Jackson Yin and Angeline Yin are a loving couple married happily for more than five years. They have one child, Denise Yin, aged 3. Jackson works as a Business Services Manager at a private hospital, while Angeline is an English teacher at an international school in Penang. Jackson's gross salary is RM120,000 per annum or net RM89,289 (after tax and EPF deductions), and Angeline's gross salary is RM65,000 or net RM56,685 (after tax and EPF deductions). Jackson and Angeline were schoolmates and college mates. Being the same age, 35 years old, and from the same educational background, they share similar interests and hobbies. Both of them like shopping and travelling. Once every half-year, they will travel overseas or locally for a holiday. They also love eating out at fancy restaurants. They live in an apartment which they bought five years ago at RM500,000. They paid a down payment of RM50,000 and obtained a housing loan for 35 years. The monthly loan repayment is RM 2,060.52 at an interest rate of 4.25% per annum. Both own a car each, purchased with car loans from local banks at the interest rate of 4% per annum flat. Total car loans taken are RM 162,000 to be repaid over nine years. The monthly car instalment repayment is RM2,040. They usually use credit cards for shopping and keep their balances high, more than RM 20,000 at all times and repay only 10% of the outstanding amount every end of the month.

a) As you can see in the cash flow statement, the surplus amount is very little. At RM8 per annum, this little surplus will not be able to fund the financial goals and objectives of the couple, such as future children's education fund and retirement fund. As a financial planner, how can you help this couple improve their cash flow management? Suggest to this couple what can they do to have better cash flow management. Construct a new cash flow statement based on your suggestions and reccomendations. In recommending changes, you must keep in mind some basic principles: 1. The couple's lifestyle needs to be maintained as original as possible. 2. Any reshuffling of assets, including paying off debts or loans, must leave enough liquid assets that cater to the emergency buffer fund's 3-6 months emergency buffer fund. 3. Repayment of loans must consider what the couple wants to do with their liquid assets like fixed deposits and saving account balance in the near future. (20 marks)

The following is their yearly statement of income and expenses: Income Jackson's salary (after tax and EPF) Angeline's salary (after tax and EPF) Interest (2% on savings account) Interest deposits) (4% on fixed TOTAL RM89,289 RM56,685 RM240 RM4,800 Home upkeep Cars instalments Cars maintenance Life insurance Eating out Credit card Groceries Travelling Utilities Housing loan repayments Miscellaneous Expenses RM151,014 TOTAL Surplus RM2,350 RM24,480 RM4,800 RM3,000 RM12,000 RM21,600 RM9,600 RM22,000 RM4,850 RM24,726 RM21,600 EMI51,006 RM8 The following is the balance sheet of the couple: Jackson 6,000 80,000 6.500 0 1.200 Item 1. Liquid assets Cash balance Cash deposits Stocks Tax balance - LHDN Life insurance (cash values) 2. Non-Liquid assets EPF Apartment Collectibles Cars TOTAL ASSETS 3. Liabilities Mortgages Car loans Credit card balances TOTAL LIABILITIES NET WORTH 180,000 650,000 3,000 65,000 991,700 418,856 73,440 18,000 510,296 481,404 Angeline 6,000 40,000 0 0 800 100,000 0 2,000 65,000 213,800 73,440 5,000 78,440 135,360 Total 12,000 120,000 6,500 0 2,000 280,000 650,000 5,000 130,000 1,205,500 418,856 146,880 23,000 588,736 616,764 The following is their yearly statement of income and expenses: Income Jackson's salary (after tax and EPF) Angeline's salary (after tax and EPF) Interest (2% on savings account) Interest deposits) (4% on fixed TOTAL RM89,289 RM56,685 RM240 RM4,800 Home upkeep Cars instalments Cars maintenance Life insurance Eating out Credit card Groceries Travelling Utilities Housing loan repayments Miscellaneous Expenses RM151,014 TOTAL Surplus RM2,350 RM24,480 RM4,800 RM3,000 RM12,000 RM21,600 RM9,600 RM22,000 RM4,850 RM24,726 RM21,600 EMI51,006 RM8 The following is the balance sheet of the couple: Jackson 6,000 80,000 6.500 0 1.200 Item 1. Liquid assets Cash balance Cash deposits Stocks Tax balance - LHDN Life insurance (cash values) 2. Non-Liquid assets EPF Apartment Collectibles Cars TOTAL ASSETS 3. Liabilities Mortgages Car loans Credit card balances TOTAL LIABILITIES NET WORTH 180,000 650,000 3,000 65,000 991,700 418,856 73,440 18,000 510,296 481,404 Angeline 6,000 40,000 0 0 800 100,000 0 2,000 65,000 213,800 73,440 5,000 78,440 135,360 Total 12,000 120,000 6,500 0 2,000 280,000 650,000 5,000 130,000 1,205,500 418,856 146,880 23,000 588,736 616,764