Azedah Jamil, ChFC

Setting Financial Goals

2008-07-10T01:23:00.001-07:00

The first step in personal financial planning is controlling your day-to-day financial affairs to enable you to do the things that bring you satisfaction and enjoyment. This is achieved by planning and following a budget, as discussed in the first article in this series.

The second step in personal financial planning, and the topic of this article, is choosing and following a course toward long-term financial goals. As with anything else in life, without financial goals and specific plans for meeting them, we drift along and leave our future to chance. A wise man once said: "most people don't plan to fail; they just fail to plan." The end result is the same: failure to reach financial independence.

The third step in personal financial planning, "Building a Financial Safety Net," is discussed in the third article in this series.

FOUR SIMPLE STEPS FOR SETTING FINANCIAL GOALS

Step 1: Identify and write down your financial goals, whether they are saving to send your kids to college, buying a new car, saving for a down payment on a house, going on vacation, paying off credit card debt, or planning for retirement.

Step 2: Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals.

Step 3: Educate yourself! Read Money magazine, or a book about investing, or surf the Internet's investing web sites. The stock market is not voodoo. With a little effort you can learn enough to make educated decisions that will increase your net worth many times over. Then identify small, measurable steps you can take to achieve these goals, and put this action plan to work.

Step 4: Evaluate your progress. Review your progress monthly, quarterly, or at any other interval you feel comfortable with, but at least semi-annually, to determine if your program is working. If you're not making satisfactory progress on a particular goal, re-evaluate your approach and make changes as necessary.

DO IT NOW!

There are no hard and fast rules for implementing a financial plan. The important thing is to do SOMETHING, and to start NOW.

Budgeting

2008-05-21T01:29:00.000-07:00

First Step to Financial Success

Personal financial planning consists of three general activities:

Controlling your day-to-day finances to enable you to do the things that bring you satisfaction and enjoyment.
Choosing and following a course toward long-term financial goals such as buying a house, sending your kids to college, or retiring comfortably.
Building a financial safety net to prevent financial disasters caused by catastrophic illnesses or other personal tragedies.

This article addresses how to achieve the first of these goals: controlling your day-to-day financial affairs. See "More of This Article Series" in the box to the top right for Step Two: "Setting Financial Goals," and Step Three: "Building a Financial Safety Net."

Why Should I Budget?

Controlling your financial affairs requires a budget. For many people, the word "budget" has a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a means to achieve financial success.

Whether you make thousands of dollars a year or hundreds of thousands of dollars a year, a budget is the first and most important step you can take towards putting your money to work for you instead of being controlled by it and forever falling short of your financial goals.

To those of you who think you know where your money goes without keeping detailed records, I issue this challenge: keep track of every cent you spend for one month. I promise you'll be surprised and perhaps shocked by how much some of your "small" expenditures add up to.

For an eye-opening illustration, try the American Express Saving or Spending Big Calculator. Enter the cost and frequency of a habit or indulgence and how many years you expect it to continue. Click a button and see not only how much you'll spend over the specified time period, but how much that same amount would grow to if you invested it at various rates of return. Mind-boggling!

Budgeting and tracking your expenses gives you a strong sense of where your money goes and can help you reach your financial goals, whether they are saving for a down payment on a house, starting a college fund for your kids, buying a new car, planning for retirement, paying off the credit cards, or saving for that trip to Aruba.

Since financial matters are one of the leading causes of marital discord and divorce, getting a handle on your spending, implementing a budget, and saving for the future can also have positive effects on your relationship with your spouse or partner.

Should I Use a Software Program?

You don't need to invest in fancy software in order to do a budget, but a good software program WILL make the job easier, and being able to print out graphs and reports from your PC can serve as a motivation for entering all that data.

Many banks are now offering free PC banking and free personal finance software. You simply dial into the bank's computer (or your bank may use web-based banking), and download the checks that have cleared your account, directly into your personal finance software. Then you indicate an expense category for each check.

You can do a basic comparison of budget versus actual expenses by category, or you can enter more detailed information such as investments, assets, liabilities, etc., and print personal financial statements showing your net income and net worth.

Some of the most popular personal finance software programs for checkbook and expense tracking are: Quicken, MS Money, and MoneyDance.

Whether you use sophisticated personal finance software or a couple of pieces of paper and a pencil, the important thing is that you get on the road to financial freedom by starting a budget today.

The $ Adds Up...

Habit	Yearly Cost
Daily Cup of Coffee	$547/yr
2 Packs of Cigarettes/Day	$2555 - $3285/yr
1 Hardback & 3 Paperback Books/Mo.	$690/yr
Lunch Take-out 5 days/wk @ $5-$10/day	$1300 - $2600/yr
3 Drinks at a Bar/Wk.	$936 - $1092/yr
3 Six-packs of Coke/Wk.	$624 - $936/yr

Financial planning for TAP officers

2008-04-02T01:16:00.000-07:00

Syed Rory
BANDAR SERI BEGAWAN

Wednesday, April 2, 2008

A TOTAL of 120 officers from the Employees Trust Fund (TAP) on Monday brushed up on their financial know-how as part of a month-long roadshow aimed at enhancing their financial planning prowess.

The roadshow was also a refresher course for senior employees which will be held annually once a year.

Throughout April, TAP will organise the roadshow for selected institutions such as BRUNEI Shell Petroleum Company, Brunei Liquified Natural Gas, Brunei Gas Carriers Sendirian Berhad, Universiti Brunei Darussalam, Institut Teknologi Brunei and Royal Brunei Armed Forces as part of activities to commemorate the 15 years establishment of TAP.

The roadshow will include financial institutions such as Bank Islam Brunei Darussalam, HSBC, Standard Chartered Bank, CIMB and Baiduri Bank for visitors to learn about the financial planning systems that have been implemented by these institutions.

Some of the institutions have also brought in an expert to speak on the subject. A representative from the Brunei Islamic Religious Council will also be on hand to speak about zakat and its significance towards proper financial planning.

A lecturer from CIMB Islamic, Malaysia, Mohd Damshal Damit briefed the 120 TAP employees, while the briefing on zakat was presented by Ustaz Muhammad Shukri Hj Ahmad.

The Brunei Times

SCB Introduces Guide For Home Buyers

2008-02-25T03:01:00.001-08:00

Standard Chartered Bank continues to lead the way by introducing value added services for its customers in its efforts to assist customers in making the right decisions when it comes to financial matters.

Customers looking to purchase a new home or to simply upgrade to a larger family home, can now gather useful tips and insights on how to go about beginning the purchase process with Standard Chartered’s Home Ownership Guide.

In this guide book, prospective home owners are guided step by step on managing finances in order to make their home purchase a reality, from documentation required for applying for housing loan to handy tips on house renovation.

“We understand how daunting the whole process of buying your own home can be, especially for first time home buyers where documentation and legal procedures may seem confusing. Hence, Standard Chartered is pleased to offer this extra guide to help home buyers or the interested public to not only make better financial decisions but to give a clearer picture on the process and stages of home purchase. Purchasing one’s own home is a special occasion and does not happen on a regular basis, hence Standard Chartered believes that being the right partner means being able to give dependable advice on what works best for each individual customer”, commented Ms Lim Su Hui, General Manager, SME and Mortgages.

This handy guidebook is available to all at any Standard Chartered Bank branch. Those interested in finding out more about the guidebook or about home loans can contact Standard Chartered’s Phone Banking Centre at 265 8000, or visit any Standard Chartered Bank branch where a Personal Financial Consultant will be on hand to assist.

TAP contribution rates too low

2008-01-22T19:11:00.000-08:00

By P Marilyn

There is a need for higher contribution rates from employers and employees to supplement the current Employees Trust Fund (TAP) in the country, as its current contribution rates are too low by regional standards.

This was one of the points made during the Social Security Roundtable 2008, themed "Towards A More Sustainable Post-Retirement Income, Policy Options For Brunei Darussalam", organised by the Centre for Strategy and Policy Studies (CSPS) on Saturday at the Empire Hotel and Country Club, Jerudong.

Earlier, Permanent Secretary at the Prime Minister's Office Pengiran Dato Paduka Haji Ismail bin Haji Mohamed in his capacity as CSPS Chairman, in his opening address, said the locals have been blessed with a decent quality of life and standard of living, but the sustainability of these components require the analysis of a number of key variables.

He noted one of which is TAP's contribution rate of five per cent, by both employers and employees, is too low to fund accumulated savings upon retirement.

"Currently, the normal pension age is 55, and it is estimated that there are more than 20,000 people in the age group of 55 and above," said the permanent secretary. "With current demographic data, the aging population in 20 years time will increase considerably, coupled with longer life expectancy."

Therefore, he said, "the increased number of 'warga emas' need to have certain level of income in order to support their way of life".

Pengiran Dato Paduka Haji Ismail, in his welcoming remarks, also emphasised on CSPS's commitment to advanced research and analysis on topics that are of strategic importance to the country's interest.

A report, finalised by CSPS, shows clear indication that the current pension schemes, particularly during post-TAP era, are far from adequate if there are no other provisions of savings, he said.

As such, Saturday's dialogue was aimed at discussing alternatives and required improvements to existing social security options in the country, particularly with the view of improving the Post Retirement 'Safety Net' and Financial Security for post-TAP participants.

In conclusion, there is a need for higher TAP contribution rates, and such schemes should not allow for withdrawals, in order to provide an income stream in retirement.

It was also noted that given the sluggish business conditions, the capacity for private sector to participate in increased contributions may be limited.

Among the other issues discussed during the roundtable was the importance of education in instilling a culture of savings and self-reliance.

Meanwhile, the dialogue, moderated by CSPS board member Stephen Ong, brought together over 100 stakeholders, policymakers, members of both public and private sectors, together with panellists from the World Bank, American International Group (AIG), Singapore Ministry of Manpower, and TAP.

The findings and recommendations from two independent research teams, represented by World Bank's Mark Dorfman and AIG Global Investment Group Vice President Michael Hudnall, were shared and discussed during the roundtable.

The event also saw a presentation by Deputy Permanent Secretary at Singapore Ministry of Manpower Aubeck Kam, who shared Singapore's workforce concept and touched on some social security schemes in Singapore.

Following the roundtable, CSPS will make available a report, with observations from the roundtable, to relevant authorities for policy considerations.

Financial Indepence?

2008-01-08T20:48:00.001-08:00

Do you find that there never seems to be a convenient time to put money aside for savings, investment, or insurance?

Most people spend first... and try to save and invest what little is left

Few people set aside a definite amount first... and spend the balance

They are the ones who have money when they really need it

Why can't we save money?

The answer is within yourself. Identify your weakness. Some of the reasons could be:

Poor earning capabilities
Too many debts - credit card, loan installments: personal, car, computer, furniture etc
Excessive spending
Luxury items, over-budget (no budget at all) e.g. must have latest mobile phones, laptops etc
Frequent holiday trips

How do we make sure we save first then spend? In other words, how to be financially successful?

BUT the LONGER we WAIT...

THE STEEPER THE CLIMB

Blogged with Flock

Teachers get advise on financial planning

2007-11-29T00:18:00.000-08:00

Izam Said Ya'akub
BANDAR SERI BEGAWAN

Thursday, November 29, 2007

"IS 10 per cent enough?" That was the question which set the theme for yesterday's Tabung Amanah Pekerja (TAP) Financial Planning Roadshow at the Yayasan Sultan Haji Hassanal Bolkiah School here, yesterday.

"Our initiative is to expose TAP to the general public and also get them to think more about the subject of retirement," said Irwandy Hj Louis, Manager of the Corporate Communications, TAP.

The mechanics of the Worker's Trust Fund, better known to Bruneians as TAP, sees two contributions made into the fund every month. It has become a requirement in Brunei that both employee and the employer provide five per cent contribution of the total wage into the TAP fund, which is accessible by the employee after they reach the mandatory retirement age of 55.

"However it really depends on each individual's retirement needs," said Irwandy, who highlighted that whilst five per cent is a good start, some cases the TAP fund was not enough and that one of the roadshow's objectives was to team up with the local banks in the country to inform the public what their options are.

The roadshows are also another way for us to get feedback from the public, said the manager. Some 60 teachers from Yayasan Sultan Haji Hassanal Bolkiah School were present to listen in on the basics of financial planning from representatives of both TAP and Baiduri Bank.

"I think its always good to know what options are available," said one of the teachers, "not just for me but also my children."

The second presentation by Baiduri was delivered by Peng Eng Soon, Head of Wealth Management at the bank, who touched on the significance of achieving the short and long term financial goals and general tips on financial planning.

The Brunei Times

Insurance firms urged to be transparent in transactions

2007-10-19T18:40:00.000-07:00

Shareen Han
BANDAR SERI BEGAWAN

Friday, October 19, 2007

TRANSPARENCY is the key for insurance companies in Brunei Darussalam to protect their consumers' interests while pursuing their profit-making motives at the same time, the acting permanent secretary of the Ministry of Finance said.

Achieving sustained business growth and mutual trust between insurers and clients is a real challenge that requires the "adoption of a long-term perspective," said Hj Bahrin Abdullah during the launch of Brunei's Insurance Day 2007 yesterday.

"(There is) an urgent need for insurers and insurance intermediaries such as agents and brokers, who are key front-liners in the industry to better educate the mass, with a view to developing the market for sustainable long term growth," he said.

He explained that educating the public is vital in helping them to understand the protection and risk management procedures involved in the insurance industry.

With Brunei observing its first ever Insurance Day, it would raise awareness and educate the public on the insurance industry, its business and products, and the important role that it can play in economic and societal development, the acting permanent secretary said.

Organised by the General Insurance Association of Brunei Darussalam, he said that Insurance Day 2007 would also help insurance companies to capitalise on the opportunities that are available in the market, as Brunei has yet to benefit from other segments of insurance, apart from motor insurance.

Hj Bahrin added that the theme for Insurance Day is 'Insurance Protect' or 'I-Protect', which will act as a catalyst that would enhance a better understanding of the underlying concepts and methods of protection against risks through insurance.

"The theme also stresses on how important insurance is to all walks of life and it is an integral part of any financial and wealth management programme," said David Wong, representative from General Insurance Association of Brunei Darussalam.

"The first Insurance Day in Brunei is a historical first, where you will find total collaboration amongst all the insurance community, be it life, non-life or takaful (Islamic insurance) operators," he told about 50 guests at Sheraton Utama Hotel. He said that the introduction of Insurance Day is timely, as it will help to create greater public awareness, thus increasing opportunities for both life and non-life businesses.

It is hoped that Insurance Day would not only increase public awareness in various insurance products but inform youths on the available job opportunities in the insurance industry, he said. Wong further pointed out that the formation of an umbrella association of life, non-life and takaful operators may be needed to tackle future challenges in the industry, including addressing ever changing consumer needs.

Insurance Day is celebrated every October 18 after its declaration from members during the East Asian Insurance Congress last year.

The Brunei Times

Rising demand for financial planning

2007-10-08T23:39:00.000-07:00

Hadthiah PD Hazair
BANDAR SERI BEGAWAN

Tuesday, October 9, 2007

MORE and more Bruneians are starting to realise the importance of implementing good wealth management plans to secure a financially sound future, the Standard Chartered bank (SCB) observes.

The bank has noted an increase in the number of customers seeking assistance in wealth management.

Bank chief executive officer Tiew Siew Chuen said that SCB strives to instil in prospect clients awareness of financial management and planning by holding seminars for people from all walks of life, including schoolchildren.

"More young people who've only started working for a year or two are quite well versed in the investment market they actually come in to start investing," the chief said.

"The general response is that many of our customers are pleasantly surprised at the broad range of products we offer, as many don't realise that banks in Brunei have a broad range (of products)," she said.

Tiew explained that after conducting seminars bank wealth managers see participants visiting the bank to enquire more and start investing in the products they offer.

SCB boasts the largest selection of unit trusts in the market, with more than 150 funds from more than 19 fund houses. It also has a wide choice of capital guaranteed funds, equity funds, balanced funds, bond funds, money market funds, bond funds, money market funds, and real estate investment.

"Dont put your eggs in one basket. You have to divide what percentage of your wealth should be in multi-currency and what can be put in unit trust," Tiew said.

Other factors the bank takes into account when helping customers to make a more informed decision is by asking what they are planning for so that SCB financial planners are able to work out a model to meet the needs of individual customers.

To further improve its service, SCB has enrolled five staff officers to undertake the chartered financial consultant (ChFC) course which is held in Singapore.

"I believe that we are the only bank in Brunei to have done so," Tiew said, confident that this will help boost their wealth management services further.

The Brunei Times

Insurance firms, Ministry discuss new payment rule

2007-09-30T19:08:00.000-07:00

Izam Said Ya'akub
BANDAR SERI BEGAWAN

THE General Insurance Association Brunei (GIAB) and the Ministry of Finance are currently discussing a proposed new motor insurance payment system in the wake of the insurance industry's massive payout of $3.6 million.

The move was made as increasing number of claims and larger payouts — a result of Brunei's dismal traffic safety record — mean the industry is rapidly losing its business viability.

Motor insurers have said the tariffs are grossly inadequate and argue that without a change in the tariff regime, the industry will simply become unprofitable.

The total industry volume for motor insurance is about $34 million, and new legislation introduced in 2006 requires companies to have total paid up capital of $5.4 million.

The discussions with the Ministry of Finance regarding the creation of a new motor insurance tariff regime, could potentially see a different tariff regime for foreign nationals.

The largest claim to be paid out by insurers was the award of a $3.6 million accident compensation to a nine-year-old boy injured in a car accident in 2000.

The child was of Nepalese origin but now resides in the UK. Under Brunei law the court was obliged to take into account living costs in the UK, despite the fact that the premium paid was in Brunei dollars.

With the precedent now set, motor insurers are now arguing that insurance premiums are out of sync with the claims now possible, with many forecasting that greater awards could be made.

For Southeast Asia, the $3.6 million award is a record figure, and with many expatriates living in the sultanate, the fears of the insurance industry appear well founded.

Brunei Darussalam has some of the lowest motor insurance premiums in the world. In the case of this latest record payout the claimant was covered for unlimited bodily injuries by an annual premium of just $67.50, compared to the lowest premium available in the UK of $607.50.

Industry insiders have also called for government action to improve road safety.

An Oxford Business Group report states that while the rate of accidents to vehicle population has fallen by 2 per cent since 1994, a worrying 25 per cent of all accidents have resulted in either death or serious bodily harm.

Government action to push down the number of accidents can significantly ease the industry's burden, argued the GIAB.

The report also points out that the introduction of the contingency fee rules — where claimants can split rewards with their lawyers if the case is won, and do not have to pay any fees if they have lost — resulted in more personal injury claims being made.

For instance, in 1993 only 10 annual claims were recorded. This figure jumped to more than 150 in 2004, as more people are suing for damages as they are protected by the law from financial risk.

The Brunei Times

Time for a check-up

2007-07-30T17:59:00.000-07:00

By Genevieve Cua - Oct 18, 2006
The Business Times

SINGAPORE registers the highest level of insurance penetration of four territories in the region, yet the majority believe they do not have enough cover to meet their families' needs over 10 years, a survey commissioned by insurance company AIA has found.

In fact, 55 per cent of Singaporeans say they would not be able to survive more than 12 months if their main source of income was suddenly eliminated. Only 18 per cent hold income protection policies.

The AIA 'Life Matters' Index is an annual survey into the region's insurance and risk attitudes. This year, the survey covered Singapore, Hong Kong, Malaysia and Thailand, and included a financial planning section. The survey involved 4,000 respondents in all. In the financial planning section, Singapore respondents had a household income of at least $5,000.

On the question of whether funds would be sufficient should the respondent or a family member suffer a critical illness, between 60 and 70 per cent said they either did not know or that funds were not enough.

Singaporeans, however, had the highest expectation of how much cover they would need in case of illness or an accident. The mean multiple was 6.8 times the personal income, compared to 6.2 times in Hong Kong.

In terms of educational savings, Singapore respondents indicated that on average, they've saved $45,000 for one child's tertiary education.

But their expectation of how much is needed was about twice that amount, at over $89,000.

Sixty per cent were not sure whether they intended to send children overseas, while more than 70 per cent either did not know whether their savings were enough for retirement or that the money would not be enough.

AIA general manager Mark O'Dell said the high proportion of 'don't know' replies indicated a need for financial planning advice. AIA is setting up a 'financial health check academy' to further train its advisers on needs-based selling. At the moment it has launched a financial health survey where those who undergo a full check will receive a complimentary report.

'CPF savings are not enough (for retirement) and neither can people count on unlocking the value of their real estate ... There is over-confidence that home ownership is an asset that they can rely on at some future point to consume, and generally that does not happen.'

He said AIA might consider entering the disability income protection market. At the moment there are only two to three such products. 'I think there is a need there that seems to be recognised. Yet (the take-up) has been very slow.'

On medical cover, he said the take-up of the new HealthShield Gold Prestige 'as charged' plan has been 'very good'. 'We doubled our sales in a short period.' The firm is now looking into marketing it as an upgrade to current HealthShield policyholders, of which there are about 600,000.

Give Life Policy One Close Look: Bankers

2007-07-23T07:20:00.000-07:00

By Debbie Too

Bandar Seri Begawan - Personal insurance policies have yet to increase their attractiveness to Bruneians, bankers said, noting that many who do enrol in their programmes drop out after a couple of years.

Only five of every 10 people aged 20 to 30 years old who buy a life insurance policy sustain their regular payments for a couple of years, said Elizabeth Sim, a senior personal banker at HSBC in Brunei.

Only three manage to commit to keeping the policy for its entire payment cycle, she said in an interview with The Brunei Times.

AIA Insurance, on the other hand, is seeing a higher percentage of people completing their insurance schemes, eight out of every 10, according top agency Betty Yeo.

"They are afraid of losing their income or they understand that insurance is a form of protection that helps secure them in times of sudden disability or loss of income," she explained in an interview.

"Insurance policies are a form of savings that cover health, disability and loss of income, as well as paying out the family members upon death," said Betty.

"Some people have to consider that when they take out a personal insurance, they have to think what happens when they are 40 years old with no work? At least when they take out an insurance policy when they were younger, the insurance would help them cover their loss of income."

Elizabeth said that it is better to start an insurance policy when the individual is younger because the premiums are much cheaper than when one hits 30 years and above.

"The concern for financial stability only happens when the individual has started to work between the ages 20 and 30 years old. Anyone younger has no concern or worry for finances," said Betty.

"It is better to take out an insurance policy when you're younger to take advantage of the cheaper premiums, instead of starting when you're older and thinking back about why you never started one sooner," said Elizabeth.

Asked about the necessity of having a life insurance policy, Elizabeth said: "There is no easy yes or no answer. The individual themselves will be able to see it.” -- Courtesy of The Brunei Times

The importance of sound financial management

2007-05-11T23:19:00.000-07:00

By Haliza Abu Bakar

In one of his recent speeches by His Majesty Sultan Haji Hassanal Bolkiah Mu’izzadin Waddaulah, the Sultan dan Yang Di-Pertuan of Brunei, he has touched upon the importance of sound personal financial management and to avoid the habits of excessive spending and being in debt but instead to instill the habit of gratefulness & appreciation in us. This speech was made in conjunction with the new month of Syawal 1427 or more commonly known as Hari Raya Aidilfitri.

On the topic of debts, His Majesty mentioned briefly the effects and difficulties of a person in debt not only for this world but also in the afterlife. Therefore, it would be appropriate to elaborate more on this topic especially to find out what the Islamic perspectives are regarding debt.

When it comes to the topic of spending, moderation has always been the key in Islam. To spend one’s wealth excessively especially wasting it on unnecessary items just to satisfy “wants” and “temptations” is disapproved of. Allah even said that those who are extravagant are actually related to the devils. This can be proven from the excerpt from the Quran below:

“Verily, spendthrifts are brothers of the Syaitan (devils), and the Syaitan (devils) are ever ungrateful to his Lord”
(Surah Al-Israa: 27)

From the above, we can see that extravagance is one of the characteristics despise by Allah. We are encouraged to spend only on what we can really afford and to avoid giving in into every temptation.

Maybe from appearance alone cannot tell if someone is in debt but red warning signs should clearly go off when you find your savings diminishing or almost gone to pay off others instead of yourself or when the main proportion of your income goes to your revolving debts. One of the key known areas where people easily fall into debt is via the use of credit cards, simply because credit cards are one of the easiest sources of credit. Through their advertisements, spending via credit cards can also represent a “style” or “status” therefore sometimes tempts the holder to use it on an unnecessary basis. However, without proper financial management and understanding of your credit card spending, one can easily find themselves digging their own hole of financial burden.

I’m sure most of us know that being in debt is not encouraged, whether you’re a Muslim or not. We’ve seen from television series or movies or even from reading books or newspapers, being in debt is an ugly situation and one which all of us rather avoid. However I know there are some situations which sometimes cannot be helped where we have to borrow, for example financing for your new home. Again, here is where moderation comes into place. Try to avoid the temptation of excessive borrowing and borrowing more than your financial capability.

Nevertheless, in any situation concerning debt, there are conditions set out by Islam and one of them is to pay off these debts as soon as possible. If we have the means to pay our debt, it should not be prolonged and procrastinated. Paying off your debt is a responsibility and failure to carry out the responsibility is frowned upon. This does not just relate to our financial debts but also encompasses our religious practices. For example repaying the obligatory prayers if we missed any, repaying any “puasa” we missed during Ramadan, any Zakat we have not paid and Haj for those who have left us and did not get the chance to do perform it. In a way, Allah has been teaching us indirectly to always pay our debts, be it to Him, to the society or to others.

In addition, anyone who deliberately delays the payment for their debt will not benefit from “keredhaan Allah” and their good deeds will not receive the blessings from Allah either. The burden does not just stop when they’re no longer alive. It continues even after their death as can be seen from these hadiths below:

“The soul of the believer is hanged by his debt until it is paid out”
(Narrated by At-Tarmizi, Ahmad and Hibban)

"Whoever dies owing a Dinar or a Dirham, it will be paid from his Hasanaat, for then there will be no Dinars or Dirhams”
(Stated by Ibn Umar as narrated by Ibn Majah)

From the hadiths above, we can see that leaving this world with debts will cost us much more dearly in the Hereafter. Our souls will be left hanging and hindered from entering a noble place as well as our good deeds will be taken away to “pay off” the debts. This is one of the things meant by His Majesty when referring to the difficulties in the afterlife. Therefore try to avoid bringing your debts to your death bed as it may also bring hardship to your loved ones. Imagine if you passed away leaving many debts behind. Imagine the burden you’re placing on them to settle your debts. According to Islam, if a person passed away, any debts left behind will need to be settled before his/her assets can be distributed to his/her heirs. So imagine if you left behind little or no assets at all, how will your loved ones ever cope with their daily life as well as the struggle to pay your outstanding dues?

Another thing to remember is if we do have to borrow set the “niat” or intention in our hearts that we will pay off our debts. Insyallah, Allah will make it easier for us to be able to repay our debts.

The Prophet said, "Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him."
(Narrated by Abu Hurairah)

With the “niat” or intention, pray and make “doa” to Allah so you will soon be free from debt. Even if you do not own any debts, still pray and make the “doa” so you can avoid from being in debt. This was what our Prophet Muhammad practiced during his time. As The Prophet had done, pray to Allah for protection from the burden of debts and from being dominated by other people.

So as you can see, debt is a major responsibility. Being huge in debt might also affect you and your loved ones in all aspects – financially, emotionally and physically. It can affect you emotionally due to the stress and worry. Think what all those stress and worry can also lead to in terms of your health. Also, just because you may have succeeded in avoiding paying off your debt in this world does not mean that the debt will not be claimed in the Hereafter. So if you’re one of the people who has a list of things to do before you die, be sure to include “repay all debts” as one of the top things to do!

$1 can make a difference

2007-05-04T23:27:00.000-07:00

By Suhaila Kani

Since my last article on financial planning, I have had people relating to me stories of how a 20-year-old is able to make payment in cash for a newly purchased car, or how an individual gets $30,000 from his parents.

I have also had parents telling me how their children (aged below 15 years) already have $10,000 or more nicely tucked into their savings.

You readers may likely respond by saying, "Yeah, that's easy for them because their parents are rich."

However, I would like to point out to you that these stories actually come from ordinary people like you and me. The truth is we can all become rich, given we possess both the right attitude and techniques.

In the last few articles we touched on the basics of financial planning - planning your money to achieve your dreams and, most importantly, your deepest desires in life.

Now I can already hear you asking, "So how exactly were these 20-year-olds able to purchase their cars in cash, or get such a lump sum from their parents?"

How can a normal regular earning income person afford to give their child that much money?

Did they invest in the stock market, reaping the rewards in a short period of time?

Did they take on a certain kind of business that spelt instant wealth?

You will be surprised to know that it is in fact none of the above. There are many examples I can offer towards achieving such wealth, however, I will only limit it to two.

Curious are you? Then read on

In life, some may not be as lucky as others. Not many people win big money everyday. We are ordinary people living ordinary lives, working hard to make ends meet.

However, you'll be surprise to know that saving as little as $1 a day can bring you a long way.

The people to be credited are the parents. Their dedication towards saving - everyday, every month or every year - a small fraction of their salaries for their offspring (ever since they were young) made it possible for them to cough up a lump sum for their children.

Some saved as little as $1 a day, while others saved as much as $100 a day. The moral of the story here is that you don't have to be rich to have the large sum of money given to you. All you have to do is to commit yourself to saving $1, $5 or even $10 a day.

If you are already in your 20s and your parents haven't saved enough for you, don't fret. It really isn't the end of the world.

At this tender age, you still have plenty of time to save either for your family, children or retirement. Five, 10 or 20 years down the road, you would probably be glad you did. So go on, plan now to save for you and your family.

If you are still wondering if it is possible to save as little as $1 a day and receive a large sum later on in life, allow me to clear your doubts.

Let's say you save $1 a day for your newborn, putting it into a savings account which offers a four per cent annual return. By referring to Diagram A, you will be able to see how the savings would mature over the years.

By the time your child is 25, you as a parent will be able to give your child about $15,000.

Assuming parents save $3 a day instead, they will be able to provide their child $46,000 by the time that child turns 25. (Refer to Diagram B)

This indeed is achievable for ordinary people drawing ordinary incomes.

Note the difference in figures by merely throwing in an additional $2 daily over the 25-year period. The difference of $31,000 is significant.

It just goes to show how if you are able to save more than $2 or $3 a day, your wealth will grow more exponentially. This is due to the compounding effect of the interest earned.

Let's throw in another example to the mix. By consistently saving $5 everyday, in 20 years time you should be fairly proud of your savings. (Refer to Diagram C)

Here is a tabulate of the difference:

$1 a day ---------------- $15,423.89

$3 a day ---------------- $46,271.66

$5 a day ---------------- $77,119.43

Can you see the difference now? Imagine cutting down on the daily 'nasi katoks' and putting that money aside for the future. Note: Over 25 years, those nasi katoks would cost you $15,000.

This is only a metaphor but you can relate this to other things like smoking. Cut down on your cigarettes or kick the habit and instead channel the spending towards getting your wealth intact. That $3 price tag will cost $46,000 over 25 years, which you could instead put into your child's education fund or even as down payment for your home.

So decide now to improve your financial future. Many people may say that saving a dollar a day will get them nowhere, but the truth is, it sure is better than nothing. It will be a good starting point for you to save. If you can afford to save more, then do so.

Either ways, you will later see the difference. Change your daily spending habits, choose now to be time to take better care of your financial future.

Remember, the sooner you start saving, the sooner you will reap your rewards.

Courtesy of Borneo Bulletin

Stress on financial planning

2007-04-24T01:19:00.000-07:00

Husin Ismail
BANDAR SERI BEGAWAN

Tuesday, April 24, 2007

SOME 100 officers and employees of the Royal Brunei Airlines (RBA) attended a discussion on financial planning conducted by the Employees Trust Fund (TAP) at the Muhibbah Lounge, RBA Sports Complex in Berakas yesterday.

Present at the roadshow was Hj Shahminan Hj Sulaiman, Manager of the Corporate Service Department at RBA.

The financial management discussion preceeded with TAP Corporate Video show.

The first speaker was TAP manager, marketing and Corporate Communication, Irwandy Hj Lois, who talked on the importance of savings for retirement days, especially in maintaining the current living lifestyle.

Another speaker was Dyg Hjh Suhaila Kani, assistance manager of The Royal Bank of Canada, who is also a Certified Financial Planner. She touched on financial planning concept and its importance in reaching the financial goals either in a short term or for the future. She also gave advice on spending and loans control, and more disciplined saving habits.

The roadshow is aimed at creating public awareness on the importance of financial planning and management without having to rely on other people or financial institutions. It is also to support His Majesty's titah inconjunction with the monarch birthday anniversary last year , which touched on the importance of financial planning.

TAP's financial roadshow began on March 31, 2005, targetting officers and staff of ministries and government departments which later extended to technical and higher educational institutions.

The Brunei Times.