DR. FILEMON C.

AGUILAR MEMORIAL COLLEGE

College of Business Administration
Golden Gate Subdivision, Talon 3, Las Piñas City

Course code and Title : FINE 2 / PERSONAL FINANCE

LESSON NUMBER : Module 6

Topic : Managing your Money

Introduction:
Some of us may survive without sophisticated money management strategies,
none of us can escape financial pressures entirely. Most of us hold jobs during the most
productive adult years of our lives, and the income we bring in must be managed
effectively if we are to satisfy our basic needs and lead fulfilling lives.

The decisions we make regarding our personal finances can be complicated, and
they change as we pass through the various stages of life. While we may start our adult
lives simply depositing our paychecks in bank accounts and spending most or all of that
income using cash, checks, and credit cards, as we age we may find ourselves drawn
more deeply into the worlds of borrowing, saving and investing, and insurance.

Learning Objectives :

After this lesson, the student should be able to :

1. Compare and contrast the importance of money.

2. Analyze the concept of money management

3. Identify the different risk of money management investment

Pre-Assessment:

 Instruction: Write your answer in ½ sheet of paper or in a document

file.

1. Give 3 importance of money for students today.

 Lesson Presentation:

What is Money Management ?

Personal Money Management refers to the process of balancing one’s

individual wealth and income with financial needs, desires, and goals.

Though some of us may survive without sophisticated money

management strategies, none of us can escape financial pressures entirely. Most of
us hold jobs during the most productive adult years of our lives, and the income we
bring in must be managed effectively if we are to satisfy our basic needs and lead
fulfilling lives. The decisions we make regarding our personal finances can be
complicated, and they change as we pass through the various stages of life. While
we may start our adult lives simply depositing our paychecks in bank accounts and
spending most or all of that income using cash, checks, and credit cards, as we age
we may find ourselves drawn more deeply into the worlds of borrowing, saving and
investing, and insurance.

Importance of Money

What money can do for you is what really important. Money gives you freedom
and choices. You can decide where and how you want to live when you have a
good income or financial resources.

3 RULES About Money

 Don’t spend what you don’t have

 Pay yourself first
 Develop a plan both for spending ( budget and savings )

Creating a budget is only one part of how to manage money better, and if you start
there, you'll miss a few critical steps.

Here are seven steps to take to manage your money properly:

 Understand your current financial situation.

- sit down and record all your regular monthly income and expenses. If
needed save receipts for a month to deter mine where money is spent beyond major
bills like rent, utilities and debt payment.
 Set personal priorities and finance goals.
- follow a budget that is written with your priorities and goals in mind
 Create and stick to a budget.
- look for ways to down expenses
 Establish an emergency fund.
- have a cash set aside for unexpected events such as lost job, illness or
broken car. You have to include savings in your budget.
 Save for retirement.
- speak to a financial professional if you need help creating an investment
strategy that matches your needs and goals
 Pay off debt.
- pay one off or consolidate your debt
 Schedule regular progress reports.
 - always know your income, saving ,spending and net worth. Meaning
evaluate your financial situation.

Money Market Fund and Money Market Account

A money market fund is a mutual fund that invests in a high-quality, short-term

debt. The goal of a money market fund is to preserve capital while obtaining a nominal
yield. A money market fund is often used by companies and institutions to manage their
short-term cash needs.

Businesses require ready access to cash and other highly liquid investments to
fund their obligations. Money kept at the bank earns very low rates of interest,
whereas money market funds provide better returns and are considered extremely safe
investments.

A low-risk investment you can consider is a Money Market Fund. Instead of

parking your money in a savings account, you can park your money in this type of fund
and generate better returns while being liquid (you can invest and pull out your funds
easily at a day’s notice) at the same time.

Reason of investing in Money Market fund

 Highly Liquid –
You can invest and pull out your funds easily at a day’s notice. This is very
convenient for investors who want to withdraw their investments immediately
whenever a need arises. In uncertain times like this, it is better to keep a portion
of your investments as liquid as possible so you can use it for unexpected needs
and or emergencies.

 Higher Returns than a Savings account-

 Affordable –
You can start to invest for as low as P10,000.

 Managed by Professional Fund Manager -

Money Market Fund is handled by a professional fund manager. They
constantly monitor the market for opportunities to make the best out of your
investment.

A Money Market Account

- A money market deposit account (MMDA), also known as a money

market account (MMA), is a special type of bank or credit union savings account with
some features not found in regular savings accounts.

Most money market deposit accounts pay a higher interest rate than regular passbook
savings accounts and often include check-writing and debit card privileges. MMDAs
also come with restrictions that make them less flexible than regular checking or
savings accounts.
PROS and CONS of Money Market Account

PROS

 Safety: Like other checking and savings accounts at federally insured banking
institutions, your money is protected up to the federal limit.
 Interest: You'll often get better interest rates on an MMA than you’ll get from a
traditional savings account. Larger account balances also help you earn more
interest, and the return is usually somewhere between a certificate of deposit
(CD) and a savings account.
 Access: Most accounts allow you to write checks or withdraw cash, and some
offer a debit card you can use to make purchases. This easy access, combined
with a competitive interest rate, is what has traditionally made MMAs unique. In
recent years, rewards checking, interest checking accounts, and online banks
have become more popular and offer the same benefits, but sometimes you’ll get
a better deal from a money market account.

CONS

 Transaction Limits: You have access to cash in an MMA, but you won’t be able
to make payments with your checkbook or debit card more than six times per
month by law—even less at some banks. You can withdraw cash as often as you
like, but these accounts aren’t as flexible as your checking account when it
comes to everyday use.3
 Introductory Interest Rates: If the rate sounds too good to be true, double-
check to make sure it's a permanent interest rate, not a promotional rate that will
disappear in a month.
 Safety Insurance: Make sure you use an MMA from a bank or credit union that
will insure your funds. Ask your bank or credit union to verify your funds are
insured and keep your deposits below the maximum covered limits.

Generalization:

Saving money may seem like a hard thing to do- especially if you don’t have a lot
to start with. But even pennies add up, and as you see here, saving a little can help you
do a lot more for yourself, it can help you make bigger changes in your life, be in
control, and be less dependend on others.

Sometimes though, it’s impossible to avoid borrowing money. Anything we

borrow- even from family or friends - must be paid back. Generally, we pay back a lot
more than we borrow so we end up spending more than we realize. Remember, if you
can’t afford to save even a 10 peso each week, you can’t afford to pay back a peso
each week on loan.

Application:

 Prepare and Develop Personal Finance Plan.

Evaluation :
 1. Briefly discuss in 1 to 2 paragraphs “ How to manage money wisely? ”

Reinforcement:

Instruction: Write in 1 whole sheet of yellow paper then upload your reinforcement to
you’re your Google drive folder in word, pdf, or jpeg (picture ) format

 Note: Upload using this file name format:

SURNAME_NAME_MO1_ EVAL

SURNAME_NAME_MO1_ REIN

Example : MERCADO_GRACE_M01_EVAL

1. Create a personal cash flow statement measures your cash inflow ( money you earn )
and your cash outflow ( money you spend ) to determine if you have a positive or
negative net cash flow for week 7.

Online resource:
https://bench.co/blog/accounting/cash-flow-statements/
Personal Finance 2nd edition, Jeff Madura, 2017 Pearson Education
Investment Management with Personal Finance, 2014-2016 edition, Lawrence J. Gitman

https://www.investopedia.com/terms/s/simple_interest.asp