Consumer Mathematics : Financial Management

Objective : Construct and present personal financial plans to achieve short-term and long-
term financial foals.
Situation A

Mr. Andrew wants to save RM10000 in two years to renovate his house. The following is Mr. Andrew’s
financial plan and actual cash flow for the first month he starts saving.

Income and Expenditure Financial Plan (RM) Actual cash flow (RM)
Net income
(a) Net salary 3200 3200
(b) Passive income 0 0
Total monthly income 3200 3200
Minus fixed monthly saving (15% of monthly income) 480 480
Minus emergency fund 250 250
Income Balance 2470 2470
Monthly Fixed expenses
(a) Car instalment 800 800
(b) Insurance premium 120 120
Total monthly fixed expenses 920 920
Monthly variable expenses
(a) Groceries 600 600
(b) Home utilities 120 120
(c) Petrol expenses 200 200
(d) Parents subsistence 240 240
(e) Holiday 0 300
Total monthly variable expenses 1160 1460
Surplus of income 𝒙 𝒚

(a) Find the value of x and of y.

(b) Based on Mr. Andrew’s financial plan, could he achieve his financial goal?

(c) In the next month, Mr. Andrew’s salary is increased by 20%. If the monthly fixed expenses and variable
are still remain the same. What is the effect on his financial goal?
 Situation B

Simeon wants to save RM6500 in 18 months to buy a motorcycle. The following is Simeon’s financial plan
and actual cash flow for the first month he starts saving.

Income and Expenditure Financial Plan (RM) Actual cash flow (RM)
Net income
(a) Net salary 2800 2800
(b) Passive income 350 350
Total monthly income 3150 3150
Minus fixed monthly saving (15% of monthly income) 370 370
Minus emergency fund 200 200
Income Balance 2580 2580
Monthly Fixed expenses
(a) Car instalment 750 750
(b) Insurance premium 350 350
Total monthly fixed expenses 1100 1100
Monthly variable expenses
(a) Groceries 400 380
(b) Home utilities 100 100
(c) Petrol expenses 300 300
(d) Telephone bill 180 180
(e) Personal items 350 300
Total monthly variable expenses 1330 1260
Surplus of income 𝒙 𝒚

(a) Find the value of x and of y.

(b) Based on Simeon’s financial plan, could he achieve his financial goal?

(c) In the next month, Simeon’s salary is increased by 5%. If the monthly fixed expenses and variable are still
remain the same. What is the effect on his financial goal?
 Situation C

Mr. Alex works in a computer company and receives a net salary RM2600 per month. He also carries out an
online business and receives and extra income of RM1200 per month. He saves 10% of his monthly income as
fixed monthly saving and RM200 as an emergency fund. His estimated monthly expenses are as follows :

Monthly Expenses RM
Food expenses 1040
Petrol expenses 130
House utilities 160
Parking and toll 80
Insurance premium 120
House rent 400
Car instalment 760
Travel 270

Prepare a financial plan based on the given information. Hence, determine status of the financial plan.

Income and Expenditure Financial Plan (RM)

Net income
(a) Net salary
(b) Passive income
Total monthly income
Fixed monthly saving
Savings for emergency fund.
Income balance
Monthly fixed expenses
(a)
(b)
(c)
Total monthly fixed expenses
Monthly variable expenses
(a)
(b)
(c)
Total monthly variable expenses
Surplus of income
 Situation d

Miss Sara works as a teacher with a monthly net salary of RM4200. On the weekend, she becomes a teacher in
a tuition centre and receives an extra income of RM1400, she also receives rental collected from her ascestral
home of RM350. Miss Sara saves 10% of her monthly salary as fixed monthly savings and RM300 as an
emergency fund.

Monthly Expenses RM
Insurance Premium 380
Petrol and Toll 250
Utility bills 300
Entertainment 380
Car instalment 800
Food expenses 1000
Pocket Money 400
Housing loan 1000

Prepare a financial plan based on the given information. Hence, determine status of the financial plan.

Income and Expenditure Financial Plan (RM)

Net income
(a) Net salary
(b) Passive income
Total monthly income
Fixed monthly saving
Savings for emergency fund.
Income balance
Monthly fixed expenses
(a)
(b)
(c)
Total monthly fixed expenses
Monthly variable expenses
(a)
(b)
(c)
Total monthly variable expenses
Surplus of income
 Situation E

Encik Hakimi works as an accountant at Company A. His monthly net salary is RM3500. He sets aside 10% of
his monthly income as a fixed monthly savings and RM120 as a savings for emergency fund. The table below
shows Encik Hakimi’s monthly fixed expenses and variable expenses.

Monthly Expenses RM
Car instalment 500
Toll payments 180
Petrol expenses 450
Groceries 300
House rental 600
Home utilities 240
Personal care expenses 200
Allowance for parents 350

Prepare a financial plan based on the given information. Hence, determine status of the financial plan.

Income and Expenditure Financial Plan (RM)

Net income
(a) Net salary
(b) Passive income
Total monthly income
Fixed monthly saving
Savings for emergency fund.
Income balance
Monthly fixed expenses
(a)
(b)
(c)
Total monthly fixed expenses
Monthly variable expenses
(a)
(b)
(c)
Total monthly variable expenses
Surplus of income
 Exercise

(1) Madam Lim receives an active income of RM3200 and a passive income RM400 per month. The monthly
fixed expenses and variable expenses are RM1900 and RM1200 respectively.

(a) Calculate Madam Lim’s monthly cash flow. Explain your answer.

(b) If Madam Lim’s does not receive any passive income and the total expenses increase by 25%, explain the
effect on her cash flow.

(2) Xu Ling receives an active income of RM2500 and a passive income of RM500 per month. The monthly
fixed expenses and variable expenses are RM1200 and RM1350 respectively.

(a) Calculate Xu Ling’s monthly cash flow. Explain your answer.

(b) If Xu Ling does not receive any passive income and the total expenses increases by 10%, explain the effect
on her cash flow.