Joerick L . Ramonal Dr.

Elena Orcales
BSBA – Marketing III Personal Finance

Performance Task No. 1a

1. Why is it important to learn about personal finance?

Personal finance is important to learn for our daily life that is why it is taught in schools. It
is relative to our daily decisions in terns of financial stability. Personal finance gives us the
overview of what is money and how are we able to manage, and actions we commit to plan
and control our daily finances. This guide will analyze the most common and important aspects
of individual financial management.

Personal financial skills are important because without them, people usually spend their
entire lives slaving for money, always indebt, never able to catch up and get ahead. This is
bad enough, but the issue goes far deeper. When children watch their parents slaving for
money, always owing more than they get from their hard work, the children usually repeat
that behavior as adults. Because without it, generations of people will most likely continue to
live unfulfilling lives as slaves to money.”

Without personal finance, it possible to live a life of bondage without knowing how to get of
debts or adequately pay for your bills. When seeking financial freedom, personal finance plays
a significant role. Therefore, having the necessary personal finance skills will help you to
ensure all your money is managed well. This will help propel you to a bright financial future.

2. Why is it important to understand personal finance?

In order to increase the financial well-being of individuals within our communities, financial
literacy is a necessity. It will help mold positive financial behaviors and help students work
toward self-sufficiency. Those pleasantly surprised at the myriad of benefits that arise from
being financially literate must also keep in mind that such knowledge is much easier to acquire
through a reputable education program than other means. While good in intention, curriculum
made by individuals without significant financial expertise will often glance over important
detail and leave learners without much valuable knowledge.

When we talk about personal finance, the term is usually used to refer to the financial
management of an individual or a family’s resources. It comprises of how you manage your
money through expenditure, investments and savings, considering various life events and
risks. Personal finance focuses mainly on meeting the individual or a person and caters for
both long and short term financial goals. Whether you have enough money for your essential
monthly bills or you want to plan for your retirement, this is all personal finance. Being
financially literate helps a person to distinguish between financial decisions that will be
beneficial, and that will be detrimental to their financial future.

3. Explain the areas of personal finance?

 Savings: You need to keep money aside as savings to cover any sudden financial need. As
a thumb rule, the fund for your emergency needs should be three to six month of your
expenses.
 Investing: Investing is important to grow money so that you can achieve what you
aspire. While saving is about setting money aside, investing is putting money/purchasing
assets like – stock, bond, mutual funds etc. – in order to make your money grow.
  Financial protection: Now, financial protection through insurance ensures you and your
family are able to sail through during the hard times. the thumb rule is, turn your dreams
into financial goals and set a timeframe around it. Then pick a mutual fund that matches
your investment timeframe. We might weave several dreams in life and create investment
plans to turn those dreams into reality. But unless we protect them with a safety net, the
same can turn into a liability. That safety net is insurance.
  Spending: Spending includes all types of expenses an individual incurs related to buying
goods and services or anything that is consumable. All spending falls into two categories:
cash (paid for with cash on hand) and credit (paid for by borrowing money). The majority of
most people’s income is allocated to spending. Common sources of spending are rent,
mortgage payments, taxes, food, entertainment, travel, credit card payments. The expenses
listed are all reduce the amount of cash an individual has available for saving and investing.
If expenses are greater than income, the individual has a deficit. Managing expenses is just
as important as generating income, and typically people have more control over their
discretionary expenses than their income. Good spending habits are critical for good
personal finance management.
 Income: Income refers to a source of cash inflow that an individual receives and then uses
to support themselves and their family. It is the starting point for our financial planning
process. Common sources of income are: salaries, bonuses, hourly wages, pensions, dividends.
These sources of income all generate cash that an individual can use to either spend, save,
or invest. In this sense, income can be thought of as the first step in our personal finance
roadmap.

4. Which group had to work the hardest to build the education tower? Why?

It is the high school dropouts who are at the bottom of the education tower whose going to
word hardest among the groups in the education tower. That is, they can only use one hand
and the other must be kept behind the back. All communications must be done nonverbally.
Their job is tough for they only seek in their less knowledge and more on efforts for them to
build success in their endeavors. They lack knowledge about building success and they use the
try and error process for them to mix and match what are the things that will suit in their need
to be successful. Their engagement towards getting through success is much difficult and
different because of lack of motivation and trusting their skills and abilities. Most likely, they
are unproductive and stay mainly in their comfort zone.

5. How might a person get the skills for the opportunity to add to the occupational
level and earn higher volume?

It’s a challenging time to be entering the workforce for the first time. The traditional path
of getting a college education or learning a skill, then taking a job and remaining in it for your
entire career, is largely obsolete now. Today, most in the current workforce not only specialize
in certain skills, but also upskill and move jobs throughout their careers. Constant learning to
different skills needed in a certain job is important to follow the trend that is a requirement of
the business world.

People must attend school, get a degree, add skills that is in line to its educational degree
for them to level up their skills. After this, they must attend seminars, workshops for them to
develop their innate skills and become more suitable to the workplace. Its competence to their
jobs and should elevate the skills they perform. Some do educate themselves by enrolling
another course that is a big plus to their employers that would be a factor to upgrade their job
level and increase their earnings.
Joerick L . Ramonal Dr. Elena Orcales
BSBA – Marketing III Personal Finance

Performance Task 2a

1. What are the benefits of time value of money?

The lessons will help immensely in understanding money. It is the most integral component
of knowing how to create wealth and manage debt. The time value of money can work for
you or against you. For example, if you are deciding between buying a new phone for 10,000
pesos, or invest in a stock for example that yields 10% per year. If you buy the phone, you
have just incurred an opportunity cost of 10%. No matter how you slice it, every financial
decision you make have an impact on your quality of life and the ability to enjoy the things
you love. Because of this, one of the most fundamental and cornerstone concept in modern
finance to help us make those decisions is the concept of time value of money. This concept
is so important that it is equally applicable and useful in your personal finance and your
business. As a business student, this concept must be clear as day. Time is money and the
sooner you earn or save that money, the faster you can put it to work for you.

2. Why these benefits are important to you as a student?

The time value of money (TVM) is an important concept to students because a money on
hand today is worth more than a money promised in the future. The money on hand today can
be used to invest and earn interest or capital gains. A money promised in the future is actually
worth less than a money today because of inflation. Provided money can earn interest, this
core principle of finance holds that any amount of money is worth more the sooner it is
received. At the most basic level, the time value of money demonstrates that, all things being
equal, it is better to have money now rather than later. Another important factor in assessing
time value of money is the level of debt you carry. If you have significant, costly debt, it is
more advantageous to get money in hand quickly. The main idea of the time value of money is
that as a business student we are going to become as a young investor, you should start
saving as soon as possible! The sooner you invest, the higher your interest earning potential,
and thus, the more likely your money will grow over time.

3. What do you think are the elements of time value of money? Explain the elements.

There are five variables to consider in every time value of money problem. The letter in
parentheses represents the symbol used in mathematical calculations. Sometimes you will
know four out of the five components, and in that case you will use a formula or financial
calculator to figure out the unknown quantity.

 Periods
Periods are the total number of time phases within the holding time.
 Rate
The rate is the interest or discount commonly expressed as an annual percentage.
 Present Value
The present value represents the amount of a sum of money today.
 Payment
The payment is the amount of money received or paid out equally for each period.
Positive payments are payments received, while negative payments are payments
made.
  Future Value
The future value is a single amount of money that is scheduled to be received or paid
out in the future.

4. Is there a building blocks to achieve financial success? What are they and why?

Financial well-being is characterized by being able to fully meet current and ongoing
financial obligations, by feeling secure in one’s financial future, and by having the financial
freedom to make choices that allow enjoyment of life. The personal factors that comprise
financial capability appear to stem from three interlocking components of youth development
or “building blocks”: executive function, financial habits and norms, and financial knowledge
and decision-making skills. The building blocks are capabilities that support and catalyze the
development of additional skills and capabilities.

Executive function is a set of cognitive processes used to plan for the future, focus
attention, remember information, and juggle multiple tasks successfully. Executive function
helps manage the flow of information in an individual’s day-to-day life and keeps mental
distractions at bay. It encourages the development of personal traits and social/emotional skills
used to achieve financial well-being, such as perseverance, self - regulation, and the ability to
prioritize future gain over current desires. Financial habits and norms are the values,
standards, routine practices, and rules of thumb used to routinely navigate an individual’s day-
to-day financial lives. Financial habits and norms come into play in financial capability because
consumers use them to decide what is desirable, or even possible, as well as to guide day-to-
day behaviors. Financial knowledge and decision-making skills are familiarity with financial
facts and concepts, as well as conscious and intentional decision-making skills. These include
budding versions of skillful money management, financial planning, goal setting, and financial
research.

5. Explain your key to success in personal finance?

Tracking how much money you spend, what you should spend it on, and how much to save
are the basic foundations of budgeting and saving. Mastering these skills keeps you on track
so you can track your money wisely to provide for your family and live prosperously. The first
step to managing your finances is creating a budget. A budget is simply a spending plan that
tells you how much to spend and on what, either within a certain time frame or on an
ongoing basis. First, start simple, write down your monthly expenses. Let’s start with the
basics: my family’s monthly budget. This budget directs where your income should go,
according to your monthly expenses. By making a list of all your expenses for the month, how
much they are, and when they are due.

Now subtract your expenses from your total monthly income. decide if you can afford
extras. Once you have covered the essentials, if you have money left over, it is a smart idea
to take at least half of your leftover income and put it in savings. After you have put money
aside to save, what you have left can be used for other, non-essential expenses – the fun
ones! Just know how much you can spend on them, and stick to it. Once you know how much
money you have to spend on expenses and a few fun extras, you can start to think seriously
about saving. A savings fund is a smart way to make sure you are always able to cover those
unexpected medical expenses, home or vehicle repairs, or to help work toward a larger
financial goal.
6. What are the steps to financial success? Explain the steps.

1. Spend less than you earn.

Sounds simple, but how many people spend more than they make and live beyond their
means. The only way this works is if you earn more and more each year to be able to maintain
your lifestyle, otherwise, it is a formula for disaster.

2. Pay yourself first

The first payment each paycheck should be to yourself; your savings, retirement plan,
investment account etc.  Most people pay their bills first and are happy to save whatever is left
over; the only problem is, there's never anything left over.

3. Ensure big risks

Examine the risks in your life and insure them appropriately.  For example, if you are younger,
your biggest risk is morbidity and therefore, disability insurance should be considered. 

4. Know your numbers

Too many people are disconnected from their finances, beyond paying their bills.  It might be
due to a lack of interest or lack of time or fear of finding out that you're in deep trouble.
Regardless, know where you stand; what you make, spend, your debts, your net worth and
monitor your numbers actively.

5. Understand your money attitudes

Our actions surrounding money, whether we are spenders, savers, avoiders or fear-based,
come from somewhere. It's no accident. Understand that your attitudes determine your
behaviors around money.

6. Invest time and energy discussing your MUSTS

Invest the time to discuss with the stakeholders in your life what is most important to you and
decide on the best way to get there. Without buy in, the chances of success are remote. Share
your values and decide what MUST happen for you to feel satisfied with your financial life.

7. Invest in Stocks if you can live without immediate gratification

During the recession, the media screams about the ills of investing in stocks and that it was a
surefire way of losing all your money. After all, during the recession, stock prices fell
significantly.   For those who are well-diversified and didn't sell at the bottom of the downturn,
it's ok to open your statements now-you survived.

8. Be willing to give up potential return for short-term needs

Rational thinking needs to supplant the euphoria of stock market gains; prudent people do not
gamble with their short-term savings and emergency funds.

9. Protect yourself from the stupidity of others

Everyone has a story; friends, colleagues, the media and your odd Uncle Ned who supposedly
has millions buried somewhere in the piles of forty year old National Geographic magazines in
his basement.  Employ the grain of salt mantra. Allow everyone their story and don't think that
their story is yours to buy into. 

10. Goals are important

The truth is we need goals; a direction in which to aim ourselves forward.  Think about your
goals, this year, five years, ten years and beyond. Invest the time, it's worth it.