# How Benny Does His Financial Planning without Investing – Sample 1

(Disclaimer: following sample serves only to explain how one does financial planning. All cost mentioned in the sample is fictional and it does not reflect the real condition. This sample is designed for those who just or are about to start their working life)

1. Setting Financial Goals
Benny is 23 years old and just started working in Kuala Lumpur with a monthly salary of RM3, 000. He is doing his financial planning now.

Benny has been dating his girlfriend for 2 years and he hopes he can marry her in 3 years. After a rough calculation, he estimated that a simple wedding will need RM30, 000. Benny also plans to have his own house at 30 years old, which mean he will need to have money to pay for deposit when he is about 28 years old. At the moment, he assumes he’d need at least RM20, 000 for deposit and the rest he may go for KWSP.

So Benny’s 3~5 years financial goal is clear now. He needs to save at least RM50, 000.

1. Listing Out Expenses
Next, Benny starts to list down all his monthly expenses as following,
 Item Expenses Meal RM500 Transportation RM450 House Rental RM450 Hp. fee RM100 For Parents RM300 Insurance RM200 Entertainment RM200 Miscellaneous RM100 Total RM2, 200

Throughout the coming 5 years, he assumes his monthly expenses will increase by an average of RM200 every year. So his monthly expenses would become RM2, 400 in 2nd year, RM2, 600, RM2, 800 and RM3, 000 for 3rd, 4th and 5th year.

1. Listing Out Income
Benny’s monthly income after KWSP is RM2, 670 for 1st year, which has a surplus of RM470 after deducting his monthly expenses. He planned to save it all. If he maintains this surplus for the rest of the 5 years, the maximum saving he could achieve was RM28, 200, which is only about half of his financial target. But he has assumed his monthly expenses will increase every year, which means his income will not be able to support him from 4th year onwards. So, he also makes an income increment projection. He plans to have at least a RM300 increment every year. This can either be done by performing well in his company or switch a new job in the middle with better pay.

With this assumption, his monthly income would become RM3, 300 in 2nd year, RM3, 600, RM3, 900 and RM4, 200 for 3rd, 4th and 5th year. His ideal saving becomes as follows

 Year Calculation Yearly Saving Cumulative Saving 1 12 x (2670-2200) RM5,640 RM5, 640 2 12 x (2937-2400) RM6, 444 RM12, 084 3 12 x (3204-2600) RM7, 248 RM19, 332 4 12 x (3471-2800) RM8, 052 RM27, 384 5 12 x (3738-3000) RM8, 856 RM36, 240

Benny almost cries out as he realizes that with this planning, he still could not save up to RM30, 000 in the 3rd year for his marriage and another RM20, 000 in the 5th year for his house.

After much consideration, Benny feels that he should be able to save another RM100 from meal, entertainment and miscellaneous. With the RM1200 reduction every year, his new saving becomes as follow,
 Year Cumulative Saving 1 RM6, 840 2 RM 14, 484 3 RM22, 932 4 RM32, 184 5 RM 42, 240

Benny thinks this is the best he can do. Any further reduction in expenses will lower his living quality. But now, the difference for his 3 years financial goal and the saving assumption has reduced to about RM7, 000. For his 5 years financial goal, there is almost no difference.