Financial Planning Goals

2.0 Financial Planning Goals
Financial planning is an important life skill to help us take better control of our financial goals by helping us to set realistic plans, evaluate alternatives and take effective measures. Financial planning is important because it can secure one’s future life. People will no longer have to worry about the unforeseen expenses such as car accidents. Financial planning goals can be divided into three steps - short term, intermediate and long term for different life situation
2.1 Short term financial planning goal
Short-term goals are generally smaller in scope and dollar amount with a definite target date for accomplishing them. Short-term goals could be the purchase of household furniture, minor home improvements

The most important long-term financial goal for everyone is to save for retirement and children’s college education fees.
Chee Siong is planning to begin saving for 2 children college education fees to ensure they have receive a good education. They will enter college at the age of eighteen and will pursue a Bachelor Degree for four years. He assumes that college education today costs $8,000 per year. Therefore, the total college cost will amount to $64,000 ($8,000x4x2). Average inflation rate assume will be 2% per year. He need to have $91,408 in eighteen years to pay their college

N= 216, i= 5/12, PV= 0, FV= $91,408, PMT=?
Future Value of Annuity= PMT ( 〖(1+r)〗^n -1)/r $91,408 = PMT ( 〖(1+0.004167)〗^216 -1)/0.004167 PMT = $261.76 Therefore, he must put away $261.76 per month for the next 216 months (18 years) at an interest rate of 5% to save the $91,408 needed for his 2 children education.

3.0 Purchase Strategies Planning
3.1 Consumer Credit At the age of 30, Chee Siong plans to apply a consumer credit card. He needs to collect information from two financial institutions which are CIMB Bank Berhad and Malayan Banking Berhad. To make a great decision, he collected the information and compared it.
Table 3.1: Comparison of consumer credits between CIMB Bank and Maybank.
Bank CIMB Bank MayBank
Minimum Income Requirement (Monthly) RM 2, 000 RM 2, 500
Annual Fee Lifetime fee waiver Lifetime fee