The document discusses the key areas of personal finance: income, spending, saving, investing, and protection. It explains the money management cycle which includes earning income, spending on goods and services, saving excess funds, and investing savings. The optimal financial planning process involves setting objectives, gathering personal data, analyzing the data, developing a customized plan, implementing the plan, and monitoring it over time.

1. MODULE 6: PHILOSOPHY AND
PRACTICES IN PERSONAL
FINANCE
LESSON 2: MONEY MANAGEMENT CYCLE

2. MOST ESSENTIAL LEARNING COMPETENCIES
ILLUSTRATE THE MONEY
MANAGEMENT CYCLE AND GIVES
EXAMPLES OF SOUND PRACTICES IN
EARNING, SPENDING, SAVING AND
INVESTING MONEY.

3. WHAT I KNOW
ANSWER THE PRE-TEST
ON THE MODULE

4. MOTIVATION
NEEDS OR WANTS

5. WHAT’S IN

7. WHAT’S NEW
READ THE
STORY

9. QUESTION
WHAT LESSON DID YOU
LEARN FROM THE
ARTICLE?

10. WHAT IS IT

11. AREAS OF PERSONAL FINANCE
1.INCOME
2.SPENDING
3.SAVING
4.INVESTING
5.PROTECTION

12. 1. 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.

13. COMMON SOURCES OF INCOME
SALARIES
BONUSES
HOURLY WAGES
PENSIONS
DIVIDENDS

14. 2. 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 fall into two
categories: CASH (paid for with cash on
hand) and CREDIT (paid for by borrowing
money).

15. COMMON SOURCES OF SPENDING
RENT
MORTGAGE PAYMENTS
TAXES
FOOD
ENTERTAINEMENT
TRAVEL
CREDIT CARD PAYMENT

16. 3. 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.

17. Common Forms of Savings
Physical cash
Savings bank account
Checking bank account
Money market securities

18. 4. 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 or return.

19. COMMON FORMS OF INVESTING
STOCKS
BONDS
MUTUAL FUNDS
REAL ESTATE
PRIVATE COMPANIES
COMMODITIES

20. INVESTING is the most complicated area of
personal finance and is one of the area 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.

21. 5. PROTECTION
Personal protection refers to a
wide range of products that can
be used to guard against an
unforeseen and adverse event.

22. COMMON PROTECTION PRODUCTS
LIFE INSURANCE
HEALTH INSURANCE
ESTATE PLANNING

23. THE PERSONAL FINANCE PLANNING PROCESS

24. A. OBJECTIVE SETTING
Quantify monetary objectives with
definite time frame
Prioritize objectives
Examine these objectives with an
individual’s resources and limitations

25. B. DATA GATHERING
Use surveys, questionnaires and
interviews to gather quantitative and
qualitative information from the
individual

26. QUANTITATIVE-for assessing
financial status (i.e investments cash
flow, liabilities)
QUALITATIVE-to identify individual’s
goals and objectives, lifestyles, risk-
tolerance)

27. 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 condition

28. D. FINANCIAL PLAN RECOMMENDATION
Propose financial products
At this point, the individual can
comment on the proposed solutions

29. 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.

30. F. PLAN MONITORING
Review the financial periodically to evaluate
changing market conditions (i.e economic
conditions, taxes, interests rates, etc.)
Evaluate the financial plan regularly to see if
it effectively meets the individual’s goals and
objectives.

31. WHAT’S MORE (GROUP 1)
SHORT-TERM GOALS: FOCUS ON LESS-3 MONTH TIME
FRAME AND IMMEDIATE SATISFACTION
MEDIUM-TERM GOALS: FOCUS ON A 3-MONTH TO 1
YEAR PERIOD
LONG-TERM GOALS: FOCUS ON MORE THAN 1-YEAR
OF TIME AND REQUIRE DELAYED SATISFACTION

33. WHAT I HAVE LEARNED (GROUP 2)
Using a graphic organizer, illustrate the
money management cycle and give
examples of sound practices in earning,
spending, saving and investing money.

35. WHAT I CAN DO (GROUP 3)
SHOW ME THE MONEY: REACHING YOUR GOALS
Are you dreaming of buying a new gadget, visiting a
new place after quarantine or learning a language-----
but aren’t sure how to get there? The key to achieving
your financial goals is to break them down into
manageable steps. Fill in the circles to see how you can
start reaching one of your goals today.

37. ASSESSMENT
DIRECTION:
WRITE THE LETTER OF THE
CORRECT ANSWER ON YOUR
ANSWER SHEET

38. ANSWER
1. C 6. A 11. D
2. B 7. C 12. B
3. C 8. E 13. C
4. D 9. A 14. F
5. A 10. F 15. D

39. ADDITIONAL ACTIVITIES (ASSIGNMENT)
If you were to picture yourself 10 years from
now in a profession of your own choice, how
would your study of Personal Finance help
you contribute more to your field of
expertise
Write it on one whole sheet of paper