DIY Financial Planning

Created a simple spreadsheet (rev1.0) to devise some form of self-financial management. You can get it from here: https://www.dropbox.com/s/ani7eo357s0szxl/DIY_Financial_Planning.xlsx?dl=0. Nothing fancy but needs some explanation. The spreadsheet is divided into four sections:

[1] Income Management

[2] EPF Table (Malaysian Pension Fund)

[3] Risk Management

[4] Wealth Generation

Income Management

The most exhaustive among the big four and is important for your monthly and yearly budgeting plan. It is broken down into Income, Expenses, House Affordability Range and Car Affordability Range. Income is straightforward but do make sure you break your income between taxable and non-taxable. From here you can estimate how much you earn yearly in gross income, net take home pay as well as total EPF contributions and taxes you are paying.

In expenses I further drill into day-to-day spending, regular lump sums (monthly), regular lump sums (annually) and occasional lump sums (estimates). The regular lump sums is the critical part here as this probably the bulk of your life commitments. Towards the very end you will notice a column named "Difference". This is computed based on Net Take Home - Total Expense and will conclude if you are overspending hence the need to revisit your "lifestyle".

 

Next is the House Affordability Range. The formula is derived using ratio 4 as the standard. This value is universally accepted in many countries as well as historical figures for a house to be termed as "affordable".  

Similarly there is a Car Affordability Range. There is no standard ratio. This is simply computed by using how much you can afford (Ideal case) and the downpayment value. For the number of payments, it is best to stick at 60 (5 years). Anything longer means you are paying a lot more in terms of interest value.

EPF Table (Malaysian Pension Fund)

The second tab and this is important for your long-term retirement planning; to roughly guess how much you would have at a specific age depending on your current income. You would be able to estimate your yearly gross from the Income Management section earlier. Both average pay rise of 3.00% and EPF estimated returns p.a. at 5.50% are obtained from historical national statistics.

Risk Management

Here is where insurance comes into play. Broken into two parts: Summary of Protection and Inflation Adjusted Medical Costs/Dependency Coverage. I will explain the latter first. You will need to key in the inflation rate, this rate is the medical inflation rate not the usual consumer price index inflation rate. The cost of treating these critical illness is based on Year 2010. I obtain these values from various sources including articles/doctors/medical news and like asking around.

The Personal Accident coverage simply takes into account how much you earn per year * the duration. The duration that you key in for example might be derived from your family's age. E.g. I need to continue to support my kids for 20 years before they grow up to be able to work for themselves.

The Summary section. You will need to summarize all your insurance policies into a single sum. For Life and Health, both are bench marked against the Critical Illness cost for current year 2015. The Medical H&S is bench marked at 200. Likewise the Personal Accident Coverage is bench marked against the Dependency Coverage for year 2015.

Wealth Generation

Honestly the most difficult part. It is not ready yet but you get the idea where I am heading; partly thinking of portfolio style.

I will occasionally update the spreadsheet as I tweak it. Expect new revisions to come up from time to time. Any feedback is appreciated and I can be reached via my email. Again it can be obtained from here. https://www.dropbox.com/s/ani7eo357s0szxl/DIY_Financial_Planning.xlsx?dl=0