Personal Finance

LYKA C. HINAMPAS
BSBA HR-3D


Assessment 1: Discussion Questions

1.What is financial happiness?
Financial happiness entails far more than just
getting money. The most crucial factor is your level
of contentment. People who are satisfied with their
financial situation are more likely to be in charge
of their money, and this satisfaction flows over
into good sentiments about their general
enjoyment of life. Achieving financial freedom is a
goal for many people. It generally means having
enough savings, investments, and cash on hand to
afford the lifestyle you want for yourself and your
family.
 2. How does economics affect personal financial decisions?

You must be aware of the current stage of the business cycle as

well as where it is likely to go in the coming years. For example,
if the economy begins to slow, it may be a favorable moment to
invest in fixed-income securities since interest rates will almost
surely decrease when the government reduces rates to boost
the economy. We must realize how today's actions will affect us
in the future.
 3. How Inflation Affects Income and
Consumption?

When that happens, your purchasing power or capacity to

buy declines. Inflation might force you to cut out luxuries
and “tighten your belt” to keep up with the rising cost-of-
living. These small increases in expenses can also reduce
your disposable income and erode the value of your savings
over time.
Inflation has several negative effects, including an increase
in the opportunity cost of holding money, uncertainty about
future inflation, which may discourage investment and
savings, and, if inflation is rapid enough, shortages of goods
as consumers begin hoarding in anticipation of future price
increases.
 4. Explain the difference between simple interest and compound interest, and
describe why that difference is critical.

Simple interest is based on the principal amount of a loan or

deposit, while compound interest is based on the principal
amount and the interest that accumulates on it in every period.
Since simple interest is calculated only on the principal amount of
a loan or deposit, it's easier to determine than compound interest
Thank You!