SPENDING

It is the act of using money on a final goods or services rendered by a certain store.
Spending happens in our daily living, as we have needs everyday. For instance, we need to buy
food, to keep healthy and build strong body, we need to buy clothes often, to keep us warm, and
we need to buy something we want, as a reward for the things we done. Essentially, spending is
important in our lives as this keep us alive and be able to work for our dreams.

ADVANTAGES OF SPENDING
 It will make people de-stressed
 It will satisfy the needs of people
 It will make people enjoy their lives

DISADVATANGES OF SPENDING
 It will give you financial stress
 It will make you borrowed money from someone
 It will make you to save less money

HOW TO MANAGE YOUR MONEY?

 60% of your income should covered your daily expenses.
 20% of your income should covered your needs.
 20% of your income should covered your savings.

CREDIT
It is generally defined as an agreement between two persons. One who is a lender and
other one is being the borrower. This often happens, when a person is short of budget and is in
need of money. A person may borrow money from a friend, relative, or even from lending
company. However, the borrower must ensure that the bank or lending company is trusted by
many and is legitimate, also they must have a clear agreement regarding the terms and conditions
on the settlement of debt.
People should not be fond of credit, as it may bring them also a financial stress, having
their money go to all payments and not saving for emergency funds. One big advantage of credit,
is to be able to establish something for instance, an appliance, most of the people nowadays use
‘home credit’, this is an efficient strategy of establishing little improvement in the household, as
home credit is 0% interest.

CASE STUDY ( SPENDING AND CREDIT)

 Allen is an accountant in a well-known bank. She earns well on her job. She is single and
the youngest in her family, she doesn’t need to provide for her family because her parents have
enough money to support their daily expenses this is the main reason why Allen has been
addicted to shopping especially the cosmetics products. She has a lot of make-ups and other
cosmetics products; these were all branded. Everytime she receives her salary, she makes sure to
spend sixty percent of it on buying make-ups and the forty percent goes to her clothes and shoes.
One day, on her way to work, an unfortunate accident happens, a car hits her. The finding
of doctor on her condition is to undergo surgery that will cost around 100,000-200,000. She
doesn’t have enough money; she doesn’t have any savings that is why she asked for her parents
to cover the surgery cost and she will pay as soon she gets back to work. After the surgery and a
month of recovering, she able back to work healthy and jolly.

STATEMENT OF THE PROBLEM:

1. Does her spending too much on cosmetics products is bad? Why?
2. Do you think that saving money for emergency funds is important? Why?

COURSE/S OF ACTION:
1. Spending too much on non-essential products is not good, it might give you financial
stress whenever you need budget. On the otherhand, it is good to purchase all the
cosmetics or stuffs you love to as long as you manage your money well. Allen being an
employee, should manage her income well, she should think thrice before she purchased
something, so that a little saving would accumulate every month or every year. Moreover,
it is not a justifiable reason to purchased such luxury items and spend all your income on
it just because your family is financially stable, you need to save also.

2. Saving money for emergency funds is important because it will save you from credit
transaction and financial stress. As an individual who is employed, it is natural to invest
in different kinds of fund because the money you invested accumulates every year, it is
not that bad as your money utilized its purpose in most efficient way of living. Moreover,
you’ll have a money to look for in the future.

SOLUTION AND RECOMMENDATIONS:

1. All employed individuals should be wary on purchasing items, whether it is essential or

non-essential this is to ensure that your money benefits you and your family. Your
income should be managed well, as the 60% goes to the daily expenses, 20% goes to the
needs, 20% goes to the savings, this is an effective way of managing your income as it
will compensate the needs you need to cover to. Also, an employed person should put it
in his mindset that whenever he wants to purchase something, his money is twice or
thrice the price of that product and he needs to wait for 1 week or 1 month before he
purchased it, because sometimes we only want to buy something just because we only
need it for that day only, we can only use it for one day only. It is good to consider
whenever we have to purchase something whether the item can be useful for a short or
long period of time.
2. Investing your money in different kinds of fund is a good idea because it will save you
from future financial problem. Aside from you’’ gain interest every year because of its
compensation, you will face a little temptation on purchasing something as most of the
employed individuals are impulsive buyers because of the saying, “I deserved this”. The
best way to attract positive vibes regarding money is to look for investment that will
enable person to become financially stable, that is why all employed individuals should
evaluate all different kinds of funds, so that they will prioritize the things that is essential
to their daily living.