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PERSONAL FINANCE > MODULE 1 > Flashcards

MODULE 1 Flashcards

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1
Q

Finance came from 2 concepts:

A

Accounting and Economics

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2
Q

Main aim of economics

A

allocation of limited resources

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3
Q

Types of Finance

A
  1. Corporate
  2. Public
  3. Personal
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4
Q

Objective of Corporate Finance

A
  • maximize the profit
  • maximize the shareholders’ wealth
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5
Q

Objective of Public Finance

A

Acquisition of Funds from
1. Taxes
2. GOCC
3. Borrowing

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6
Q

Objective of Personal Finance

A

Manage finances well and make own financial plan

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7
Q

Personal Finance Meaning

A

*encompasses the
management of financial sources of an individual

*covers budgeting, banking,
insurance etc.

*deals with giving of advises about various financial opportunities to the
households

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8
Q

3 goals of personal finance

A

*come up with a plan that would meet the financial challenges

*maximize the income and savings

*make informed financial decisions

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9
Q

Importance of Personal Finance

A

*The understanding of how to manage finances, without financial
discipline it is difficult to achieve financial goals.

*The short term and long
term goals are realized and attained when a person is knowledgeable of
managing their finances.

*Other financial opportunities may also be explored and exploited such as saving, investing and insurance

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10
Q

Areas of Personal Finance

A
  1. income
  2. saving
  3. spending
  4. investing
  5. protection
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11
Q

Income.

A

This is the financial resource that is allocated to various financial activities.
This includes salaries, wages, and other form of returns.

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12
Q

Spending.

A

This is the process of using the financial resources particularly cash in
nature. The utilization is either on the needs or wants— food or travel.

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13
Q

Saving.

A

*income that is left after spending. *usually being
allocated to cover expenses primarily to meet emergency
*an individual is encouraged to have between three to 12 months of the usual expenses

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14
Q

Investing.

A

*includes purchasing of assets
*aim: increase the wealth of a person from the amount they invested however, one
should also take considerations of the risks
*Studying and readings can help a
person in investing their money.

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15
Q

Protection.

A

*During unexpected events, one should be prepared to protect themselves.
*can include life and health insurance and estate and others.

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16
Q

Some companies offer financial services
WRITE CHRIB L

A
  • Wealth Management
  • Loans and Debt
  • Budgeting
  • Retirement
  • Taxes
  • Risk Management
  • Estate Planning
  • Investments
  • Insurance
  • Credit Cards
  • Home and Mortgage
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17
Q

Personal Financial Strategies

Some practices for personal finance
finance

A
  1. Knowing income
  2. Devise a Budget
  3. Pay Yourself First
  4. Limit and Reduce Debt
  5. Only Borrow What You can Repay
  6. Monitor your Credit Score
  7. Plan for Your Future
  8. Buy Insurance
  9. Maximize Tax Breaks
    10.Give Yourself a Break
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18
Q

Personal Finance Skills

A

Financial Prioritization.
Assessing Costs and Benefits.
Restraining Your Spending.

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19
Q

Financial Prioritization.

A

This refers to your ability to check on your finances and evaluate your
cash flows particularly on the inflows.

20
Q

Assessing Costs and Benefits.

A

It simply means that you should treat your finances as business.
You should always think of the costs and benefits.

21
Q

Restraining Your Spending.

A

One should learn how to restrain from spending on non-earning
assets.

22
Q

________ goal setting for short term, midterm and long term is an important step
toward in being secured financially.

A

Fontinelle (2024)

23
Q

Short Term Financial Goals

A

provide a boost enable to achieve greater goals in the future.

24
Q

Short Term Financial Goals
3 Examples

A

Establish a Budget

Create an Emergency Fund

Payoff Credit Cards

25
Q

Midterm Financial Goals

A

serves as a bridge between the short and long term goals.

26
Q

Midterm Financial Goals (3)

A

Get Life Insurance and Disability Income Insurance

Pay Off Loans

Consider Your Dreams

27
Q

Long-term Financial Goals

A

is saving enough to retire.

28
Q

Long-term Financial Goals
2 Examples

A

Estimate Your Retirement Needs

Increase Retirement Savings

29
Q

Financial Values

A

Drivers for behaviors are personal values, it is also considered as lens to filter
financial decisions.

30
Q

Drivers for behaviors are personal values, it is also considered as ______

A

lens to filter
financial decisions.

31
Q

3 Financial Values

A

Intentional Spending
Informed Charitable Giving
Impact Investing

32
Q

Intentional Spending

A

In intentional spending, always think about the decisions that actually matters to you. You
should be more conscious of spending. Company that have the causes you support, you can shop
with that establishment.

33
Q

Informed Charitable Giving

A

Aside from being conscious on spending, one should also be conscious on allocating
dollars to a certain cause or organization. You should also look into how the organizations are
being run.

34
Q

Impact Investing

A

When investing, a person can look at the ESG (environmental, social and governance) scores. This is aligning investing decisions with personal values.

35
Q

Financial Planning

A

*is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. (Geier, 2024)

*also referred as practice of planning your future focusing on managing finance
and be able to be ready with all of the potential costs and challenges that may
arise.

*considered as holistic and broad as it can cover variety of services.

*is not synonymous with asset management.

36
Q

Types of Financial Planning

A

Tax planning
Estate planning
Retirement planning
Philanthropic planning
Education funding planning
Investment planning
Insurance planning
Budgeting

37
Q

Tax planning-

A

preparation and filing of taxes

38
Q

Estate Planning

A

making it easier for loved ones after the person die

39
Q

Retirement planning

A

saving enough money to live lifestyle a person wants in retirement

40
Q

Philanthropic planning-

A

giving something to people who need help

41
Q

Education funding planning-

A

helping a person’s child/ ren pursue higher education

42
Q

Investment planning

A

mapping out the amount and type of investments

43
Q

Insurance planning

A

evaluating needs and insurance types

44
Q

Budgeting-

A

making sure that the person would spend based on the income and not able
to get into debt

45
Q

Basic Steps in Making Financial Plan

A

Gauge the net worth

Establish financial goals

Monitor Cash Flow

Create pathways to each of financial goals

46
Q

SUMMARY

A

Personal Finance considers
individual personality, goals
and plans to maximize the
resources they have not
only for short period of time but for the future.

PERSONAL FINANCE (6 decks)

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