Lesson 1 Personal Finance SY24-25 PDF

PERSONAL FINANCE  MS. MARY ROSE ESCALA PATINGO PLM e-mail address: [email protected] Personal e-mail address: [email protected] Contact # (CP / Viber): 09151505609 OPENING PRAYER ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of...

PERSONAL FINANCE  MS. MARY ROSE ESCALA PATINGO PLM e-mail address: [email protected] Personal e-mail address: [email protected] Contact # (CP / Viber): 09151505609 OPENING PRAYER ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan NETIQUETTE (INTERNET ETIQUETTE)  PERSONAL FINANCE COURSE DESCRIPTION : This study provides a foundation in the basic principles of financial planning and an introduction to more advanced personal financial planning topics primarily in the areas of investment, insurance, benefits, retirement and estate planning with an emphasis on decision making and development of skills and tools necessary for lifelong personal financial success. UNITS : 3 ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan PLM GRADING SYSTEM ORIENTATION  Attendance Checking  Class Management/ Rules in Virtual Class  Promptness of Submission of Deliverables/ Outputs  Areas of Evaluation  Grading System  Online Interaction / Kumustahan THE PERSONAL FINANCIAL PLANNING  Importance of Financial Planning  Areas of Personal Finance  Steps in the Personal Financial Planning Process  Factors that Influence Personal Financial Planning Decisions  Short-term vs. Long-term Personal Financial Goals What is Personal Finance & Personal Financial Planning?  everything in life that involves money  the process of planning and managing personal financial activities such as income generation, spending, saving and investing  covers managing your money as well as saving and investing  encompasses budgeting, banking, insurance, mortgages, investments, retirement planning, and tax and estate planning  meeting personal financial goals, whether it’s having enough for short-term financial needs, planning for retirement, or saving for your child’s college education Sources: Personal Finance Definition (investopedia.com) Personal Finance - Definition, Overview, Guide to Financial Planning (corporatefinanceinstitute.com) Importance of Personal Financial Planning 1. Ensures that you meet your money needs (Needs vs Wants) 2. Easily manage your income 3. Budgeting, Spending and Saving 4. Personal Finance and Cash Flow 5. Offering Family Security 6. Offers Better Financial Understanding 7. Keeps You Off Unmanageable Debts 8. Growing Your Assets 9. Raising Your Standards of Living Sources: 9 Reasons Why Personal Finance is Important (financialwolves.com) Areas of Personal Finance Sources: Personal Finance - Definition, Overview, Guide to Financial Planning (corporatefinanceinstitute.com)  Areas of Personal Finance PROTECTION INCOME SPENDING  wide range of products  source of cash inflow  all types of expenses an that can be used to that an individual individual incurs related guard against an receives and then to buying goods and unforeseen and adverse uses to support services or anything that event themselves and their is consumable family  Cash or Credit INVESTING  purchase of assets that SAVING are expected to generate a rate of  excess cash that is return, with the hope retained for future that over time the investing or spending individual will receive back more money than they originally invested Sources: Personal Finance - Definition, Overview, Guide to Financial Planning (corporatefinanceinstitute.com) Sources: Kent Thune (2021). Retrieved from 7 Steps of Financial Planning (thebalance.com)  Personal Financial Planning Process STEP 1 - Understanding Your Personal and Financial Circumstances / Situation  Make a list / record of items that relate to finances  Income (Daily, Weekly, Monthly, Yearly)  Savings  Expenses  Debts  Investments Sources: Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com)  Personal Financial Planning Process STEP 2 – Identifying and Selecting Goals  Spend money now or Save for the future?  What is your time horizon?  Do you want to accomplish this goal in five years, 10 years, 20 years, or 30 years?  What is your risk tolerance?  Are you willing to accept a high relative market risk to achieve your investment goals, or will a conservative portfolio be a better option for you? Sources: Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com) NEEDS vs. WANTS  NEEDS vs. WANTS Prioritize which goals are most important.  NEEDS vs. WANTS Source: Financial Planning & Knowledge Centre (2020). Retrieved from https://web.facebook.com/www.fpkc.in/photos/needs-vs-wants-self-realization-time/2624794241065396/?_rdc=1&_rdr  Personal Financial Planning Process STEP 3 – Analyze / Identify Alternative Courses of Action  analyze the current course of action to see if it's moving them toward financial goals  if it's not, need to identify alternative courses of action and know the advantages and disadvantages of each option  Options:  Continue the same course of action  Expand the course of action  Change the current course of action  Take a new goal  Opportunity Costs & Risks Sources: Kent Thune (2021). Retrieved from 7 Steps of Financial Planning (thebalance.com) Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com)  Personal Financial Planning Process STEP 4 – Developing the Financial Planning Recommendations  Selects one or more recommendations that they believe will help meet the goals STEP 5 – Presenting the Financial Planning Recommendations  Presents the recommendations and the thought process behind the recommendations  This helps to make an informed decision about whether the recommendations are a good fit Sources: Kent Thune (2021). Retrieved from 7 Steps of Financial Planning (thebalance.com) Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com)  Personal Financial Planning Process STEP 6 – Implementing the Financial Planning Recommendations  Implementing the plan means putting the plan to work  It takes discipline and desire to put it into action Sources: Kent Thune (2021). Retrieved from 7 Steps of Financial Planning (thebalance.com) Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com)  Personal Financial Planning Process STEP 7 – Monitoring Progress & Updating  Plans evolve and change just like life.  Once the plan is created, it's essentially a piece of history.  Plan needs to be monitored and tweaked from time to time. Think of what can change in your life, such as marriage, the birth of children, career changes, and more.  Think about events or changes beyond your control, such as tax laws, interest rates, inflation, stock market fluctuations, and economic recessions Sources: Kent Thune (2021). Retrieved from 7 Steps of Financial Planning (thebalance.com) Steven Cody Fitzgerald (2016). Personal Financial Planning (Financial Decisions and Goals). Retrieved from Personal Financial Planning - ppt download (slideplayer.com) Source: Ciumara, Tudor. (2014). FACTORS INFLUENCING INDIVIDUAL FINANCIAL DECISIONS: A LITERATURE REVIEW. Retrieved from (PDF) FACTORS INFLUENCING INDIVIDUAL FINANCIAL DECISIONS: A LITERATURE REVIEW (researchgate.net) SHORT TERM vs. LONG TERM FINANCIAL GOALS FINANCIAL PLANNING PROFESSIONALS  personal financial advisor, financial consultant, wealth manager, or personal banker.  professionals can take on the daunting task of organizing finances and choosing wise investments  they also help families protect their assets through appropriate insurance products and estate planning services  help their clients develop short-term and long-term financial goals and develop strategies to accomplish those goals Sources: Financial Planner - Career Overview (accounting.com) Selecting a Qualified Financial Planning Professionals 1. Decide What Part of Your Financial Life You Need Help With 2. Learn About the Different Types of Financial Advisors 3. Choose Which Financial Advisor Services You Want 4. Decide How Much You Can Pay Your Financial Advisor 5. Research Financial Advisors Sources: John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor Selecting a Qualified Financial Planning Professionals 1.Decide What Part of Your Financial Life You Need Help With Remember: The best financial planner is the one who can help you chart a course for all your financial needs Sources: John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor Selecting a Qualified Financial Planning Professionals 2. Learn About the Different Types of Financial Advisors  Fee-Only Financial Advisors  earn money from the fees you pay for their services  Financial Advisors Who Earn Commissions  make money by earning sales commissions  Registered Investment Advisors (RIA)  companies that provide fiduciary financial advice; employ Investment Advisor Representatives (IARs) Sources:  Robo-Advisors John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor Selecting a Qualified Financial Planning Professionals 3. Choose Which Financial Advisor Services You Want  Investment advice  Debt management  Budgeting help  Insurance coverage  Tax planning  Retirement planning  Estate planning  College planning Sources: John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor Selecting a Qualified Financial Planning Professionals 4. Decide How Much You Can Pay Your Financial Advisor  Commission-only advisors  Fee-only and fee-based financial advisors Sources: John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor Selecting a Qualified Financial Planning Professionals 5. Research Financial Advisors  How do you make your money?  What is your approach to financial planning?  What financial planning services do you offer?  What kind of clients do you normally work with?  Do you have any account minimums?  Do you have any conflicts of interest in managing my money?  What information do I need to bring for you to look at when developing my financial plan?  How many times and how often will we meet?  Will you collaborate with my other advisors, like CPAs or attorneys? Sources: John Schmidt (2020). Retrieved from How To Choose A Financial Advisor – Forbes Advisor  Registered Financial Planners Philippines is the premiere professional body of financial planners in the Philippines.  RFP Philippines promotes the value of financial planning and advances the financial planning profession.  RFP upholds global standards in financial planning practice through the promotion and awarding of "RFP® Registered Financial Planner", the mark of excellence in financial planning, to members who meet the Institute's qualification.  RFP applicants must meet two-year relevant experience, complete RFP education program, ascribe to RFP Code of Ethics and pass the RFP examination. FINANCIAL PLANNING TOOLS & TIME VALUE OF MONEY Organizing Financial Information  Evaluating Personal Financial Situation  Time Value of Money ORGANIZING FINANCIAL INFORMATION  Keeping Your Financial Accounts Organized  Tracking Your Live Documents  Organizing The Stuff You Have To Keep / Managing Your Financial Files  Protect your Financial Information Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Keeping Your Financial Accounts Organized  See What You Have  Always read your financial statements  Simply listing out your financial accounts  There are three ways to do: a. the simple spreadsheet or list method b. the software method c. the online method Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Banking  Investments  Checking  Brokerage  Savings  Peer-to-Peer Lending  Certificates of Deposit  Money Market  Debt  Retirement  Credit Cards  Auto Loan  Mortgage  Personal Loans  Student Loans Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Tracking Your Live Documents  Set Up Your Filing System  Organize regular bills and financial statements by the month or by the account (your preference)  When organizing by account, be sure to arrange documents in chronological order within each file so they are easier to find later on Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Tracking Your Live Documents There are two main categories of documents: paper documents and digital documents.  Paper filing:  Birth Certificate, Will, Social Security Card, Power of Attorney, Passport, House Title, Car Title, Contracts  Digital Filing:  Just like your physical lock box, you need a digital lock box to keep your sensitive financial records.  Get a computer (ideally a small laptop) that is dedicated to your financial life  Store it in a locked cabinet or your safe and make sure the data is encrypted (which I’ll discuss below). Install a good antivirus program on it. Then, only use that machine for financial purposes. That way the chances of you getting hacked are much less.  In terms of staying organized, create a folder for each year, with sub folders for categories to keep it clean. Give files descriptive names so if you need to search you can find it. Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Organizing The Stuff You Have To Keep / Managing Your Financial Files  Reconcile And File Receipts 3-step process:  store receipts in an action file or poly envelope labeled “to reconcile”  as your bank and credit card statements come in, mark off each purchase  set aside any receipts that require further action (items you need to return or charge disputes) Any receipts for major purchases should be stapled to the warranty or instruction manual and stored in a permanent file. Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta ORGANIZING FINANCIAL INFORMATION  Protect your Financial Information  Keep your monthly financial statements until you get the annual summary statement  If you have many different accounts, set up one binder per account or brokerage house  Properly Store Your Bank Documents  Take Care Of Any Credit Card Issues Sources: How To Completely Organize Your Finances And Your Money Life (thecollegeinvestor.com) Creel, R. Retrieved from 6 Tips for Organizing Financial Paperwork (smead.com) Budgeting for Your Personality (If Past Budgets Have Failed You) (thecollegeinvestor.com) Ashley (2019). Retrieved from How to Organize and Secure Your Financial Documents | Wealth Meta  HOMEWORK (Individual)  TITLE: MY PERSONAL FINANCIAL GOALS  Follow Personal Financial Planning Process 1. Make a list / record of items that relate to current finances (allowance / income, expenses) 2. List down your Short Term (6mos) & Long Term Financial Goals (1year) 3. Provide alternative courses of actions 4. Identify specific action plan / things to do 5. Timeline of Implementation 6. Monitoring Process 11 Font Size, Arial, Single Space, Min. 2 pages DEADLINE: SEPTEMBER 21, 2024 11:59PM  MS. MARY ROSE ESCALA PATINGO PLM e-mail address: [email protected] Personal e-mail address: [email protected] Contact # (CP / Viber): 09151505609 Thank You and Goodnight! 