business finance

1. Money
Management
Cycle

2. How a P14M lotto winner lost it all
Posted at Mar 15 2012 10:01 PM | Updated as
of Mar 16 2012 11:56 AM
Taong 2008 nang maging instant milyonaryo
si Dionie Reyes. Si Dionie ay 42 noon at
nagtatrabaho bilang isang utility worker nang
manalo ng P14 milyong. “System 7, lucky
pick, kaya lahat ng kategoryang ‘yon hawak
ko. Sabi ko, ‘Lord, thank you po, sana ako na
iyon.’ Pero hindi ko po tinitingnan ticket ko,”
sabi ni Dionie.

3. Makalipas ang tatlong araw tiningnan ni
Dionie ang hawak niyang ticket.Doon na niya
nakumpirma na siya nga ang jackpot
winner.At nang makubra ang pera...“Sabi ko
sa manager ng bangko, magwi-withdraw ako
ng P1 million para ma-experience ko
makahawak ng P1 million. Atsaka issue-han
niyo ako ng tseke, bibili ako ng Fortuner,”
sabi ni Dionie.Isang bahay na may halagang
P4 milyon ang binili rin ni Dionie para sa
kanyang mag-ina.

4. At patuloy rin siyang nagbigay ng balato sa
mga kapamilya, kaibigan at ka-
opisina.Maganda na sana ang kanyang buhay
hanggang unti-unting naubos ang pera sa
alak, babae at sugal.Napilitan na ring ibenta
ang kanilang dream house para ipambayad sa
ilang utang.“Kaka-sabong nga po. Siyempre
nangungutang ako na dapat bayaran kaya
napapabenta,” sabi ni Dionie.Matagal nang
bumalik sa trabaho si Dionie.Noong
nakaraang taon, inoperahan siya dahil sa sakit
sa puso.

5. Halos wala nang natira sa kanya.Maliban sa
isang bahay na nagawa pa niyang mabili.May
ilan pa rin siyang utang na kailangan
bayaran.Si Boss Kaka na nabalatuhan din ng
P100,000 ni Dionie, nanlumo sa sinapit ng
kanyang empleyado.“I feel bad for him kasi
ilan lang ang nananalo ng jackpot?” sabi
niya.Isa lang si Dionie sa mga taong matapos
maging milyonaryo ay muling naghirap dahil
winaldas lang ang kayamanang napanalunan.

6. Maluwag na naikuwento ni Dionie ang
kanyang istorya.Sana raw ay magsilbi itong
aral sa mga tatama sa lotto na pangalagaan
ang kanilang panalo at huwag iwaldas sa
masasamang bisyo. Pinky Webb, Patrol ng
Pilipino

7. What lesson did you learn
from the article?

8. Money Management
Money management is the process of
budgeting, saving, investing, spending or
otherwise overseeing the capital usage of
an individual or group. It can also be
referred to more narrowly as "investment
management" and "portfolio
management."
It follows a cycle that is from earning to
spending, or saving or investing

9. Essential Terms/Ideas:
Cash- money in forms of currency, checks
and debit cards as distinct from checks,
money or credit
Short- term goal- something achievable
in 12 months or less
Long term goal- something that takes a
long time to accomplish

10. Essential Terms/Ideas:
Opportunity Cost- the loss of potential
gain from other alternatives when one
alternative is chosen
Credit- borrower receives something of
value now and agrees to pay later
Budget- a financial plan for a defined
period

11. Below is a diagram that shows
money management cycle.

12. Areas of Personal Finance
#1 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

13. Areas of Personal Finance
#2 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.

14. Areas of Personal Finance
Common sources of spending are:
• Rent
• Mortgage payments
• Taxes
• Food
• Entertainment
• Travel
• Credit card payments

15. Areas of Personal Finance
#3 Saving
Saving 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.
Common forms of savings include:
• Physical cash
• Savings bank account
• Checking bank account
• Money market securities

16. Areas of Personal Finance
#4 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. Investing carries risk,
and not all assets actually end up producing a positive
rate of return. This is where we see the relationship
between risk and return.

17. Areas of Personal Finance
Common forms of investing include:
• Stocks • Private companies
• Bonds • Art
• Mutual funds • Commodities
• Real estate
Investing is the most complicated area of personal
finance and is one of the areas where people get the
most professional advice. There are vast differences in
risk and reward between different investments, and
most people seek help with this area of their financial
plan.

18. Areas of Personal Finance
#5 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

19. Areas of Personal Finance
#5 Protection
This is another area of personal finance where people
typically seek professional advice and which can
become quite complicated. There is a whole series of
analysis that needs to be done to properly assess an
individual’s insurance and estate planning needs.

20. The Personal Finance Planning Process
Good financial management comes down
to having a solid plan and sticking to it.
All of the above areas of personal finance
can be wrapped into a budget or a formal
financial plan.

21. Generally speaking, the main components
of the financial planning process are:
See SmartArt Graphic below

22. A. Objective Setting
• Quantify monetary objectives with definite time
frames.
• Prioritize objectives.
• Examine these objectives with an individual’s
resources and limitations.
B. Data gathering
• Use surveys, questionnaires, and interviews to
gather quantitative and qualitative information
from the individual.
• Quantitative – for assessing financial status (i.e.
investments, cash flow, liabilities,etc.)
• Qualitative – to identify individual’s goals and
objectives, lifestyle, risk-tolerance, etc.

23. C. Data Analysis
• Analyze the individual’s financial position and
cash flows.
• Review legal papers (i.e. insurance policies, trust
agreements, wills, etc.).
• Evaluate objectives vis-à-vis the individual’s
resources and economic conditions.
D. Financial Plan Recommendation
• Propose financial products.
• At this point, the individual can comment on the
proposed solutions.

24. E. Plan Implementation
• Assist the individual in the execution of the
recommended financial plan.
• Implementation may involve other entities so assist
the individual in dealing with the parties
involved in the execution of the financial plan.
F. Plan Monitoring
• Review the financial plan periodically to evaluate
changing market conditions (i.e. economic
conditions, taxes, interest rates, etc.).
• Evaluate the financial plan regularly to see if it
effectively meets the individual’s goals and
objectives.

25. Tips on Money Management Success
1. Build savings. This step involves
allocating a portion of your income to a
saving/investment fund.
2. Pay bills on time. This step involves
avoiding late payment charge and high
interest debts to build a positive credit
standing

26. 3. Pay more than the minimum payment.
This step involves minimizing interest charge on
outstanding debts.
Minimum payment- is the amount that needs to
be paid to avoid late payment charges.
Example: If you pay the P2,000 minimum
payment due out of the total P75,000 total
payment due, you are saved from the late
payment charge but still liable for interest charge
of P73,000 x 3.5% x days overdue/ 30 days( days
in a month).

27. 4. Research for the best deal. This
step involves comparing process of
different vendors before making a
purchase.

28. SHORT QUIZ
True or False.
Directions: Write True if the statement
is correct and False if the statement is
incorrect. Write your answer on the
space provided for.
_________1. Savings is a result of
income minus spending.

29. SHORT QUIZ
_________2. As student, you consider
yourself as investment of your parents.
_________3. Using spending tracker
app is way of managing money.
_________4. Investing is the process
of placing our money in a bank through
savings account.
_________5. Savings is buying a car
for rentals.

30. SHORT QUIZ
_______6. Earning money can be through
buying and selling real properties.
_______7. Setting an emergency fund in
the bank is considered investing.
_______8. Cutting cost in business is
considered saving.
______9. Buying clothes for sale is
spending.
______10. Selling used clothes is earning.

31. 1) True
2) True
3) True
4) False
5) False
6) T rue
7) False
8) False
9) False
10) False