BUS 121- Managing Personal Finances.pdf - Introduction to...

Dr. Dirisu, J. & Dr. Amaihian, A.
Introduction to Business II
(BUS 121 )
MANAGING
PERSONAL FINANCES

Lecture objectives
At the end of this lecture, the students should be able to:
 Describe the importance of personal financial management
 Identify the significance of money management and budgeting
 Identify the difference between gross income and net income
 Create a personal budget
 Recognize money wasters
 Identify debt and debt-management resources
 Identify wise use of credit
 Describe the importance of savings and investments
 Protect yourself from identity theft
5/27/2020

Overview of Personal Financial
Management
Personal financial management: This is the
process of controlling your income and
expenses
Personal financial management covers
aspects of financing like accessing the
need of capital, raising sufficient amount
of funds, cost of financing, budgeting,
maintaining liquidity, lending policies,
borrowing policies, and dividend policy.
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Overview of Personal Financial
Management contd.
 Personal finance refers to
all financial decisions and activities of
an individual or household, including
budgeting, insurance, mortgage
planning, savings and retirement
planning.” Understanding these terms
can help you better control your funds
and prepare for
future financial success.
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Overview of Personal Financial
Management contd.
 Managing personal finances is essential to
one’s financial wellbeing. Money
management is a critical function in self-
management.
 It aims to give the power and the
knowledge to take control of the money.
 It provides the means to keep track of
personal expenses, personal debt and
subsequently helps in calculation and
enhancement of personal net worth.
5/27/2020

Personal Financial Management
Income
 Income: This refers to money
coming in from:
 Parents
 Grants
 Student loans
 Job
 After college, your income most
likely will increase
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Personal Financial Management
Expense
 Expense: money going out
 Common college expenses include:
 Tuition
 Text books
 School supplies
 Housing
 Transportation
 Hobbies and entertainment
 These are life needs
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Framework For Personal Finance
 1) Finance and related discipline: The base of personal
financial management comes from recommended practices from
Economics, Accounting, and Information Technology.