DR. FILEMON C.

AGUILAR MEMORIAL COLLEGE

College of Business Administration
Golden Gate Subdivision, Talon 3, Las Piñas City

Course code and Title: FINE 2 / PERSONAL FINANCE

LESSON NUMBER: Module 1

Topic: Overview of a Financial Plan

Instructor: Senen V. Villanueva

Introduction:
Finance plays a vital role in the day-to-day activities of everyday life. Today’s
youth will be required to take more personal responsibility for actively managing their
finances. Finance instruction plays an important role for students to have a working
knowledge of the fundamentals of financial planning.

Everyone, regardless of the career they choose, can benefit from

Finance instruction in their own personal affairs. It’s never too soon, or too late, to
begin, Financial Planning is important whether you’ve just started working or are
thinking seriously about retirement. And it should be a continuing process, so that you
can evaluate your progress, revise your goals, and update your strategies.

Learning Objectives:

After this lesson, the student should be able to:

 Provide personal factors that influence personal financial planning.

 Analyze the process for making personal financial decision.

 Describe the personal financial planning process.

Pre-Assessment:

Instruction: Write your answer in ½ sheet of paper or in a document file.

1. Enumerate 5 importance of Personal Financial Planning.

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Lesson Presentation:

Personal Finance – is the process of planning the spending, financing and

investing so as to optimize your financial situation.
-meaning it is all about managing your personal budget and how to best
invest your money to realize your goals

 Personal Financial Plan - a plan that specifies your financial goals and
describes the spending financing and investing plans that are intended to
achieve those goals.

 Financial Planning - a systematic process that considers important elements

of an individual’s financial affairs in order to fulfill financial goals.

Why is personal financial planning important?

o Enables people to set in place personal objectives and arrange financial means
to satisfy these objective
o Ensures that the suppliers of funds are easily investing in companies which
exercise financial planning.
o Reduces uncertainties with regards to changing market trends which can be
faced easily through enough funds

The Financial Planning Process

1. Determine your current financial situation

 In this first step of the financial planning process, you will determine
your current financial situation with regard to income, savings, living
expenses and debts. Preparing a list of current asset and debt
balances and amounts spent for various items gives you a
foundation for financial planning activities.

2. Develop Financial Goals

Financial Goals – are the results that an individual wants to attain.

Examples include buying a home, building a college fund, an achieving financial
independence.

Financial Planning is important because it helps you identify a range of goals that
you’re working to achieve. It is useful to consider objectives in 3 time frames:
 Short – term goals
- Invest for things you hope to have in a couple of years, like a new car or
new home.

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  Mid-term goals
- Expenses to meet several years in the future, like tuition payments or a
vacation home
 Long-term goals
- Hopes for a comfortable retirement the opportunity to go places and do
things you’ve always wanted, or a chance to provide security for your heirs.

 Periodically analyze your financial values and goals. This involves

identifying how you feel about money and why you feel that way.
The purpose of this analysis is to differentiate needs from your
wants

3. Identify alternative courses of action

 Creativity in decision making is vital to effective choices.

Considering all of the possible alternative will help you make more
effective in satisfying decisions.
- expand the current situation
- change the current situation
- take a new course of action

4. Evaluate alternatives

 There is a need to evaluate possible courses of action, taking into

consideration your life situation, personal values, and current
economic conditions.
 Decision making will be an ongoing part of your personal and
financial situation. Thus, there is a need to consider the lost
opportunities that will result from your decisions.

5. Create and implement a financial action plan

 First develop an action plan. This requires choosing ways to

achieve goals. As you achieve your immediate or short-term goals,
the goals next in priority will come into focus.
 Second, in implementing your financial action plan, a need for
assistance from others might arise. For example, the need for the
services of an insurance agent to purchase property insurance or
the services of an investment broker to purchase stocks, bonds, or
mutual funds.

6. Re-evaluate and revise your plan

 Regularly assess your financial decisions. Changing personal,

social and economic factors may require more frequent
assessments. When life events affect financial needs, this financial
planning process will provide a vehicle for adapting to those
changes. Regularly reviewing this decision-making process will
help make priority adjustments that will bring financial goals on
activities in line with current life situation.
Generalization

Personal financial planning is the process of managing your money to

achieve personal economic satisfaction. This planning process allows one to control
their financial situation. Every person, family, or household has a unique financial
position, and any financial activity therefore must also be carefully planned to meet
specific need and goals.

To achieve these and other goals, people need to identify and set priorities.
Financial and personal satisfaction are the result of an organized process that is
commonly referred to as personal money management or persona financial planning.

 A good way to approach financial goals is by dividing them into three time frames:
short-term (less than two years), intermediate-term (two to five years), and long-term
(more than five years). Goals should be realistic and measurable, and you should
designate definite time frames and specific courses of action.

Application

 Prepare Business and Financial group Investigative Essay for Midterm output

Evaluation

Reinforcement

Instruction :

Online Resource:
http://novella.mhhe.com/sites/0079876543/student_view0/senior_experience-999/your_finances19/financial_planning.html

Investment Management with Personal Finance, 2014-2016 Edition, Lawrence J. Gitman

Personal Finance 2nd edition, Jeff Madura, 2017, Pearson Education