PERSONAL FINANCE ACTIVITY BeforePandemic During Pandemic 1. How much is your weekly allowance? 2. Write down all items you spend. 3. Ts your allowance enough 1 cover the sum in (2)? 4. If the answer in (8) is YE do with the money left? If your answer is NO, where do you get additional money? . what do youeR COPY CEC ae POAT Personal Finance The process in which individuals — or _ families determine their resources and uses of their funds, including the excess. Personal financial planning is the process of managing one's finances to achieve personal economic satisfaction.FINANCIAL CYCLE OF AN AVERAGE PERSON Consolidation Phase Accumulation Phase Spending oa Gifting Phase FINANCIAL CYCLE OF AN AVERAGE PERSON ACCUMULATION PHASE CONSOLIDATION PHASE. © Willing to take higher risks. = Spend higher amounts of = Have least liabilities and have the needed assets of a normal money. household. = Willing to take debt and increase S)Vake on qnoderatesimesinent liabilities risk, * Keep on collecting assets, even if * Preparing for future retirement. it means taking in loans.2) 3) 4) FINANCIA| E OF AN AVERA\ RSON SPENDING PHASE GIFTING PHASE Mostly retired. Main source of = Giving gifts and providing income are pensions, insurance, support to family, friends, investments. charities, etc. Capital is most conserved ADVANTAGES OF FINANCIAL PLANNING It enhances the effectiveness in outsourcing, allocating, and safeguarding the financial resources of individuals. It helps individuals to be more prudent in using more credits than what is needed. It improves personal relationship with people as a result of a well planned and effectively communicated financial positions. It creates a feeling of independence and freedom from financial worries as everything is in place even before expenses come in. It provides a sense of financial security that everything that might happen in the future has already been taken care of.FINANCIAL LITERACY The ability to manage your financial matters mE ae nt, effective and responsible manner. Knowledge about money, inflation, interest, value, prices, future plans, protection for oneself, family and loved ones. Includes part of knowing where you want to be financially. Target and goal setting, FINANCIAL LITERACY Living and maintaining your lifestyle. Ability to make sound financial choices for further gains and to be ready for any sudden unexpected events. Financial literacy is about knowing how to do personal finance well. Knowing how to grow your wealth and DiesFINANCIAL LITERACY age your credit at all times. a skill to be used your whole life. If there is something you do not understand, always ASK. There fonNome miraseneonereninany who still have low savings and eventually become bankrupt. FINANCIAL PLANNING PROCESS 5. Implement ica Cec Peta t. Create a ETiernrCerr ET1, Determine the financial situation Identify your financial position. Just like corporations, you can create your personalized financial statement to. see the true picture of your financial strength, weaknesses, liquidity, and solvency. 2. Develop personal goals Developing financial goals directs a financial plan. This is the ve of meeting certain financial requirements. Setting multiple goals is not bad at all. Goals can be short term or long term.3. Identiiy and evaluate possible courses of action Sticking to your course of action is good but having an alternative course of action is. even better, A financial plan is not bound to be permanent; it should somehow display flexibility depending on the current siftiation. Your life situation, personal values, and the present economic. situation should be considered before doing any alternative or changing your financial plan. 4, Create a financial plan Indicate the details on how you can accomplish your financial goal. You may want to review your” personal expenses and choose which expenses you can cul to increase savings. Tf cutting expenses is not possibl of other ways to increase your income to meet your objective.5. Implement the financial plan A financial plan is easy to create. The hardest part of this isthe implementation phase. This phase requires discipline and perseverance. You may want to seek assistance from professionals such as accountants, — financial planning, investment advisors, stockbrokers, and lawyers. 6. Monitor and re-evaluate A financial plan is a dynamic process that does not end up on. implementation. It needs regular monitoring and re-evaluation for financial decisions.© a) Financial Position (b) Adequate Protection aC MALE) Oa tire @ Orme Financial 1 Goals aL) = (d) Investment and Accun _ (e) Retirement Planning @& =) Estate Planning @ Financial Position * Developing a personal financial position helps individuals determine their financial =! status, =Net worth - the difference between an individual's personal assets and liabilities. ufInsurance =Moncy set aside and other profitable investments may not be enough to support any unforeseen events. "Insurance ~ protection against possible 1 losses. It brings peace of mind against 4 any fortuitous events Insurance * Property insurance * Vehicle Insurance "Health Insurance = Disability Insurance * Life Insurance®The financial position may be TAX PLANNING planned in such a way that any accruing tax to an individual is minimized. INVESTMENT PLANNING "The word investment _ has different meanings to different people. =Investment planning is a plan on how to finance a project./ RETIREMENT PLANNING =Retirement planning is the process of determining how much it k costs to live — at retirement. This affects \. : the present and future se Ss standards of living. "Estate represents the assets of a deceased person after all liabilities and taxes are deducted. "At the time of death, the estate ESTATE Sccording tothe hv al desires of PLANNING the decedent. "Estate planning is the process of developing a plan to administer and distribute the assets in manner consistent with the d and needs of the benefic the deceased person .ESTATE PLANNING ESTATE PLANNING * Will - Legal document showing how the estate of the deceased person should be distributed. It indicates the executor to facilitate the transfer of the estate. "Simple Will -— states the specific assets to be distributed to a particular person ® Holographic will = handwritten and signed by the testator. =Testate Succession - decedent dies with a will. =Intestate Succession - decedent dies without a will. In this case, the estate is distributed according to the law.