Introduction To Financial Planning and Life Planning (Part 2)

8/21/2015 07:55:00 pm

Assalammualaikum everyone! Salam Jum'ah Mubarak! I am sure some of you are waiting for my blogposts. Thank you for your patience in waiting.

I ended my last Monday's blogpost on the first Life Cycle Phase-Young (1-25 yrs old). I will cover the rest of the Life Cycle Phases in this blogpost. Here goes...

Family Formation (26-35 yrs old):
I am sure, majority of us around this age are financially stable and are looking forward to build our very own family or already have a young family with young kids. Want some tips?

Getting married (FDB: Future Detailed Blogpost):
1) Plan your wedding with your partner, compromise and keep it at low cost but of quality.
2) Shop around for good wedding package, venues, invitation cards (if you can design your own card, it will be cheaper), catering etc.
3) Honeymoon destinations? Check out Tripzilla or Agoda or other well-known sites. Make sure you do your homework.
4) Saving for wedding? It is a matter of sacrifice and discipline. It is either you choose to have:
  1. Set up a small online business
  2. Sign up for investment schemes eg. 

2.1: CPF Investment Schemes (you may start investing your CPF if you are at not an undischarged bankrupt, have more than $20k in your OA, and or have more than $40k in your SA) ,or

2.2: Endownment schemes (I would advise those who wants to take this, to start as early as 5 years before marriage age, as some endowment plans can withdraw partial amount after 5 years or 10years, depends on the contract - check with your financial advisor.  

  3. Cut down on your unnecessary expenses, bring home-cooked lunch, or cycle from home to work (if only your workplace is nearby home) or cut down on taking taxi. 

Young Family With Young Kids:
Dont feel that your kids are a burden as they are actually blessings from Allah. Keep this in mind whenever you feel financially pressured. Fret not. Here are some tips that I gathered from the people around me who are young and have their own kids.

1) Buy your kids milk formula at Traditional Chinese Medicine (TCM) Halls as they are much cheaper.
2) New mummies out there, breastfeeding is good for both mother and child as it helps create a special bond between both. Not only that, your child actually obtain lots of nutrients from your breastmilk. Plus, this is a cheaper alternative.
3) Diapers: Need not get the most expensive ones (find quality but cheaper cost), because your baby only use them once and then throw them away. I suggest for home daytime use, you can make your own home-made diaper (cheaper, but you need to keep washing the cloth).
4) Baby clothes: Baby grows very fast especially when from newborn. Get for your baby clothes that can last until he/she is 2mths old or more (its going to be abit baggy). Cheapest options are hand-me-down clothes from your relatives or friends whose kids have outgrown them.
5) Saving for your kids: 
  1. Open a bank account for your child and save monthly.
  2. Start an endowment plan of 10 years or more (keep in mind this saving is for your child's college/university fees or their wedding)
  3. Don't forget to apply for insurance (get Takaful Insurance, if you have this option) for your kids). Have a mindset that this is for emergency days in case your kids got sick and hospitalised and you are lack slightly in terms of financial.
  4. Get your kids to start saving money on their own with their pocket money. Encourage them to save at least 50 cents a week or more (depends on individual parents). Point is, educate them about managing their finances.
Family Development (36-45 yrs old)
At this point in time, majority of you would be having kids who are already in their primary school or secondary school stage. It is time to start thinking further about your investment plans and retirement plans. 

Keep in mind:

- That you have to save at least 10% of your paycheck before spending on your expenses. 
- Ensure that before you start investing, you should have at least 6mths worth of savings which enable you to pay for your expenses.
- Get yourself covered with insurance protection too.
- Ask yourself, how long do you plan to do this investment? The following ones are long-term investment strategies (FDB: Future Detailed Blogpost)
  1. CPF Investment Schemes (you may start investing your CPF if you are at not an undischarged bankrupt, have more than $20k in your OA, and or have more than $40k in your SA) ,or
  2. Endownment schemes (upon maturity, you will get a big sum of money which you can withdraw wholly. Don't forget to pay Zakat on Insurance of 2.5%)
  3. Buy physical Gold bars at a low price. Sell them when you are out of money and no other options (make sure you sell them at a high price), or keep them for future inheritance for your kids when you passed on. Don't forget to pay Zakat on Gold if your Gold bar investments are above the Zakat Nisab value.
  4. Invest in some Crowdfunding efforts.
- Short-Term investment strategies are as follows:
  1. Fixed Deposit.
  2. Savings account with the highest hibah.
Family Maturity (46-55 yrs old)
This is the time when your kids are all-grown up, either in university or getting married.

Tips from Family Development Phase, also applies for this phase. Kindly refer to above.
Retirement (55-? yrs old)
Congratulations upon reaching your Golden Age. It is time to relax and reap the benefits of your hardwork. By this age, your CPF can be withdrawn in large amounts. Remember to use them wisely, because it is your hard-earned money.

Tips from Family Development Phase is still applicable for this stage.

At this current age, it is time for you to think further ahead for your future generations. It is advisable to start estate planning for your love ones that you will leave to meet the Creator. Keep in mind on issues such as Faraidh and also Will (Wasiat)(FDB: Future Detailed Blogpost), and how it will affect in future, as in how will your kids react after you passed on. Try to minimize misunderstandings as I am sure all of us would want to leave the dunya in peace.
Yaum Al-Akhirah (Infinity)
You are never too old or too young to start investing for your akhirah. Here are the things that you can do:

Sadaqah (Donation)/Infaq/Waqaf: These are the various forms of donations that we can channel to the various avenues such as the mosques, the less fortunate, orphans, set-up of a new islamic building, education for the students who are from low-income background and other examples.

Zakat: Zakat is a means whereby all Muslims who are wealthy enough, must purify their wealth through the act of giving charity. You have to pay zakat on your insurance, investments and savings, upon maturity or upon withdrawal or have been in possession for one whole year(savings/physical gold bars), as long as it is above the Zakat Nisab, and it is 2.5% of the value of your insurance/investments or savings.

Haji (Pilgrimage)/Umrah: Haji is part of the 5 pillars of Islam. When you have the means to go for Haji, save money with the intention that it is for you to embark on your journey to the Holy Land of Mekah. May Allah ease our affairs and enable us to visit the Holy Land of Mekah, at least once in a lifetime. Aamiin. For those of us who are unable to perform Haji due to lack of financials and would still want to visit the Holy Land of Mekah, you can start by performing Umrah first. Ultimately, it depends on individual's financial capability.

Alhamdulillah. I have managed to cover all the different phases of life planning and financial planning. I hope it helps all of us to have a clearer picture and some ideas on managing our life. Always keep in mind that Allah does not burden His creations. Live life minimally, remain grounded in life and always remember to help people who are in need. Insyaallah, there are barakah in helping people who are in need. With that, I shall continue to an in-depth topic next Monday for some of those parts in this blogpost that I indicated as "(FDB: Future Detailed Blogpost)".  All the knowledge that I have shared here is from Allah, and any flaws in this blogpost is from myself.


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My objective of creating this page is to reach out to more people, to educate about Islamic Finance and Individual Finance, share tips on financial planning and also be able to answer to everyone's queries. So, feel free to share this page and ask me questions. Let's share the knowledge and practice them together. In syaa Allah. Aamiin.