BUSINESS FINANCE

MODULE

Module No.4: Week 4: 2ND Quarter

TOPIC: The Philosophy and Practices in Personal Finance.

Learning Competency (Essential Competencies)

The learners shall be able to illustrate the money management cycle and
Gives examples of sound practices in earning, spending, saving and
investing money
Code: ABM_BF12-IVo-p-26

Objectives

After going through this module, you are expected to:

1. Identify money managment philosophy.
2. Practices in earning, spending, saving and investing money.

Let’s Recall (Review)

1. Give at least 5 Basic Principle of Personal Finance?

2. Explain the Personal Financial Planning Process?

Let’s Understand (Study the Concept)

In this sort of world, you cannot live without cash yet before an individual or
a family unit can productively and successfully deal with their own funds, he or he needs a
comprehension of cash. Envision an existence where trades of where trades of products and
enterprises need to happen however there is no cash to be utilized. It was done in the past
through framework called BARTER. In any case, the present financial framework has gotten
more entangled with more extensive exhibit of products and ventures.

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 Four Major Functions of Money
A. The primary function of money is a Medium of Exchange.
Money is utilized by individuals to encourage the trading of products and ventures.
B. Money is a unit of account
Cash indicates costs paying little heed to where a purchaser and dealer found.
C. Money is a store of value
At the point when individuals save cash for a specific period as opposed to spending
or contributing it.
D. The fourth function of money is as a standard of deferred payment.
This happens when individuals purchase something yet decides to pay it for some
other time.

Financial literacy
Have you heard of the expression? “take care of yourself, because if you do not, no one
else will.”? The statement could be an eye opener to some people, it does not mean, though,
that you are totally today alone in this world.
Financial literacy is a person’s ability to understand finances, as well as understanding of
the risk and potential rewards of financial investments and the types of financial products and
services available to help you achieve your goals” (walker and walker 2013)
Ways on how to become financially literate.
A. Talking (listening) to people who possess financial literacy
You can gain from others' encounters and intelligence.
B. Attending free courses on financial literacy
Exploit money related education classes
C. Online Course
In accordance with free courses, there are free online course too simply be wary
on the sort of data that is being shared and the source.
D. Television shows
There are stations on digital TV that have fragments on close to home fund or
cash the board.
E. Libraries and other sources of literature
Libraries are plentiful with books, diaries and magazines which contain significant
data on how people and family can even more likely deal with their funds.

Planning and Budgeting

Indeed, arranging ang planning are only critical to individual fund as they are to
corporate money. Arranging and planning in close to home fund involve developing a
spending plan and anticipating reserve funds.
5 key exercises for you to have the option to design your accounts accurately and
proficiently and for you to accomplish your monetary objectives and targets too.
1. Analyze your spending habits.
Before you can design your funds and make a financial plan.
For instance: Buying load for a week

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 Php 10.00 per day
Php 10.00 x 7 days= Php 70.00 per week
Php 70.00 x 4 weeks = Php 280.00 per month
Php 280.00 x 12 months = Php 3,360 per year

2. Determine your Net Worth

Your total assets are essentially the distinction between your benefits and liabilities
(obligation/budgetary commitment).
a. List down the assets from the most liquid to the least liquid.
A liquid Asset is an asset that can easily be converted to cash.
b. Pay attention to assets that depreciate and those that appreciate.
c. List down liabilities that are due within one year or less and those that are due in
more than year from present.
d. Insurance policies are assets, but the amount should be based on the cash
surrender value.
Cash Surrender is the amount of cash the owner of the insurance policy would
receive if the policy were canceled today.
3. Create a personal cash flow statement.
A comprehension of one's way of managing money will be useful in the production of
income articulation.
4. Prepare the budget
Use the following steps to build your own budget:
Step 1: Record your income and when you receive it.
Step 2: List all your fixed payments and the dates on which they are due.
Example: tuition fee or water and electricity bill are fixed payments
Step 3: list of your variable monthly expenses.
Example: food and entertainment are variable expenses.
Step 4: this step is for your unexpected expenses.
Example: borrowing money at a higher borrowing rate.
5. Review and revise your budget
A spending works consummately when it is reasonable.

Financial life stages

Each individual experience life stages. In each life stage, there are explicit budgetary needs,
difficulties, and openings. One is current life stage has sway on the budgetary arrangement.
Comprehend those stages will help one in dealing with their accounts.
1. Dependent Life Stage
it is the stage wherein an individual first learns about money because of allowances
received from parents or guardians.
2. Independent Life Stage
it regularly begins when an individual starts working all day and procuring pay is
sufficient to support all their costs.
3. Early Family Stage

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 It is the stage wherein the individual has begun to live all alone.
4. The Empty Nest
This stage is when the children are either in college or on their own.
5. Retirement
At the point when an individual has arrived at full monetary autonomy.

E-search (optional)

Additional resources on the topic may be found on the following links:

https://doingbusinessinthephilippines.com/list-of-banks-in-the-philippines/
https://www.managementstudyguide.com/financial-management.htm
https://www.investopedia.com/terms/i/investment.asp

References
Business Finance – Teaching Guide for Senior High School
By: The commission on Higher Education in collaboration with the Philippine Normal
University
Business Finance by:Arthur S. Cayanan and Daniel Vincent H. Borja

Let’s Apply
TEST I- DIRECTIONS: Write all your answers in your activity notebook
and follow the following instructions.

1. Consider your weekly allowance as your source of income. If you have a part-time
job or other sources of income, you may include that as well.
2. Create a budget for 1 month
3. As much as possible, follow steps outlined previously, in you case as a student,
cell phone expense is an example of a fixed expense. Your daily transportation
expense from your house to school and back may also be considered as a fixed
expense.
4. After 1 month, go back to your budget and see if there us a need for any revision.

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 You may follow the format below:

PERSONAL BUDGET

INCOME

Week 1 Week 2

Allowance

Other income

Expenses

Fixed

Variable

Allowance for
extraordinary and
unexpected expenses

Total expenses

Cash (short)/extra

Let’s Analyze

DIRECTIONS: Write all your answers in your activity notebook and

follow the following instructions.

APPLY IT IN REAL LIFE

You are a financial management accountant. You were welcome to lead a class
for Senior High School understudies. The objective of the class is to show the Basic of
financial literacy. In particular, the point of the class is for the understudies to figure out how
to make an individual spending plan to comprehend the money related apparatuses that are
accessible to them with the goal that they can design their budgetary future.

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As one of the instructors in the workshop, you are to make an introduction of the significant
point viewing money related proficiency as talked about in this module. Your introduction
ought to likewise incorporate a bit by bit manage on the best way to make an individual
spending plan. Your yield will be assessed based on completeness, accuracy, clarity,
organization, relevance, and creativity.

Let’s Try (Evaluation)

DIRECTIONS: Write all your answers in your activity notebook and

follow the following instructions.

READ AND ANSWER

I completed my MBA (Master's Degree in Business Administration) in De La Salle

University in December 2019. Since I was at that point winning somewhat more cash. I just
surrendered to my affection for espresso. While in MBA school, I might want to go through
my ends of the week concentrating in a celebrated bistro. The earth was simply ideal for me-
not very peaceful, not very loud.

As a youthful urban Professional in Manila, I purchased espresso consistently. It was around

Php 200.00 for each enormous (they call it tall) cup. I did that consistently from 2001-2010.
If I recollect it right. I just took a break each Lenten Season penance.

1. Calculate the amount I spent on gourmet espresso for a long time while working in
manila.

2. If I had that cash with me. What could I have finished with that cash?

3. If you had that load of cash, what might you have finished with it?