12

BUSINESS FINANCE
Second Quarter

Week 5 and 6

LEARNING ACTIVITY SHEETS

 BUSINESS FINANCE

Name of Learner: Grade Level:

Section: Score:

LEARNING ACTIVITY SHEET

MONEY MANAGEMENT PHILOSOPHIES

Background Information for Learners

Every person is doing capital budgeting, business or investment in life. As a Senior

High School student, you still rely on your parents or guardian for finances. While you are
still young, it is very important to have enough knowledge of the different ways of managing
resources in the future. As an ABM student, there will be a lot of opportunities that will come
your way. You will, later on, meet a rewarding and fulfilling job or will have your own
business to manage. Wouldn’t it be nice if you contain the awareness of properly managing
your future assets? Through it, you can avoid financial illiteracy and can take effective and
efficient personal financial decisions.
Managing personal finance is when an individual gains an understanding of proper
utilization of funds, efficient planning and controlling financial transactions, budgeting and
proper financial decision-making to meet one’s short term or long term goals. Being
knowledgeable of it, an individual can determine and predict assets based on past and future
performance. Also, he can properly assess the capability of generating future cash flows.
To give an example, the following successful individuals had accurately managed
their personal finances therefore, they were able to increase their net worth and become one
of the most successful people in our time.
Ranking Business Net Worth
1. Henry Sy SM Investment Inc. $ 14.4 B
2. John Gokongwei, Jr. Universal Robina Corp. $ 5.5 B
3. Andrew Tan Alliance Global Group $ 4.5 B
Inc.
4. Lucio Tan Philippine Airlines Inc. $ 4.3 B
5. Enrique Razon Jr. International Container $ 4.1 B
Terminal Services Inc.
 6. George Ty Metropolitan Bank and $4B
Trust Company
7. Aboitiz Family Aboitiz Equity Ventures $ 3.6 B
8. Jaime Zobel de Ayala Ayala Corporation $ 3.5 B
9. David Consunji DMCI Holdings Inc. $ 3.2B
10. Tony Tan Caktiong Jollibee Foods Corp. $ 2.2 B
Source: Forbes.com (Forbes Magazine : Philippine Richest Individuals 2015)

Moreover, the following are the nine (9) money management philosophies in
managing personal finance (Keown 2010).

1. The Basic Protection is Knowledge

The first step to getting your personal finances under control is to have a clear
understanding of where you are now. Determine and list your assets, liabilities and
expenses. Yes, it may be too small now, but it would soon grow when you will later
on have your job or business. You must find a way or method on how to properly
determine your cash inflows and outflows by simply listing down on your notes or
making your balance sheet. Once you understand its importance, you will learn to
appreciate what needs to be done to get there, how much you’ll spend to earn, how
much you’ll need to save and when you will be able to achieve such goals.

2. Nothing Happens without a Plan

Financial planning is not limited to companies alone. Individuals should also practice
financial planning to achieve the set goals and objectives. One must learn to practice
budgeting to properly account one’s resources. In the very basic level, budgeting is
easy. All you have to do is look at what you make, look at what you are spending, and
look at how much to be put away for the rainy season.

3. The Time Value of Money

Individuals must see the importance of investment. One may invest his resources
through debt reduction, bonds, banks, pension plans, active businesses, real estate,
stock market and mutual funds. Do not forget to select the best investment alternative
by determining its face value and future value before deciding which investment
scheme
 is to be utilized. Through time value of money, one can determine how much will be
the return value one should get in entering an investment scheme.

4. Taxes Affect Personal Finance Decisions

Before entering into an investment, learn to analyze first the impact of taxes in it.
Almost 1/3 of the company’s or individual’s income will go to taxes, thus; learn to
compare the returns of your potential investment after tax basis.

5. Stuff Happens, or the Importance of Liquidity

Remember to liquidate your assets (cash and cash equivalents). Liquidating assets
will allow the individual to cover unexpected needs and expenses. Not liquidating
assets will lead the individual to a fund irregularity and chaos.

6. Waste Not, Want Not – Smart Spending Matters/Live below your means
This is the only way to ensure you save and grow your net worth. Most of us spend
beyond our means because we fail to distinguish needs versus wants. There are times
that we are impulsive in buying items that we think are our needs. But the truth is, it
is only our wants, not needs that we spent for. Therefore, one must identify which
goals should be prioritized to avoid unnecessary expenses.

7. Insure your needs

It provides another margin of safety. Most importantly, insurance is not a primarily
vehicle for creating wealth, merely protecting it. One must protect his resources from
event risks including natural calamities by securing insurance. We must accept the
fact that life has always a way of throwing unexpected curves, so it is also an
advantage if an individual ensures his financial health and not be interrupted by the
things that cannot be foreseen. While it is true that no one wants the worst things to
happen, we st ill need to be prepared to handle such and not sacrifice our finances and
assets.

8. Risk and Return Go Hand in Hand

One must have to understand that to gain a higher return, he must face certain risks. A
concrete example of this philosophy is when an individual invests in the stock market,
e.g., Jollibee Foods Corporation. It is very risky to invest now that we are
experiencing a pandemic, but, after this, a high return will take place due to business’
high demand.
 9. Mind Games and Your Money
Now that you already know the different money management philosophies, it is now
time to adopt or practice managing your personal finances. Yes, many of these
strategies entail order and control, but, once you come to a decision, make sure that
you will stick to it. It may be hard to adjust to a new lifestyle to properly managing
your personal finance, but you have to take note that long term financial goals require
short term sacrifices. The secret is to always find a way to discipline yourself in
managing your personal finances to meet your long term objectives in life while still
enjoying life to the fullest without sacrificing all your resources.

Learning Competency
Enumerate money management
philosophies (ABM_BF12-IVo-p-26 Quarter
2 week 3-4)

Exercise 1: “NEEDS versus WANTS”

Directions:
1. Think of at least five (5) items that you had bought recently. Determine if those
are needs or wants by checking the appropriate box provided below and write
2. Analyze your cash outflows.
3. Reflect on your answer.
Item Needs Wants
1.
2.
3.
4.
5.

Reflection:
Exercise 2 . “WHAT TO BUY”
Directions: Make a list of 5 things you want to buy in descending order and answer the
following guide questions below.

1. Why did you choose item number 1 as the most necessary thing to buy? How
about item number 2 ? Item number 3? Item number 4? Item number 5?
2. What personal value does the item gives you?
3. How will the item help you reach a goal in life?
4. Will the item make you feel happy? Why?

Answer:

Exercise 3. “MY WEEKLY BUDGET OF EXPENSES”

Directions: Make a budget of your expenses for one week. After this, compare your budgeted
amount with your total expenses. Is the difference favorable or unfavorabl e? Why?

Day Budgeted Amount Actual Expenses Difference

1

TOTAL

Answer:

7| Note: Practice Personal Hygiene protocols at all times

Exercise 4. “MY BUDGET TOOL”
Directions: Assume that you are already employed or have your own business to manage and
is now earning your own money. Use the budget tool provided below to determine the
monthly inflow and outflow of your cash. What will you do if your total income is more than
or less than your total expense?
Month of:

Sources of Income Amount Gained

Salary ₱

Government
₱
Benefits

Others ₱

TOTAL ₱

Expenses Amount Spent

8| Note: Practice Personal Hygiene protocols at all times

 Housing ₱

Utilities ₱

Health
₱
Expenses

Transportation ₱

Education ₱

Clothing ₱

₱
Others

₱
TOTAL

Now make your budget tool using the formula

Total Income - Total Expense
₱ - ₱ = ₱
Answer:

9| Note: Practice Personal Hygiene protocols at all times