• Personal finance is the management of your 2.

Goal-Oriented
individual or household financial activities. It • It is focused on achieving specific financial goals, such as
INTRODUCTION TO involves making decisions about how to earn, saving for retirement, buying a home, funding education, or
paying off debt. Setting and prioritizing these goals is a
spend, save, invest, and protect your money.
PERSONAL FINANCE The goal of personal finance is to achieve
fundamental part of personal finance.
3. Dynamic and Evolving
ABIGAIL M. NARAG financ ial secu rity and meet p ers ona l
• Personal finance is not static; it changes with life stages,
SUBECT TEACHER
financial goals, such as buying a home, i ncome levels, econ omi c con di ti ons , a n d p ers ona l
funding education, or retiring comfortably. circumstances. Financial plans need to be regularly
reviewed and adjusted.

4. Interdisciplinary
DEFINITION OF PERSONAL FINANCE NATURE OF PERSONAL FINANCE • Personal finance draws on knowledge from various fields,
including economics, accounting, psychology, and law. It
requires an understanding of financial products, market
• Personal finance is the process of managing • The nature of personal finance refers to the characteristics and
principles that guide how individuals manage their money and make
trends, taxation, and behavioral finance.
your money to meet your financial goals and financial decisions. Here are some key aspects: 5. Risk Management
ensure financial stability. It involves making 1. Personal and Individualized • Managing risk is a key component of personal finance. This
informed decisions about earning, spending, • Personal finance is unique to each individual or household. Financial involves decisions on insurance, investment diversification,
goals, risk tolerance, income levels, and spending habits vary from and emergency funds to protect against unforeseen
saving, investing, and protecting your assets. person to person, requiring tailored financial strategies. financial hardships.
6. Decision-Making Process 10. Education-Dependent 2. Goal Achievement
• Personal finance involves continuous decision-making. • Financial literacy plays a significant role in personal finance. • Personal finance allows individuals to plan and save for major
Individuals must make choices about spending, saving, Understanding basic financial concepts, such as interest life goals, such as buying a home, funding education, traveling, or
investing, and borrowing, balancing short-term desires with rates, credit scores, and investment strategies, is essential retiring comfortably. Setting financial goals and working towards
long-term financial security.. for making informed decisions. them provides a sense of purpose and direction.
7. Influenced by External Factors • In summary, the nature of personal finance is characterized 3. Debt Management
• Economic conditions, government policies, interest rates, by its individuality, goal orientation, dynamic nature, • Understanding personal finance helps individuals manage and
and inflation can all impact personal finance. Staying interdisciplinary approach, risk management focus, and reduce debt effectively. By making informed decisions about
informed about these factors is essential for effective the need for informed decision-making. borrowing and repayment, people can avoid excessive debt and
its associated stress and financial strain.
financial planning.

8. Ethical and Value-Driven 4. Improved Decision-Making

IMPORTANCE OF PERSONAL FINANCE
• Personal financial decisions often reflect an individual’s • Knowledge of personal finance empowers individuals to
values, ethics, and beliefs. Decisions about charity, socially • The importance of personal finance cannot be overstated, as it plays a make better financial decisions, such as choosing the right
responsible investing, or spending on non-essentials are crucial role in ensuring financial stability, achieving life goals, and investment options, budgeting wisely, and planning for
reducing stress. Here are some key reasons why personal finance is taxes. This leads to more efficient use of resources and long-
influenced by personal values.
important: term financial well-being.
9. Long-Term Perspective 1. Financial Security 5. Increased Wealth
• While it involves day-to-day money management, personal • Proper management of personal finances helps individuals build a • By managing income, expenses, savings, and investments
finance emphasizes the importance of long-term financial safety net for emergencies, reducing the risk of financial crises. By strategically, individuals can grow their wealth over time.
health. Planning for future needs, such as retirement, is a saving and investing wisely, people can protect themselves from This wealth can be used to improve quality of life, provide
crucial aspect. unexpected expenses or income loss. for loved ones, and support future generations.
 PERSONAL FINANCE PUBLIC FINANCE
6. Retirement Planning 10. Financial Independence
2. OBJECTIVE The primary objective is to achieve The main objective is to manage
• Personal finance is critical for ensuring a secure and • Understanding and applying personal finance principles enables individuals personal financial goals, such as public resources to provide
to achieve financial independence, where they can live without relying on saving for retirement, buying a services, maintain economic
comfortable retirement. By starting to save and invest early, others for financial support. This independence offers freedom and control home, or funding education, while stability, ensure equitable
ensuring financial stability and distribution of income, and
individuals can accumulate the necessary funds to support over one’s life choices.
independence. promote economic growth. It aims
themselves when they are no longer working. 11. Legacy Planning to meet the collective needs of
society.
• Personal finance also includes planning for the future beyond one’s own life.
7. Stress Reduction Estate planning, wills, and trusts ensure that assets are distributed
3. DECISION-MAKING Decisions are made by individuals Decisions are made by government
according to one’s wishes, providing for family and charitable causes.
• Financial stress is a common source of anxiety. Effective AUTHORITY or h ou s e ho l d s . T h e fi n a n c i a l officials and policymakers. These
In summary, personal finance is important because it provides the foundation choices are driven by personal decisions are influenced by
personal finance management helps alleviate this stress by for financial security, goal achievement, stress reduction, and overall preferences, goals, risk tolerance, political, social, and economic
providing a clear plan and control over one’s financial well-being. By effectively managing finances, individuals can lead more and individual circumstances. factors and are intended to benefit
the public or the nation as a whole.
situation, leading to greater peace of mind. fulfilling and stable lives.

PERSONAL FINANCE PUBLIC FINANCE

8. Better Quality of Life DISTINCTIONS OF PERSONAL FINANCE 4. REVENUE SOURCES The primary sources of Revenue is primarily
• Good financial management can lead to an improved standard of FROM PUBLIC FINANCE
revenue are personal income, generated through taxes, fees,
such as salaries, wages, fines, and borrowing.
living, allowing individuals to afford the things they value most, business income, investment Governments may also earn
such as a comfortable home, quality education, and the ability to PERSONAL FINANCE PUBLIC FINANCE returns, and other personal income from public
travel or enjoy hobbies. 1. SCOPE AND SCALE Deals with the financial Involves the financial
earnings. enterprises, natural resources,
or other assets.
management of an individual management of a government
9. Preparation for Life Changes or household. It focuses on or public sector entity. It deals 5. EXPENDITURE FOCUS Expenditures include personal Expe nd iture s are direc t ed
• Life is full of unexpected events, such as job loss, health issues, or income, expense s, savings, with the collection of revenue and household expenses such toward public services and
investments, debt, and (taxes), government spending, as housing, food, healthcare, infrastructure, such as defense,
economic downturns. Personal finance helps individuals prepare financial planning at a budgeting, public debt, and education, entertainment, and education, healthcare,
for these changes by building financial resilience through personal level. fiscal policy. debt repayment. t ra ns por tat ion, a nd soc ia l
savings, insurance, and diversified income streams. welfare programs.
 PERSONAL FINANCE PUBLIC FINANCE
6. BUDGETING Budgeting involves managing Budgeting involves creating
li m ite d re sourc e s t o c ove r
personal expenses, save, and
and managing a government
budget, which allocates
• In summary, personal finance focuses on the MAIN AREAS OF PERSONAL FINANCE
invest for future goals. It is resources to various sectors f i n a n c i a l m a n a g e m e n t o f i n d iv i d u a l s o r
often done on a monthly or and programs. It is typically
annual basis. planned on an annual basis but households, with an emphasis on achieving 1. EARNING INCOME
can involve long-term fiscal personal goals and financial security. Public
planning. Income refers to a source of cash inflow that an individual
f i n a n c e , o n t h e o t h e r h a n d , i nvo lve s t h e
7. DEBT MANAGEMENT Debt management involves Public debt man agement receives and the uses to support themselves and their family.
handling personal loans, credit i nvo lve s t h e gove r n me nt management of government finances, aiming to It is the starting point of our financial planning process.
ca r d d e b t , m or tga g e s , a nd borrowing funds through the meet public needs, promote economic stability, Common sources of income are: salaries, bonuses, hourly
other forms of pers on al issu an ce of bond s o r ot her
borrowing, with the goal of instruments to finance deficits a n d en s u re t h e equ i t ab l e d i s t r i bu t i o n o f wages, pensions and dividends. Income can be thought as the
minimizing interest costs and
avoiding financial strain.
or large projects. Man aging
public debt is crucial for
resources. first step in our personal finance roadmap.
maintaining a stable economy.

PERSONAL FINANCE PUBLIC FINANCE 2. SPENDING

8. RISK AND UNCERTAINTY Individuals face personal financial
risks, such as job loss, health issues,
Governments face risks related to economic
downturns, inflation, political instability,
THE BASICS OF PERSONAL FINANCE Spending includes all types of expenses an individual incurs
or investment losses, and they use and unexpected public expenses. They rela ted to buy ing goo ds a nd se rvi ces or a nyt hing that is
tools like insurance and manage these risks through fiscal policy,
diversification to manage these risks. monetary policy, and contingency planning.
consumable. All spending falls into two categories: cash (paid for
9. LEGAL AND REGULATORY Operates within a legal framework O p e ra t e s wi t hi n a b ro a de r l e g a l a nd with cash on hand) and credit (paid by borrowing money).
FRAMEWORK that governs individual financial regulatory framework that governs taxation, Common sources of spending are: Rent, mortgage payment and
transactions, contracts, taxes, and government spending, public borrowing,
consumer protection. Individuals and financial accountability. Public finance taxes, food, entertainment, travel and credit card payments. Good
must comply with relevant laws,
such as tax laws and credit
is subject to oversight by legislative bodies
and auditing institutions.
spending habits are critical for good personal finance management.
regulations.
3. SAVING
10. SOCIAL RESPONSIBILITY While personal finance decisions Public finance decisions have broader social
may reflect individual ethics and implications, as they affect the distribution Saving refers to excess cash that is retained for future investing or
values, they primarily focus on the of wealth, access to public services, and
individual's or household's well- overall economic stability. Governments spending. Managing savings is a crucial area of personal finance.
being. have a responsibility to ensure that public
resources are used equitably and effectively.
Common forms of savings include: Physical cash, savings bank
account, checking bank account and money securities.
4. INVESTING
Investing relates to the purchase of assets that are expected to
PERSONAL FINANCE STRATEGIES CHARACTERISTICS AND HABITS FOR
The keys to success in personal finance are:
generate a rate of return, with the hope that over time the individual SUCCESS IN PERSONAL FINANCE
will receive back more money than they originally invested. Common 1. FRUGALITY - This refers to living below our means so
forms of investing include: Stocks, bonds, mutual funds, real estate, that savings may be effected. In being frugal, we have to • Be enthusiastic about life, have a passion for what we do and see to it
private companies, commodities and art. Investing is the most that our work in some ways help others and improve this world.
save, save and save. It requires control over expenditures.
complicated area of personal finance and is one of the areas where • Have patience and stick to our long-term vision.
people get the most professional advice. 2. VISION - This refers to foresight or ability to look far
• Have time to make good educated decisions.
5. PROTECTION into the future. It entails short-term and long-term
• Have discipline and not bother about social climbing.
Personal protection refers to a wide range of products that can be planning. In order to achieve our financial goals, we have
• Save every month.
used to guard against an unforeseen and adverse event. Common to maintain focus on what we want to achieve in the long-
• Avoid debt
protection products include: life insurance, health insurance and run.
estate planning.

PERSONAL FINANCE SERVICES 3. SAFETY NETS - These are buffers or protections • Shop before we buy.
from losses of property and income. These may be in • Buy quality used cars instead of brand new ones.
the form of investment portfolios, insurance policies • Take care of what we own.
* Wealth Management * Estate Planning and retirement or pension funds.
* Loans and Debt * Investments
• Maintain a basic understanding of the investment vehicles
and their markets.
* Budgeting * Insurance
* Retirement * Credit Cards
• Adopt corrective measures.
* Taxes * Home and Mortgage • Dare to discipline our children and teach them the value of
money.
* Risk Management