Week 15:

Personal Finance

| Mr. Jay M. De Leon

Business Finance Teacher

Business Finance
Accountancy, Business, and Management

1
Learning Competency

Enumerate money management philosophies (ABM_BF12-

IVo-p-26).

2
Learning Objectives

At the end of this lesson, you should be able to

do the following:
● Define personal finance.
● Demonstrate how financial needs, sources,
and goals develop in an individual’s life.
● Develop personal financial goals and
actions.
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Areas of Personal Finance

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 Areas of Personal Finance

● Income is the starting

point of personal finance
● a primary need in
personal finance Earning/Income
● refers to an individual’s
cash inflow
● used to cover expenses

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 Areas of Personal Finance

Earning

● Salary & Wages

● Allowances
● Bonuses
● Incentives
● Pension
● Other income

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Areas of Personal Finance

● a cash outflow
● the act of using money to
pay for products and
services
● Unavoidable, as humans
have basic needs to live
Spending and survive
● Live within your means.

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 Areas of Personal Finance

● any cash left from

income after spending
● the money set aside for Saving
future use

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 Areas of Personal Finance

Saving
Stored in deposit
instruments such as
● saving account
● checking account
● safe boxes
● vaults

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Areas of Personal Finance

using a portion of your

savings to buy financial
Investing instruments to earn future
income

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 Areas of Personal Finance

Investing

● stocks
● bonds
● mutual funds unit
● investment trust funds
● real estate

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 Areas of Personal Finance

● needed as a hedge
against financial losses
● include life and non-life Protection
(property, fire, car)
insurances

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 Check Your Progress

When managing finances, can an individual do without one

1 of the areas of personal finance? Why or why not?

Answer area

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Five Stages of an Individual’s Life

Teenage Starting a Retirement

Family
13-17 years 26-45 years 65 years and
old old above

1 2 3 4 5

Young Planning to
Adulthood Retire
18-25 years 46-64 years
old old

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 Five Stages of an Individual’s Life

Teenage Years
● Expenses: school, hobbies, interests
● Source of funds: financial support or
allowance
● Focus of financial management: to
develop healthy spending and saving
habit

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Five Stages of an Individual’s Life

Young Adulthood
● Expenses: basic necessities and
investments
● Source of funds: allowance,
business, salary
● Focus of financial management: to
gain financial independence

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 Five Stages of an Individual’s Life

Starting a Family
● Expenses: family needs, emergency
funds, leisure activities
● Source of funds: salary, business
investments
● Focus of financial management: to
meet family needs

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Five Stages of an Individual’s Life

Planning to Retire
● Expenses: less on family needs, more
on self-care and health
● Source of funds: salary, business
investments
● Focus of financial management: to
spend surplus funds wisely

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 Five Stages of an Individual’s Life

Retirement
● Expenses: basic necessities,
medicines, health, emergency
● Source of funds: business
investments, social services
● Focus of financial management: to
maintain financial independence

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 Computing an Individual’s Net Worth

Closer L
o ok

Compute the net worth of Juan Dela Cruz to evaluate his

personal finances. Use the formula:
Net worth = Total Assets – Total Liabilities

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 Example

Closer L
o ok

Juan Dela Cruz is an Architect employed in company ABC.

Throughout his career he has acquired an automobile with a
market value of ₱200,000.00. In order to finance his
automobile, he availed a loan from XYZ bank. His current
outstanding balance from the bank is ₱20,000.00. His savings
account has a ₱10,500.00 balance, and he expects to receive
₱30,000.00 at the end of the month from his salary.
Compute his net worth at the end of the month.

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 Example

Closer L
o ok

Step 1: List down all the assets. Then, add them up.
Cash on hand: salary ₱30,000.00
Cash in bank: savings 10,500.00
Automobile: 200,000.00
Total assets ₱240,500.00

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 Example

Closer L
o ok

Step 2: List down all the current bills to pay or liabilities.

Then, add them up.
Loan: ₱20,000.00
Total liabilities: ₱20,000.00

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 Example

Closer L
o ok

Step 3: Write the working equation.

Net Worth = Total assets – Total liabilities

Step 4: Substitute the given values.

Net worth = ₱240,500.00 – ₱20,000.00

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 Example

Closer L
o ok

Step 5: Find the answer.

Net worth is ₱220,500.00.

Juan Dela Cruz acquired more assets than liabilities. It means

that Juan's financial resources are sufficient to pay for his loan,
and he can allocate some of his money for investment.

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Keep in Mind

● Personal finance deals with managing an individual's money or

budgeting the family's fund by making the right financial decisions.
● The areas of personal finance focuses on the financial activities that
a person go through at every stage of life. Each stage should be
planned thoroughly and consistently.

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Keep in Mind

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Keep in Mind

Teenage Young Starting a Planning to

Retirement
years adulthood family retire

Financial Allowance Allowance Employment, Employment, Business,

Sources and financial employment, business, business, investments,
support business investments investments social
services

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Keep in Mind

Teenage Young Starting a Planning to

Retirement
years adulthood family retire

Financial To learn basic To gain To provide To spend the To maintain

goals management financial for the surplus funds financial
and develop independence needs of wisely independence
healthy family
spending members
habits

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Photo Credit

● Slide 1: Analysis by Pexels is free to use under the Pixabay License via Pixabay.

● Slide 3: Books, by Pexels is free to use under the Pixabay License via Pixabay.

● Slide 4: Boy, by OpenClipart-Vectors is free to use under the Pixabay License via Pixabay.

● Slide 5: Worried, by Clker-Free-Vector-Images is free to use under the Pixabay License via Pixabay.

● Slide 6: Profit by Mohamed Hassan is free to use under the Pixabay License via Pixabay.

● Slide 25-29: Asian man lifespan cycle from infant age to old, by upklyak is free to use under the
Freepik license via Freepik.

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Bibliography

Bajtelsmit, Vickie L. Personal Finance (2nd ed). Fort Collins, Colorado: John Wiley & Sons,Inc., 2019.

Garman, E. Thomas and Raymond Forgue. Personal Finance (12th ed). USA: Cengage Learning, 2015.

King, Jane and Mary Carey. Personal Finance (2nd ed). UK: OXFORD University Press, 2017.

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