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This course covers the process of financial planning. Learn how to identify your immediate and long term financial goals. Know what resources you have to meet and achieve your goals.
Financial Planning is a process for you to take charge and manage your finances to ensure your financial well-being. It comprises of Managing cash-flow for your current needs and future goals, e.g. buying a home; Managing exposure to unforeseen circumstances by providing for your dependants’ basic needs; Managing resources to meet your financial goals, e.g. child education and retirement.
Just like a physical health medical test, a financial fitness assessment allows you to have a better understanding of your financial health. The following are common personal financial problems that can affect your financial fitness: Failing to plan ahead, or not planning at all; Not spending within your means; Spending on borrowed money, buying with consumer credit; Delayed savings for retirement; Falling prey to financial sales pitches; Not doing your homework; Making impulsive decisions; Exposing yourself to high financial risk.
In order to accurately access our financial situation, we need to find out the following: Net Cash Flow Position; Net Worth; Financial Ratios. The net cash flow position is the amount after the total outflows have been subtracted from the total inflows. The net cash flow statement gives you your net cash flow position, and can be used as a tool to find out if you are making good use of your income. Your net worth is a snapshot of your financial position at a specific point in time.
In the event of a total loss of income, you may have to use your liquid assets to cover your regular expenses. The Basic Liquidity ratio shows the number of months you can expect your liquid assets to sustain your monthly expenses. This is also known as your emergency savings. The Savings Ratio reveals how well you are building up your savings for your future consumption. The Non-Mortgage Debt Service Ratio compares the monthly payments to service all debt, excluding the mortgage, with a person’s monthly take home pay. This ratio simply provides insight into what amount of income is going towards non-mortgage debt. The Mortgage Servicing Ratio reveals the percentage of your monthly income that can be used to service your monthly property loan instalment.
This course continues from "Making Sense Of Your Money". Also, after going through this course, you can join the next module entitled "Implementing Your Financial Plan".
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|Section 1: Introduction|
Find out about the objectives of this module.
|In this lecture, find our more about the MoneySENSE Core Financial Capabilities Framework. The five Core Financial Capabilities are:
This lecture provides notes to explain the process of financial planning. In a nutshell, financial planning involves setting financial goals, knowing what resources you have to achieve those goals and then implementing and monitoring the progress of reaching those goals.
Financial fitness can be compared to physical fitness. Just like we take certain physical readings such as blood pressure, cholesterol level and BMI in order to assess our physical health, our financial health can be assessed by looking at various financial numbers and ratios.
|Section 2: Setting Financial Goals and Priorities|
In this video we will consider the importance of setting financial goals.
This video can also be viewed at http://www.youtube.com/watch?v=Ojfinlty-JI
The following lectures contain notes based on this video.
This lecture explains what financial goals are. Just as we have destination goals when we set out on a journey, a financial goal is like the financial destination or position that we would like to be in.
This lecture also explains what S.M.A.R.T. financial goals are. Having financial goals which as Specific, Measurable, Achievable, Realistic and Time-Bound will increases the chances of you reaching your financial goals.
|Section 3: Assessing Your Financial Fitness|
|In this Mashup, Ferris explains about the Cash Flow statement and the Net Worth Statement. It is important to have these two statements in order to accurately assess your financial position.|
This lecture provides notes to explain the concept of Net Cash Flow. Net Cash Flow is basically your total inflows minus your total outflows. A positive Net Cash Flow results in a Cash Surplus. Conversely a negative Net Cash Flow results in a Cash Deficit. It is obviously better to have a Cash Surplus.
Take some time to fill in your Net Cash Flow statement. It is important to be as detailed as possible and to identify all your Cash Inflows and Cash Outflows. This will help to build a better and more accurate picture of your financial situation.
This lecture provides notes on the concept of financial Net Worth. This can be calculated by taking all our Assets (everything we own) minus our Liabilities (everything we owe). Obviously a high financial Net Worth is a good financial position to be in.
Take some time to calculate our financial Net Worth. Once again, it is important to be as detailed as possible when listing down our Assets and Liabilities. This will help us have a clearer picture of our financial health.
|In this video, Ferris explains four essential financial ratios that we need to calculate in order to assess our financial health.|
In this lecture, we provide written notes various financial ratios and how they are calculated. It is important to note that our financial ratios have to be looked at holistically so that we can have an overall assessment of our financial situation.
|Section 4: Case Studies and Excel Demonstrations|
|In this video, the detailed calculations for the Case Study are presented. Download the supplementary material for reference.|
In this lecture, we look at how an Excel spreadsheet can be used in help us calculate Mr James Tan's financial ratios and net worth.
|In this lecture, we look at how an Excel spreadsheet can help us calculate Mrs James Tan's financial ratios and net worth.|
|In this lecture, we look at how an Excel spreadsheet can help us calculate the combined financial ratios and net worth of Mr and Mrs James Tan.|
This video contains a case study and also concludes this e-learning module. Make use of the supplementary Excel file and PDF file to see if you can calculate the financial ratios on your own. If you are not sure of anything please ask. Thank you for viewing the e-learning module.
|Section 5: Quiz and Additional Resources|
|Quiz 1||3 questions|
Test your knowledge on Assessing Your Financial Fitness.
This lecture contains links to additional resources where you can learn more about money matters pertaining specially to Singaporeans.
BA (Hons) Business and Finance
Ferris Wee is a qualified Financial Planner, and through his previous workplace, a global financial services company, he has helped more than one hundred clients with his clear process in reviewing their financial needs. Specifically, he has helped clients to identify their goals and ensure that they make the right choices to meet those goals today, tomorrow and in the years to come.
Ferris is passionate about leading people beyond financial breakthroughs, and has conducted financial literacy training in Singapore and Indonesia, as well as sports camp training for youths in India. Ferris is also an experienced financial counselor, helping many people manage their budget to meet their financial responsibilities.
Ferris is a Certified Will Writer, and has provided Professional Will writing, estate planning and custody services. He is also an Associate Estate Planning Practitioner.
Prior to his career in financial planning, Ferris was with the Republic of Singapore Air Force working on budgeting, logistics, maintenance and overseeing safety issues. For his strong leadership qualities, Ferris received the Outstanding Safety Warrior Award.
Ferris has a BA (2nd Class Upper Honours) specializing in Business and Finance. He also holds industry certifications in M5, M8, M8A, M9, M9A, HI, BCP and PGI.
The MoneySENSE-Singapore Polytechnic Institute for Financial Literacy is a collaboration between MoneySENSE, the national financial education programme in Singapore and Singapore Polytechnic.
MoneySENSE is spearheaded by the public-sector Financial Education Steering Committee which comprises representatives from the Ministry of Health, Ministry of Social and Family Development, Ministry of Education, Ministry of Manpower, Central Provident Fund Board, Monetary Authority of Singapore, National Library Board and People’s Association.
Our financial education courses cover basic money management, financial planning and investment know-how.