A 2008 Learning Lab on Financial Planning and Access to Funding facilitated by Citigroup.
One of the main messages of this workshop is that women need to plan for their financial future. They need to ensure they have sufficient funds to match their lifespans. They also need to see to the financial needs of any dependents, such as elderly parents, siblings and children.
The first step towards financial planning is to take a critical look at your current status. You need to know where you are now, and where you want to be. To get there, you also must ascertain your risk profile. This helps to plan possible sources of investment income. With the right planning, the facilitators assured, it is possible to enjoy worry-free golden years. However, it is imperative that you start as early as possible.
Statistics show that in general, women are financially weaker than men. For example, at the age 54, men have a higher EPF balance than women. This is because women spend an average of seven years out of the workforce, mostly to care for young children. The situation is even more worrying for women because they have a higher life expectancy than men, and therefore more likely to outlive their savings.
The facilitators cautioned women to be aware that at current inflation rates it would be imprudent to rely on EFP savings alone.
Facts:
• only 0.43% of active EPF members have balances >RM500,000
• only 0.08% of active EPF members have balances >RM1million
• 90% of EPF contributors have less than RM100,000 in their accounts
• Retirees on average use up to 70% of their EPF savings within 10 years
The second part of the workshop focussed on ways women can access funds to start their own business. First off, women were advised to seek professional advice from lawyers, bankers and accountants to protect their investments and ideas. A business plan should also be developed outlining the basis for your business. This should include a marketing plan, and financial and operational procedures.
Keeping good records and complying with laws and regulations are critical. Other good habits to cultivate include ensuring all payments are made on time for purposes of establishing yourself as a responsible paymaster. Loans should be paid off, beginning with those with the highest rates of interest.
Some typical sources of funding for new businesses include:
• personal savings, loans from family and friends
• credit card loans
• developing a partnership
• bank loans – however some form of collateral is usually required
• franchisor loans
• government loans specially for SMEs (provided by SMIDEC)
• secured lending, eg fixed deposits, real estate or property
• capitalising on your equity, for example use checking accounts with benefits for SMEs
In closing, the facilitators encouraged all women to evaluate their own financial health using their 10-step guideline.
10 Steps to Financial Fitness
1. Form a trusted network of practitioners and friends who are able to give professional input and advice
2. Know what you have and where you have it – practice good record keeping (financial statements, insurance policies, and so on)
3. Figure out where you are today – in terms of savings, investments, EPF
4. Determine your money values – time value of money
5. Clarify your financial goals, both long-term and short-term
6. Determine long-term needs – retirement, children’s education, etc
7. Consider the unexpected – plan for rainy days and the 3Ds: divorce, disability, death (premature)
8. Develop a plan and stick to it with discipline
9. Cover the basics – wills, insurance, etc
10. Stay informed and engaged
This lab was sponsored by Citigroup and facilitated by Chin Wan Keang, Head of Branch Banking and Sales Distribution