerage fee.
After calculating the actual amount, Jason knows that he can save more every year. He can save for RM 375 (RM195+RM115+RM20+RM15+RM30) for the 5 years. He realizes that he can save more in the expenses of food, clothing, entertainment, electricity, and outings with his girlfriend. In this way, Jason can consider cooking and preparing the meal at home rather than eating outside. He also realizes that he can save the most for clothing expenses as he buys the clothes which are good in quality where the clothes can last for at least 1.5 years but affordable in price. He also tries to break down his addiction to entertainment, somehow it could lead to overspending. Jason tries to allocate the entertainment expenses as lower as it could in order to achieve the target goal. Jason saves the electricity expenses by switching off the electrical appliances whenever he is not in used. For the expenses with his girlfriend, he finds a considerable girlfriend which she knows Jason is trying hard to achieve his target goals while still willing to allocate some of his surplus of money to her.
Annual Budgeted Summary
From the list above, we can see clearly that money for parents, food expenses and education are three of the largest expenses. The money for parents is necessary as Jason is brought up by his parents and he also lives in their house which can reduce the highly rental expenses in Kuala Lumpur area, food expenses can be reduced by cooking at home instead of eating outside where the hygiene of food outside cannot be guaranteed and the expenses in education is vital as he needs to attend some financial seminar each month for career development and must make sure he passed the CFA Level I examination in the year 2020.
In conclusion, according to the current financial situation, we have concluded our plan and realized that our financial planning is achievable for our long-term goal. Based on all the budget above, Jason is possible to accomplish his financial goal which is paying back 50% of PTPTN in 5 years for sure. According to our Journal 1: (Here’s How To Pay Off Your PTPTN Loan In 5 Years, 2016). There are two methods to follow which are discipline and finance management that advised by the article and suggest us to utilize ASB or TH for clearing the burden from PTPTN as soon as possible. Compare to our situation, Jason has followed two of the method as the budget can show his financial situation in the last 5 years and have well-planned savings plan to achieve his financial goals. Putting half or more money in ABS will help to settle PTPTN as soon as possible and also get surplus from it as savings based on the journals has mentioned but the author has mentioned this is the simple interest calculation as a reference. It is a good suggestion for those people like Jason that is facing the financial burden on PTPTN.
According to our Journal 2: (Tips to Help You Pay Off Your PTPTN Student Loan, 2015). There are few tips to suggest which are know your loan, grace period, work to pay off, do not panic and ignore. The other advice is using EPF as a choice to pay back PTPTN. In fact, Jason has achieved all the tips that suggest paying off PTPTN. He knows his loan and loan’s grace period very well and starts planning to pay back after his graduation with a detailed budget above has shown. Furthermore, he works hard and reserves the money for repaying PTPTN with a well-planned budget. Lastly, there is no panic and ignore in Jason’s opinion and he finds a job and plans to pay back PTPTN earlier as he knows it will get blacklisted by the government if not paying back in the time horizon. Thus, Jason can consider using EPF to repay PTPTN and it is not a bad choice for him as he wants to pay back as soon as possible.
According to our Journal 3: (Knowledge, Attitude and Perceptions of University Students towards Educational Loans in Malaysia, 2006). Most of the students have a well-known knowledge of the PTPTN except fewer students. Based on the journal, it has found out that most of the students have a negative attitude of facing PTPTN but students which are knowledgeable are responding to a positive attitude of facing PTPTN. Most importantly, most of them believe that PTPTN loan plays as a vital element that affects their life after graduation. They also trust that PTPTN is a financial burden and limiting their life choices and this kind of thoughts may affect their repayment situation. This finding is consistent with Livingstone’s previous study that attitude factors are deemed to be important predictors of debt repayment. (Livingstone & Lunt, 1992)
With the three journals above had to support our financial budget planning to achieve financial goals, we believe that Jason can payback 50% of PTPTN in 5 years on time or earlier than the time range we plan and achieve the other financial goals as well.