Personal Finance Management.pdf

Personal Finance Management Training Slides

1. Facilitatedby
Daro
PATRICK

2. TRAINING
OBJECTIVES
Understand of financial literacy. What is it and what does
itencompass?
Understand how to effectively carry out
financialplanning.
Be equipped how to cultivate and maintain a
savingsculture.
Be equipped on importance of investing and different
investmentvehicles.

3. “A Journey of a
thousand miles begins
with a single step”

5. ICEBREAKER!
Have you computed your current net worth?
Have you been paying yourself first?
Can be able to handle an emergency of 200 -
500 USD?

6. What comes to your mind when you
hearthe word financial
literacy?

7. Definition,
FINANCIAL LITERACY IS THE ABILITY TO UNDERSTAND AND
EFFECTIVELY USE VARIOUS FINANCIAL SKILLS, INCLUDING
PERSONAL FINANCIAL MANAGEMENT, BUDGETING AND INVESTING.
POSSESSING THE SKILLS AND KNOWLEDGE ON FINANCIAL MATTERS
TO CONFIDENTLY TAKE EFFECTIVE ACTION THAT BEST FULFILS AN
INDIVIDUALS PERSONAL NEEDS , FAMILY AND THE GLOBAL
COMMUNITY GOALS .

8. Istheprocessofwisely
managing yourpersonal
financessothatyoucan
achieveyourgoalsand
dreams
Financial
Management

9. z
Financialliteracy
Isasetofskillsandknowledge,attitudeandbehaviors
thatallowsindividualstomakeinformedandeffective
decisionsregardingmoneymatters.
Mainpurpose/goal:Toachieveindividualfinancial
wellbeingbychangingfromourcurrentbehaviortothe
desiredbehavior.

10. Currentbehavior
•Lives on a day-to-daybasis/
Hand to mouth.
•Savings not linked to
savingsgoals
•Borrows foremergencies
•Can’t choose the right
investment
Desiredbehavior
•Make a spending plan,
budgets and uses it to
managefinances
•Has a savings plan with clear
goals
•Maintain an emergency
savingsfund
•Choose the rightinvestment

11. Whyis it important to be financially
literate?
One can effectively manage money
Understand credit and debt management
Have money to meet emergencies and for other important
things
You will be able to convince others to lend youmoney
Have general knowledge regarding finances
Developconfidence and attitude that enables one to be sself-
reliance
Enables one to discuss money and financial issues
constructively
Make good financial choices about saving, spending and
managingdebt.

12. Financialplan
A comprehensive picture/road map ofyour current finances,your
financial goals and any strategies you've set to achieve thosegoals.
‘It’s not about choice it’s aboutaction’

13. Basic concepts in financialplanning
Budgeting-the process of creating a plan to spend your money. Balancing your
expenses with your income. This spending plan is called abudget.
Saving -income not spent, or deferred consumption by putting money aside in, for
example, a deposit account,apensionaccount,aninvestmentfund,orascash.
Puttingmoneyaside.
Investing-is the act of distributing resources into something to generate
income or gain profits. Putting money towork.
Debt management-is a way to get your debt under control through financial
planning andbudgeting.
FinancialAccountability-responsibilityforthewaymoneyisusedand
managed/goodstewardship

14. Key steps to draw up a basic financialplan

15. Step 1: Assess your financial
situation
With a clear understanding ofyour current financial
situation, you can decide where you should start from,
and what you need to achieve your financialgoals.
Knowing your net worth is important to assessing
your financial situation.
Start by making a list ofall your assets as well as your
liabilities. Net worth is broadly calculated as your
assets minus yourliabilities.
“Start where you are with what you
have”

16. Step 2: Create abudget
Prioritize your needs and wants and look for any
unnecessary expenses you can cut to save
money.
Refrain from overspending especially impulsebuying.
Before you decide to borrow money, make sure you
can afford new debt repayments on top ofyour
current expenses orcommitments.

18. Step 3:Set your financialgoals
Ensure they have numericaltargets
Break goal(s) into periodic targets i.e annually,
quarterly,semi annual

19. Determine your short,
medium and long termgoals

21. Step 4:Know your risktolerance

22. Step 5:Work out andimplement abasic
financialplan
Educate yourself ie work with a financial
consultant or attenda training
Start! There’s no perfect opportunity! Start with
what youhave and where youare!

23. Step 6:Regularly review and adjustyour
financialplan
After formulating a financial plan, you should exercise
strict discipline to follow theplan.
Review your existing budget and investment portfolio
from time to time to make sure they still fit your
needs.

24. Factors that influence one’spersonal
financialplanning
Spendingbehavior
Savings andinvestments
Type offinancial adviser youhave
Family size/Relatives
‘‘The wealth ofan individual is the wealth
of anation“

25. Benefitsoffinancialplanning
Moneyavailability
There is peace of mind
Accountability
Confidence
•Spendonday-to-day needssuchas food,
housing, transportation,clothing, healthcare,debt
repayment,andothernon-essentialneedssuchastakingalcohol
Save money for unexpected expenditures e.gemergencies,
medical bills, death,
someone selling their property due to anemergency
•Investing money in income generating activities to earn income
over the long-term.

26. We are all afunctionofhow
we can make, manage and
multiplymoney.

27. Budgeting
It is a summary ofestimated income andexpenditures
over a specified period of time
Telling your money where to go insteadof wondering
where it went.

28. Steps tobudgeting
Create budget beforehand
Review your financialgoals
Estimate amount of income bysource
List all expenses and amount needed for eachone
Make sure your expenses are not more than your income
Decide how much you willsave
Review and adjust asneeded
Understand that every month won’t be thesame
Budget using the money you know you will get for sure,not what you hope or wish you will
get.
Pay yourselffirst
Track yourspending
Focus on progress overperfection

29. z
Daily CashTracking

30. How to stay within yourbudget
•Remind yourself often what you planned tospend
•Put in the budget something for unexpected spendingneeds
•Keep savings out of reach so you do not spendthem
•Keep track of what youspend
•Make sure you do not spend more than what isbudgeted
•If you spend more for one item, spend less for somethingelse
•Make a list of ways to cut plannedexpenses
•Get the family to participate in developing and sticking with the
budget
•When investing money in business, consider what todo if
theinvestment
fails

31. The50-30-20Budgetingruleofthumb
Budgetingrule

32. 50%-Mandatory bills andexpenses
30%-Savings, Investments and Debtrepayments
20%-Wants, entertainment ,givings andmiscellaneous

33. Savings

35. What aresavings?
•Moneythatisputawayinthepresentforuseinthefuture
•Investments in animals or land that can be sold whencash is
needed
•A way of buildingassets
•A fundamental part of moneymanagement
Saving is putting money aside for future use and spending.
Saving can be in form of cash or anasset.

36. GROUPWORK!
Make alistof some good spending and savingpractices

37. Good spending and savingpractices
•Make a budget for the coming week or month. This means that you list the
expected money coming in and going out, and that you plan what you will do
with the money. Plan how much you will save every day, week ormonth.
•Stick to your savingplan!
•Before spending your money, ask yourself if you really need the
itemyou
want tobuy
•Don’t buy it if you don’t needit
•If you don’t spend money that you think you should, put that money on the
side for later use. Don’t just spend it because youcan!
•Even saving a small bit of money is better than savingnothing
•Keeprecordsof how much you actually saved and spent every day,
weekor
month
•Look at your spending habits and determine how you can cut them down so
that you can savemore

38. Different ways tosave:
Onanaccountinacommercialbank.Thisisaformalwayofsavingmoney.
Theyareasafeoptionforkeepingyourmoney.Theycomewithamonthlyor
yearlyfee.
WithaSavingsandLoanAssociation(SLA)oranyotherself-helpgroup.
Peoplefromthesamevillageorfarmersgroupsavetheirmoneytogetherto
makethemoneygrow.SLAsgiveoutloanstomembersandcollectinterest.
Themoneygeneratedfrominterestrepaymentisthensharedamongthe
members.
WitharegisteredFinancialCooperative(SACCO).ASACCOisaSavings
andCreditCo-Operative.Thisisalegalentitywithformalandde-fined
structuresandsystems.
Mobilebanking,Lockedsavings
Homesaving,inabox/tin,underthemattress,orinaholeunderthesoilin
thehouse.Thisistheleastsafewayofsaving.
Assets such as livestock and land are a method of saving because they hold
value and can be resold (for the same amount of money at purchasing or
more) at a latertime.

39. Ruleofthumb tosaving:
•Saveassoonasyouearn.That is,put
the savings asidebefore spending
•Try to save 10%-20% ofyourincome
•Don’t carry a lot ofcash, avoid the temptation to spendit!
•Keep savings out ofreach in a safeplace
•Good savings behavior requiresdiscipline
•Discipline is learned throughpractice!
•Spendcarefully
“Financialfreedomdoesn’thappenbymistake,ithappensby
design“

40. Call toAction!
What do you want your money to do foryou?

41. Save more? Open a savings account, decide how
much to save and start
Invest more? Open investment and brokerage a/c,
decide howmuch
money to put in and allocate in your budget
Track spending? Download tracking apps/ Create
excelsheets
Start doing it! Less talk, moreaction!

42. Start the Journey now !
Think big, start small and startnow!
Progress overperfection!

43. INVESTMENTS
An investment is an asset or item acquired
with the goalof generating income or
appreciation.
The act of putting money, effort, time, etc. into
somethingto make aprofit.
‘To be more, we must becomemore’

44. Why should I
invest?
Grow your money/earn higherreturns
Save forretirement
Reach financialgoals
Start and expand yourbusiness
Fulfillment
Impact
Freedom
‘Wealth is the ability to make choices you can support
financially, live a lifestyle you value and contribute to society
in a way that has meaning toyou’

45. Savings and Investment
Vehicles
“Wealth can only be created in the context of time.
If we cannot manage our time, we cannot
createwealth“

46. Equities
These are shares in a company. Are the same as stocks. Therefore, if you buy
stocks you are buyingequities.
The key objective is to sell shares when price is higher than when boughtor
received dividendpayments.
Equity investment –money that is invested in a company by purchasing
shares of that company in the stockmarket.
A)Public equities: Shares listed on a stock exchange
B)Private equities: Shares in companies that aren’t listed on the public stock
exchange.
Have a strong understanding of the nature of the business & confidence in
management.
Equities carry higher risk and are recommended for long terminvestments

47. FixedIncomeTreasury bonds and Treasurybills
Instruments issued by the government to borrow from thepublic.
Theyoffer a fixed rate of return referred to as interest.The
longer the instrument, the higher thereturn
T-bills are issued for 91,182 and364days
T-bonds are issued for 1 year up to 20years
Corporatebonds
Operate same way as T-bonds but issued by privatecompanies
Due to high risk associated, they offer higher returns thanT-bills
andT-bonds

48. z
Fixed deposits
Accounts
Are available in banking institutions and are similar to savings
a/c but fixed for certainperiods.
The longer the money is fixed for, the higher the interest
payment.
They prevent one from misusing their savings & future
investment funds.
Help foster financial disciplines & healthy moneyhabits
Property
Investments in property are usually in the form of land orrental
property

49. z
Cash
Unittrusts
Are pools of fund that are managed by professional fund
mangers on your behalf and placed in various investments.They
include equity funds; they invest in public equities
Objective is togrow
Money MarketFunds
They invest in low risk investments that can easily beconverted
into cash s.a fixed deposits, T-bills, short termbonds
Objective is to keep moneysafe.

50. Self
The best investment you’ll ever make is inyourself.
Learn a valuable skill and add value toyourself.
Invest inknowledge

51. Invest where you understand themarket.
You always have options; people, strengths, time, brandetc
‘It doesn’t come easy nor quick but itcomes’

52. z
Considerations in
Investments
Know why you areinvesting
Know your investment timehorizon
Know the costs
Understand the unit trustfunds

53. z
Debt
It is an obligation that requires one party, the debtor, to pay
money or other agreed-upon value to another party, thecreditor.
Also referred to as a sum of money that is owed ordue.

54. Handlingdebts
Understand what the debt was usedfor
Refrain from taking newloans
Make at least the minimum payment on all your loans toensure
credit record remainsclean.
Make additional payments to reduceprincipal
Minimizeborrowing
Understand that something has togive
Get comfortable with‘NO’

55. z
Inflation
The decrease in the purchasing power ofmoney.
Currently at 9.6%globally

56. z
How to
deal
Spendmindfully
Find ways to increase your income ie sidehustles
Invest your money, don’t just saveit
Seek good sales deals, bonuses anddiscounts
Avoiddebt

57. z
‘I can change mycircumstances,
because I can changeme’

58. In conclusion
“Our deepest fear is not that we are inadequate. Our
deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous,
talented, fabulous? Actually, who are you not to be?
Your playing small does not serve the world. We were
born to make manifest the glory of God that is within
us. And as we let our own light shine, we
unconsciously give other people permission to do the
same.” Marianne Williamson

59. Additionalmaterial
The richest man in Babylon by George S.Clason
The Psychology ofmoney by MorganHouse
Broke Millennial –ErinLowry
Success habits by Napoleon Hill
60 Principles of success
Financial Intelligence, money budgeting and management by
Anderson M. Hill
YouTube channels –Susan Wanjiku & Rina Hicks, Centonomy & Just
Ivy

60. THANKYOU!

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