Lesson 7.
1: Personal Finance
🔹 Introduction
● Learning personal finance early helps develop budgeting and spending discipline.
● As you grow older and gain more financial responsibilities, knowing how to manage personal funds becomes
essential.
● Personal finance varies across stages in life; understanding its components can help you make better
decisions and avoid running out of resources.
🔹 Learning Objectives
● Define personal finance.
● Understand financial needs, sources, and goals through life stages.
● Set personal financial goals and actions.
🔹 Areas of Personal Finance
1. Earning – Cash inflow from salary, allowance, bonuses, etc.
2. Spending – Cash outflow used for needs and wants.
3. Saving – Money left after spending, reserved for future use.
4. Investing – Using savings to earn additional income through financial instruments.
5. Protection – Using insurance to hedge against financial risks.
🔹 Life Stages and Financial Priorities
Stage Source of Funds Financial Focus
Teenage Years Allowance, family support Learn basic money management
Young Adulthood Salary, side income, business Gain financial independence
Starting a Family Employment, investments Provide for family needs
Planning to Retire Peak income from work/business Save for health and future needs
Retirement Pensions, investments Maintain financial independence, plan inheritance
🔹 Example: Net Worth Computation
Formula: Net Worth = Total Assets - Total Liabilities
● Juan Dela Cruz:
○ Assets: ₱30,000 (salary) + ₱10,500 (bank) + ₱200,000 (car) = ₱240,500
○ Liabilities: ₱20,000 (car loan)
○ Net Worth: ₱220,500
🔹 Key Takeaways
● Personal finance is the management of an individual’s and family’s financial activities.
● Financial goals and resources change with life stages.
● Being aware of your assets, liabilities, and financial priorities is key to wise decision-making.
Lesson 7.2: Personal Financial Planning
🔹 Introduction
● Events like the COVID-19 pandemic highlight the importance of financial preparation.
● Even students must learn to manage their limited resources wisely.
🔹 Learning Objectives
● List steps in financial planning.
● Create a personal financial plan.
● Apply money management philosophies.
🔹 Roadmap to Financial Freedom
● Financial freedom = ability to afford lifestyle, pay debts, and maintain control over money.
● Obstacles (e.g. low income, poor planning) must be identified and overcome.
🔹 Definition and Importance
● Financial Literacy: Basic understanding of money management.
● Personal Financial Planning: The process of setting goals and identifying strategies to acquire, save,
invest, and manage money.
🔹 Steps in Personal Financial Planning
1. Determine current financial status – Know where you stand.
2. Set financial goals – Categorize into short-, medium-, and long-term.
3. Identify financial resources – Income, savings, possible loans.
4. List financial strategies – Realistic and actionable plans.
5. Implement the plan – Apply your strategies in real life.
6. Assess and evaluate – Review and revise regularly.
🔹 Benefits of Financial Planning
● Track flow of funds.
● Understand financial status.
● Maintain organized records.
● Improve financial discipline.
● Achieve financial freedom.
🔹 Money Management Philosophies
1. Knowledge is key.
2. Be responsible.
3. Minimize debts.
4. Live within your means.
5. Invest early.
🔹 Case Study: BSP & Financial Literacy in the Philippines
● Insurance participation rose during pandemic.
● Filipinos improved savings habits.
● BSP promotes digital financial literacy and inclusion.
🔹 Key Takeaways
● Personal financial plans should reflect life goals and resources.
● Planning must be ongoing, adaptable, and realistic.
● Good financial habits early in life lead to better security in the future.
Lesson 7.3: Money Management Practices
🔹 Introduction
● With constant exposure to advertisements and online shopping, strong money management is crucial.
● Even people with limited income can achieve financial stability through discipline and planning.
🔹 Learning Objectives
● Define money management.
● Apply practices in real-life scenarios.
● Recommend sound money practices.
🔹 The Money Management Cycle
1. Budgeting
○ Review income (salary, allowance, savings)
○ Categorize expenses (fixed, discretionary, variable, annual)
○ Set financial goals that are measurable and realistic
2. Spending & Saving
○ Use strategies to reduce unnecessary expenses
○ Allocate savings toward future investments or goals
3. Investing & Protecting
○ Invest excess funds wisely
○ Build emergency funds and use insurance for protection
🔹 Lena’s Example
● Income: ₱25,000/month + ₱20,000 savings
● Expenses: ₱23,000 total (fixed + discretionary)
● Goal: Save ₱4,000/month by reducing discretionary spending
🔹 Recommended Practice: 50-20-30 Rule
● 50% Essentials (rent, groceries, bills)
● 20% Savings/Investments
● 30% Wants (leisure, shopping)
📌 Lena applies the 50-20-30 Rule:
● ₱12,500 for needs, ₱5,000 savings, ₱7,500 for wants
🔹 Emergency Funds
● Should equal at least 6 months of living expenses
● Stored separately from regular savings
● Used for sudden loss of income or emergencies
Lena’s Plan:
● Target: ₱78,000 (6 months x ₱13,000)
● She already has ₱20,000, needs ₱58,000 more.
● Saving ₱5,000/month = achieve goal in about 12 months.
🔹 Tips for Students
1. Start earning early: Leverage skills or part-time work
2. Track your spending: Use apps or journals
3. Create a realistic budget
4. Save consistently: For emergencies, travel, goals
5. Pay debts on time
6. Start investing: Begin with small, verified options
🔹 Key Takeaways
● Effective money management requires planning, discipline, and adaptability.
● Tools like budgeting and emergency funds protect you from financial stress.
● Tailor your practices to your personal situation and stage in life.
