Personal finance.

Over view
What is personal finance?
Where does your money come from?(Management of
incomes)
Where does your money go? (Management of
expenses)
Understanding the importance of having a personal budget
Personal savings(savings account, fixed deposit accounts
etc.)
Personal investments( real estate, shares, bonds, notes,
treasury bills)
Factors considered while investing
spects of money.
3/11/2021 RUTH KAALA
Personal finance refers to how individuals
manage their day to day finances or money and
plan for the future.

The main objective of personal finance is to

achieve financial independence.
Individuals do not need to live on paycheck to
paycheck basis and set their own objectives or
goals.
Therefore individuals need to develop a
spending plan or a budget to achieve this
objective
3/11/2021 RUTH KAALA
INCOME
This is the money received or a portion of earnings received
from committing your efforts into production. Income is the
flow of cash or cash-equivalents received from work (wage
or salary), capital (interest or profit), or land (rent).
Sources of income
-Employment income e.g. salaries, wages.
-Business income e.g. dividends.
- Property income. E.g. rental fees.
-Investment income e.g. financial securities & other long term
investments like commercial buildings.

3/11/2021 RUTH KAALA

Sources of income- cont’d
-Donations/Grants.
-Transfer earnings e.g. school fees, pocket money.
-Gifts e.g. wedding contributions
-Income from relatives and friends.
How to manage income
 Have a goal.What do you want to achieve e.g. in a month, year e.t.c
 Have a personal budget for incomes.
 Broaden your earnings base
 Create an emergency fund.
 Be creative or innovative
 Invest e.g in securities.
 Choose the best saving plan. Save for a purpose.
 Have a good attitude towards money.
 Have financial discipline. e.g. learn to say “NO”

3/11/2021 RUTH KAALA

Personal expense.
These are the outgoings or spendings for individual purposes
of family related spending.
Categories of expenses
Debt payments e.g.loan, and credit card
Education, tuition, day care, books and supplies
Entertainment and recreation i.e. sports, hobbies, concerts
Food i.e. grocery, dinning out
Rent i.e. housing, mortgage
Insurance
Personal i.e. clothing, hair care, gym dressing
Gifts i.e. birth days
Savings i.e. retirement, education, emergency fund
Transportation
Utilities i.e. phone charges, water electricity
3/11/2021 RUTH KAALA
 How to manage expenses
Do the math
Live within your means
Stick to your budget
Avoid impulse buying
Spend on priorities
Buy in bulk
Reduce on gifts
Avoid phantom spending
Have spending goals
Track your spending
Find the best buy
Bargain where necessary
“Too many people spend money they earned to buy things they
don't want to impress people that they don't like”. --Will
3/11/2021 RUTH KAALA
Rogers
Budget. This is a forecasted statement of individuals
expenses and the incomes you expect to receive over
a given period of time.

Why prepare a personal budget

Helps to plan for expenses or manage them
Save for the future
Helps spend wisely
Plan for emergencies
To live within ones means
Helps to reduce family arguments about money
Make your dream come true
Achieve your financial goal
3/11/2021 RUTH KAALA
Savings.
A portion of income not spent on consumption ( income kept
aside to cater for future needs)
How to manage savings
Use a quarter rule
Manage your expenses well
Plan for the income well
Keep watch of phantom money
Make sure it is impossible to access ATM machines
Set your goals
Set up an envelope system
Choose something to save for
Watch your savings grow
“It's not how much money you make, but how much money
you keep, how hard it works for you, and how many
generations you keep it for.” --Robert Kiyosaki
3/11/2021 RUTH KAALA
Debt management
These are borrowings an individual has either from an
individual or from a financial institution. It is mostly
called a loan.
How debt is managed
 Budget
 Negotiate
 Prioritize payments. i.e.pay debts that attract penalties first.
 Pay debts of small amounts first
 Create a monthly payment calendar
 Consolidate your obligations
 Use a credit counselor
 Use it for the purpose
 Do not let your expenses surpass your income
 Spend within your means
 Use your emergency fund to back on.
3/11/2021 RUTH KAALA
Creating wealth or investment management
Any activity done to generate capital gains
Investment avenues/ avenues of investment
 Financial securities i.e.. Bonds, shares, T.Bs, certificate of deposit
 Non financial securities
 Pension funds or mutual funds
 Real assets i.e. real estate, diamond, gold, art and ornaments
 Agriculture i.e. farming, piggery etc.
 Borrow or lend

Considerations for an investment

 Return
 Risk
 Marketability
 Convenience
 Tax shield i.e. initial, continuous and terminal

3/11/2021 RUTH KAALA

What an individual needs to impress when
you need to keep a proper personal finances
Identify your goals
Budget
Conduct a financial review
Debt management
Building wealth
“You can only become truly accomplished at something you love. Don’t
make money your goal. Instead, pursue the things you love doing, and
then do them so well that people can’t take their eyes off you”. --Maya
Angelou

3/11/2021 RUTH KAALA