FINANCIAL PLANNING

Group 5:
Afisyah Maudini Batari – 1706017546
Annisa Rizki Primandini – 1706077330
Indira Alya Fida – 1706012223
Ryan Eki Putra – 1706011441

PROGRAM STUDI ADMINISTRASI ASURANSI DAN AKTUARIA

PROGRAM PENDIDIKAN VOKASI
UNIVERSITAS INDONESIA
2019
 PREFACE

With all the praise and thanks God the Almighty, who has given us love and mercy so
that a paper entitled “Financial Planning“ can we finish well. The paper is structured to meet one
of the tasks of the final exam.

On this occasion, we would like to thank profusely to all those who have helped us in
completing the writing of this paper. To Rietsi Arvitricia S.E., M.M , Althaf Rafiq Tibyan S.Sos.,
MBA. , and Andi Irawan as lecturer in this final exam. And also to our friends who have
contributed their ideas and motivation for writing this paper.

We are fully aware that the many flaws in the writing of this paper. In terms of material,
technical, and presentation material. Therefore, we expect criticism and constructive suggestions
to further refine the writing of this paper. Finally, we hope that writing of this paper can be
useful for readers.

Depok, December 16, 2019

The Writer

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 Table of Contents

PREFACE...............................................................................................................................i
CHAPTER I...........................................................................................................................1
PRELIMINARY.....................................................................................................................1
1.1. Background..........................................................................................................................1
1.2. The Formulation of Problem................................................................................................1
1.3. The Objectives......................................................................................................................2
CHAPTER II..........................................................................................................................3
CONTENTS............................................................................................................................3
2.1. Mr. Harsono Financial Health.............................................................................................3
2.1.1 Basic Liquidity Ratio.................................................................................................................................6
2.1.2 Liquid Assets to Net...................................................................................................................................6
2.1.3 Saving Ratio................................................................................................................................................7
2.1.4 Debt to Assets Ratio...................................................................................................................................7
2.1.5 Debt Service Ratio......................................................................................................................................8
2.1.6 Non Mortgage Debt....................................................................................................................................8
2.1.7 Net Investment Assets................................................................................................................................9
2.1.8 Solvency Ratio..........................................................................................................................................10
2.2. Education Fund Planning For Private University.............................................................10
2.3. Life Insurance Needs for Mr. Harsono’s...........................................................................11
2.4. Planning for Mr. and Mrs. Harsono’s Hajj Trip Fund.....................................................12
CHAPTER III.......................................................................................................................13
FINAL..................................................................................................................................13
3.1 Conclusion..........................................................................................................................13

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 CHAPTER I

PRELIMINARY

1.1. Background
Financial planning examines your goals and helps you prioritize, save and invest
for you. We'll detail how to create a financial plan, as well as where to find affordable
help. Financial planning might sound like something only the very rich can afford. But
you don’t need to be wealthy to reap the benefits of financial planning. And these days,
financial planning services are more accessible and increasingly affordable.

Financial planning creates an ongoing process that will reduce your stress about
money or support your current needs. If you work with a financial advisor, you’ll be
nudged to answer questions about your income spending and goals. The advisor will help
determine how much money you’ll need to reach those goals then guide you through the
steps you need to take to get there. Financial advisors also typically help you choose
investments and many manage your investments for you.

Financial planning is important because it ensures you’re not just working for

your money, but that your money is also working for you. Planning puts a roadmap to
your finances, maximizing each dollar no matter how many you have.

1.2. The Formulation of Problem

 Analyze Mr. Harsono Financial Health
 Mr. Harsono and wife are planning the education for their children at a private
university in Indonesia
 Life Insurance needs for Mr. Harsono
 Planning Mr. Harsono goes to Mecca

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1.3. The Objectives

This paper was created to help Mr. Harsono's financial planning, specifically to
analyze financial health and the things that Mr. Harsono's family needs.

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 CHAPTER II

CONTENTS

2.1. Mr. Harsono Financial Health

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 2.1.1 Basic Liquidity Ratio
Liquidity describes the ability of an asset to be converted quickly and easily into
cash. The liquidity ratio indicates the number of months, if a household is able to
sustainably meet its expenditures through financing cash or cash equivalents after the
household suffered a loss or lose overall source of revenue.

By comparing the amount of revenue and expenditure, we obtain the following

calculation formula:

Cash∨cash equivalent
The Liquidity Ratio =
Monthly expenses

47.000 .000
=
23.675 .000

=2

The calculation of the liquidity ratio This indicates that Mr. Harsono’s debt
liquidity ratio isn’t in a good term. Liquid assets that Mr. Harsono currently owns
could only support his expenses for 2 months.

2.1.2 Liquid Assets to Net

This ratio shows indication of how much the amount of wealth a person's net worth
in the form of cash or cash equivalents. The ratio of 15% is regarded as a sufficient
comparison.

Assets liquid
The ratio of liquid assets to the net asset value =
Valuenet asset

47.000.000
=
1.239.000 .000

= 0,03794

= 4%

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 Mr. Harsono’s financial liquidity is far below the normal number, this needs to be
paid attention to since liquid assets have a huge part when handling emergency
situations.

2.1.3 Saving Ratio

The saving ratio is an indicator that states what percentage of the gross revenue that
is set aside for the use / consumption of the future (in the form of deposits / savings).
An individual or a household considered healthy financially if they have ratios of 10%
or more. For the calculation, we must use the total value of cash inflows as the
denominator.

Saving
The Saving Ratio =
Grossincome

6.000 .000
=
457.000 .000
= 0,013129
= 1%

Mr. Harsono’s saving ratio is below the minimum number. In case, Mr. Harsono’s
savings aren’t enough compared to his income every year. This can cause a long-term
problem for Mr. Harsono’s financial health.

2.1.4 Debt to Assets Ratio

The following ratio is a barometer measuring more broadly against the financial
liquidity of an individual or household. In particular, this ratio can be used to measure
the ability.

Debt Total
The ratio of debt to assets =
Assets Total

700.000 .000
=
1.939.000 .000

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 = 0,36101083

= 36%

Mr. Harsono’s debt to asset ratio is in a good number. In this case, Mr. Harsono’s
debt is still considered payable due to how much assets he owns.

2.1.5 Debt Service Ratio

This ratio compares the total annual payment of the loan with the total revenue a
year. This ratio shows how much the amount of income needed in a year to pay total
annual debt. The ratio of 35% or less, indicates sufficiency of funds for the payment of
the debt, while the ratio of 45% or more is judged that the portion of the annual debt
payments are too large.

Total Annual Loan Payments

The ratio of debt repayment ability =
Total Annual Income

223.800 .000
=
457.000 .000

= 0,489715

= 49%

Mr. Harsono debt ratio is over the normal scale, in this case if it continues as it is
Mr. Harsono and familt won’t be able to pay for their debt.

2.1.6 Non Mortgage Debt

Just as debt service ratio, This ratio compares the total annual income of the
payment of the total loan payment a year outside mortgage. Level ratio of 15% or less
considered still in a reasonable threshold, while the ratio of 20% is judged that the
position non-mortgage too high.

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 The ratio of non-mortgage debt repayment ability =

total annual non−mortgage loan payments

Total Annual Income

29.000 .000
=
457.000 .000
= 0,063457
= 6%
If the ratio is less than 15% it is indicated to be within reasonable limits, if the
ratio is more than 20%, it is too high. Thus, it is concluded that Mr. Hartono’s non-
mortgage ratio isn’t at risk.

2.1.7 Net Investment Assets

This ratio compares the value of assets for investment with a total net worth. As
consideration, we can include cash and cash equivalents into the category of
investment assets by the consideration that the cash and cash equivalents may be used
for purposes other than the financing of investments other functions as the financial
reserve (emergency fund). This ratio is very helpful to indicate how well an individual
in doubling the total capital. In general, an individual expected to have a net asset
value ratio of investment to net asset value of 50% or more and this percentage should
be growing as we approach the time of retirement.

Total Assets Investment

The ratio of the net value of the investment assets net worth =
Net Asset Value

575.000 .000
=
1.239.000 .000

= 0,464083

= 46%

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 Since investment is crucial for future financial health, this number is still below
the minimum number considering pension fund is Mr. Hartono’s second priority.

2.1.8 Solvency Ratio

By the time a person has total liabilities exceeding total assets, then technically he
has gone bankrupt, or in other words the value of negative net wealth. The solvency
ratio shows the percentage, the level of the possibility of bankruptcy a person.

total valueof net asset

The Solvency Ratio =
Assets Total

1.239.000 .000
=
1.939.000 .000

= 0,638989

= 64%

Mr. Harsono has 64% of solvency ratio which means he is still able to survive
despite a decline in the value of assets by 64%

2.2. Education Fund Planning For Private University

Educational planning is the activity that allows the public authorities to orient
educational development and identify priority interventions. Educational planning has
undergone major transformation. It has become more participatory, more flexible, less
technocratic, and more diverse. It has gone beyond what its main focus was for a long
time planning infrastructures, increasing access, and increased efficiency to become more
strategic and addressing a variety of key issues of the educational system, such as
quality, inequality, and factors influencing demand for schooling.

Educational planning can be defined as the process of setting out in advance,

strategies, policies, procedures, programmes and standards through which an educational

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 objective (or set of objectives) can be achieved. Educational planning is a detailed and
systematic process. It just does not happen by chance. It is goal-oriented that it is directed
at achieving a set educational objectives.
Since education for the children is the number one priority for Mr. Harsono, it is
highly suggested for Mr. Harsono to start preparing education fun for both of his
children. Mr. Harsono has planned for his children to enroll in one of private universities
in Indonesia.

We have made an estimation for both of Mr. Harsono’s children education fund
plan. The amount of education fund for Doni Harsono is IDR 483.085.351, therefore the
estimated monthly premium rates must be paid is around Rp 2.529.169. Besides, the
amount of education fund for Liana Harsono is IDR 507.239.619 with the estimated
monthly premium rates must be paid is around IDR 2.386.383. In total, the estimated
monthly premium rates must be paid by Mr. Harsono for his children’s education fund
plan is around IDR 4.915.553.

The most suitable education insurance plan for Mr. Harsono’s children would be
"Manulife Education Protection" from Manulife Insurance along with an additional plan
of Unit-link for investment with the amount of protection is up to 170% of paid
premiums (100% of paid premiums when the child reaches the age of 18). Therefore,
Doni and Liana Harsono’s education fund for college would be protected at all cost.

2.3. Life Insurance Needs for Mr. Harsono’s

Life insurance is Mr. Harsono second priority, it is to protect his family financially
if one day Mr. Harsono passes away. Based on the calculation we have done on the excel
spreadsheet, the amount of life insurance coverage Mr. Harsono would need is as much
as IDR 5.850.492.178.

One life insurance product that we would recommend Mr. Harsono is “Manulife
Value Protector Absolute” by Manulife Insurance. This insurance plan has coverage as
high as 150 times of paid premiums. Not only that the insurance plan will protect Mr.

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 Harsono’s financial risks, but it is also going to help boost Mr. Harsono’s income by
allocating some of his paid premium rates to investment. Mr. Harsono is also allowed to
freely manage how much money he would like to put as investment.

There are 3 benefits from Manulife Value Protector Absolute:

 Complete and maximum protection,

 Opportunity to Expand Coverage Benefits,
 Flexibility in investing.

2.4. Planning for Mr. and Mrs. Harsono’s Hajj Trip Fund
Hajj pilgrimage is a unique experience and is given high importance in Islam.
Before we go on Hajj trip, t he preparations for the trip can take a while, therefore it is a
good idea to plan well in advance how you plan to travel, who you will be traveling with
and where you plan to stay.

First of all, make sure you check with the necessary authorities on the regulations
and quotas for performing the Hajj. Generally, Saudi nationals can perform the Hajj once
every five years but there are exceptions such as if you must accompany someone else.

If you are traveling from the UAE, you can check with registered Hajj operators
which are monitored by the General Authority for Islamic Affairs and Endowments.

Mr. and Mrs. Harsono have planned to go on a Hajj trip in 16 years or when Mr.
Harsono reaches the age of 50, with the estimation cost for the trip is IDR 60.000.000 per
person, Mr. Harsono would need to prepare IDR 261.944.951. If Mr. Harsono decided to
save up by investment, the amount of money he would need to prepare monthly would be
IDR 825.026.

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 CHAPTER III

FINAL

3.1 Conclusion
Mr. Harsono is a 34-year-old businessman whose wife, Kania Febriani is a 32-year-
old housewife with 2 children, Doni and Liana Harsono with the age of 5 and 4 years old.
His net worth in total is IDR 1.239.000.000. Looking at his financial condition health,
there are some things to take note of, following:

 Liquidity ratio, liquid asset to net worth ratio, saving ratio, net investment asset to net
worth ratio are still below the safe number, therefore Mr. Harsono’s financial health is
put at risk,
 Debt service ratio is above the safe scale that it threatens Mr. Harsono’s financial
health,
 Debt to asset ratio and solvency ratio are at a good condition, it is best for Mr. Harsono
to maintain these numbers.

Mr. Harsono’s number 1 priority is education fund for his children, therefore it is
very recommended to protect it by purchasing an education insurance. Manulife
Education Protection Plan from Manulife Insurance with the amount of protection is up
to 170% of paid premiums seems to be the most suitable insurance plan for Mr.
Harsono’s children.

Meanwhile, Mr. Harsono’s second priority is to own a life insurance plan to keep
his family protected financially. Based on Mr. Harsono’s needs, expenses, and income,
the most suitable life insurance plan would be Manulife Value Protector Absolute from
Manulife Insurance with coverage as high as 150 times of paid premiums along with
flexible investment system.

Both Mr. and Mrs. Harsono have planned to have a Hajj Trip in 16 years (when Mr.
Harsono is at the age of 50). If the present value for Hajj Trip costs around IDR
60.000.000 per person, the future value of it would be IDR 304.842.202 with estimation

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 of inflation of 5%. If Mr. Harsono wanted to save up for this by investment, with
expected return of 6%, the amount of investment value Mr. Harsono would need to
prepare monthly is IDR 377.954.

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