1. Introduction to Personal Finance.pdf

personal finance

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Introduction to
Personal Finance
Mrs. Katrina Marie M. Miranda, MBA
Instructor, Elec. 1
CHAPTER 1

2. Today's Lesson
Define Personal Finance
Explain the Principles in
Personal Finance
Understand the main areas
of Personal Finance
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3. Why do we have to study personal
finance?

4. What is Finance?
FINANCE itself concerns the flow of money from one place to
another, and your personal finances concern your money and
what you plan to do with is as it flows in and out of your
possession.

5. What is Personal Finance?
Essentially, then, PERSONAL FINANCE is the application
of financial principles to the monetary decisions that you
make either for your individual benefit or for that of your
family.

6. Prioritizing
Assessment
Restraint
Principles of Personal Finance
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Areas of Personal Finance

8. Income
Income refers to a source of cash inflow that an individual
receives and then uses to support themselves and their family.
It is the starting point for our financial planning process.
Common sources of income are:
Salaries
Bonuses
Hourly wages
Pensions
Dividends

9. Spending
Spending includes all types of expenses an individual incurs
related to buying goods and services or anything that is
consumable (i.e., not an investment).

All spending falls into two categories:

cash (paid for with cash on hand) and credit (paid for by
borrowing money). The majority of most people’s income is
allocated to spending.

10. Common sources of Spending

Rent
Mortgage payments
Taxes
Food
Entertainment
Travel
Credit card payments

11. Saving
It refers to excess cash that is retained for future investing or
spending. If there is a surplus between what a person earns as
income and what they spend, the difference can be directed
towards savings or investments. Managing savings is a critical
area of personal finance.
Common forms of savings include:
Physical cash
Savings bank account
Checking bank account
Money market securities

12. Investing
Investing relates to the purchase of assets that are expected to
generate a rate of return, with the hope that over time the
individual will receive back more money than they originally
invested.
Common forms of investing include:
Stocks
Bonds
Mutual funds
Real estate
Private companies

13. Protection
Personal protection refers to a wide range of products that
can be used to guard against an unforeseen and adverse
event.

Common protection products include:
Life insurance
Health insurance
Estate planning

14. Let's Try
Share your Smart Financial Habits that you do in your daily lives
and Explain in the class.

15. You did great.
See you next time!