DIPLOMA IN FOOD NUTRITION & LIVELIHOOD SECURITY (FN-HRS)

YEAR : TWO
PRESENTED TO: Faculty of Agriculture
PRESENTED BY: NATURAL RESOURCES COLLEGE

HOUSEHOLD RESOURCE MANAGEMENT MODULE

COMPILED BY PATRICK NDOVIE, BSc. Nutrition and Food Science

BASIC TERMINOLOGIES

MANAGEMENT
This is the process of using resources efficiently to achieve family goals. In essence management is the process
of using what you have to achieve what you want. The process include the following steps: a) Planning
b) Organizing
c) Controlling
d) Evaluating

FAMILY
Consists of the father, who is usually the head of the family, the wife or wives, and their children. There are
three types of family patterns, which are common in many countries.

a) Nuclear: Parent(s) and their biological children

b) Polygamy
c) Extended family-Other relatives are accepted into the close family group
The family is the nucleus from which a society develops, and it has a great influence on the social life of the
society. The Father and the mother are the managers of the home

RESOURCE
Whatever is available to be used. Resources can be categorized based on tangibility. Resources can be
categorized into;

a) Tangible and Intangible Resources: Tangible resources are resources which can be touched and seen.
Examples: Money, books, iron sheets, information, etc

Intangible resources: These are resources which cannot be seen but when effectively utilized, the
results indicate presence of that particular resource. Examples: Knowledge, air
b) Human and Material: Human resources are the skills and abilities that people possess. These increase
through use. The sum up of human resources is called human capital. Families invest in human
capital by educating their children so that they become useful citizens in future

Material resources include natural resources, money. They decrease through use
- Resource Stock-Sum of readily available resources an individual possesses.

VALUES
- These are principles that guides ones behavior.
- These are deep-seated psychological construct, that direct individual preference and strategy for goal
achievement.
- Examples of values include honesty or loyalty
- These values can be classified in four different ways
- Values are individual attributes that affect attitudes, motivation, needs, and perceptions
- These are formed from experiences over time and are influenced by many sources including: parents,
siblings, friends, teachers, religions, organizations, the media, and others

a) Absolute and relative values

- Absolute are extreme and definite and such values described in terms of terms of black and white, as in the
phase ”honest is the best policy”. People who hold honesty as an absolute value would say that honesty is
right in all situations
- Relative values are interpreted based on the context. They can be visualized as shades of gray that depend
on the situation for definition. A person who holds honesty as relative value will usually be honesty, but in
certain situations will put friendship, politeness, or consideration first.
- Example: If a person gets a terrible haircut and asks how it looks, person x, who has absolute values, will
respond that the haircut is awful. Person y, who has relative values, will simply say that her friend‟s hair
might be a little short
- People with more relative values tend to seek additional information about an event or situation. They want
more details or knowledge before expressing an opinion or taking action.

b) Intrinsic and Extrinsic Values

- Values can be classified as intrinsic values, which ends in themselves, or which derive their worth or
meaning from someone or something else.
- For example; a couple finding their own way around a foreign city might find that experience is intrinsically
rewarding. This couple is demonstrating the values of independence and self reliance
- On the other hand, winning an academic Award is extrinsic value because in this case a group of people
have rewarded an individual for professional excellence

c) Traditional, personal and Professional Values

- Traditional values are those commonly held by the predominant society in which one lives. Example:
Education in USA and Canada is to be started at the age of five or six and also the value Education to be
important and key to success.
- Personal Values are values individuals hold for themselves, such as courage and forgiveness. Many people
pride themselves on their personal values.
- Professional values are related to jobs and careers, for example, being ambitious, capable, or logical

d) Instrumental and Terminal Values

- Terminal values are preferences for end states existence, such as equity, freedom, or a comfortable life
- Instrumental values are preferences for general modes of conduct, such as being helful, loving, or
intellectual.

GOALS
- Once a goal has been identified, values provide the impetus towards goal achievement. The seeking of
goals requires energy, commitment and motivation.
- Not all goals are attainable/reachable, some have to be reformulated or dropped. As such goals should be
re-executed and updated.
- If goals are not fully committed to they have little chance of succeeding
- Goal attributes-Not all goals are created equal, each has certain characteristics/ attributes. For instance goal
differ in
a) Intensity-i.e. Commitment of how much the goal is desired
b) Complexity-The number of goals interrelated
c) Priority-How important the goal is
d) Timing-How long it will take to attain the goal

RESOURCES AND ECONOMICS

- Economics refers to the production, development and management of material wealth which is also
concerned with material distribution and consumption.
- In an economic system there are three questions to address:
1. What goods and services are going to be produced
2. How are the goods and services produced
3. Who will get these goods and services
- If the resources are minimal then usage should be decreased as well.
- Scarcity of resources changes the life styles.
- Over supply will force the prices to go down whereas shortage/scarcity will force the prices to go up/rise.
- Scarce goods are economic goods such as food, clothing, shelter and clean air
- In economics there is Opportunity cost which means trade-offs or choosing one activity over the other
based on a made decision. Scarcity will force people to make decisions about allocation of resources e.g.
should we save for a car or for a house? How much should we save?
- Each choice we make has a cost as such families, individuals should consider the costs
- The manager must decide how much family resources of time, labour and money will be allocated. - In
economics there is also laws of demand and Supply
a) Scarcity affects the price or worth of a resource. Law of demand implies that as prices of
goods and services rises, the quantity demanded decreases and also as demand goes up, prices
goes up
b) As supply of a good or service goes up, the price goes down, as supply of goods and
services goes down, the prices rises.
- Economic wellbeing; It is a degree to which individuals and families have economic adequacy and security.
This assist one/help to cushion oneself unbound risks. This may include assets, buses or money
(Investments)

RESOURCE ALLOCATION AND RECOGNITION

- This is about what goals has been prioritized which are set in front of you depending on your values or
their importance of your needs. There is a need to be aware of what resource should be allocated where for
the advancement of your household.
- There is a need to recognize the available resources so that you can use and have value on it as well.

DIVISION OF HUMAN RESOURCES/TYPES

1. Cognitive human resource-knowledge, imtelligent, reasoning
2. Affective human resource-emotions and feelings
3. Psychomotor human resource-mascullar activity associated with mental processes and ability
to do physical works.
- All the three should be considered at Home but for the industry you should consider only two classes mainly
intertwined

MEASURING HUMAN RESOURCES

1. Head count-Number of people in a country where you quantify the total number in a country i.e.
The population of Malawi about 15 m (Census)

Population terms and Trends

a) Demography: - Is the study of characteristics of human population i.e. Size of the people,
growth, distribution, density, movement and other vital statistics.
- It is a data used to describe population or subgroups and the population figures will be affected by deaths,
birth and immigration
i. Birthrate: is the fertility rate which is a yearly number of births per 1000 women
of child bearing age.
ii. Death rate-Mortality rate
iii. Immigration: Number of people who enter and settle in a country where they are
not native
- Unemployment increases birthrate
b) Population Age: It is important to understand the composition of the population age
because it will help in programming which group/age of people will be employed or
resources to the household.
- Minorities (i.e. Refugees); They have their own policies which needs to be considered as well c)
Household and Family
- Number of household have been increasing but number of people living in each household decrease
- This will help in programming at the household level and country level e.g. the subsidy programs to know
how many households will benefit - When deciding the resource allocation you need to consider:
1. Resource attributes and models i.e.
a) Decide what has to be done
b) By whom will it be done
c) When will it be done
d) Where
e) How will it be done
f) Which resources will be required
- As a manager you need also to know how money will be spent as such you need to:
• Initiate goal setting
• Set objectives
• Make plans
• Keep records and timetables
- The characteristics way an individual/family manages their resources is shaped by five forces:
1. Psychological/personality forces
- This include value orientation that one has
2. Economic forces
- That regulates the exchange of money, energy, materials, services and information
3. Technological forces
- That generates problem solving, inventions, tools and methods
4. Social cultural forces
- That regulates morals, norms and customs.
- These affect how you can manage the household resources
5. Political and legal forces
- That allocates power and provides constraining and protecting laws and regulations i.e.
Depending on political management and other legal forces i.e. need to have collateral then this
may bring constraints to the other households which wanted to access a loan. That‟s
constraining household resource management.

MANAGING CHANGE
- Nadler, 1998 reported that
- Managing change in inherently messy as it is always complicated
- It invariably involves a massive array of sharply conflicting demands and change simply means new
patterns of power, influence, and control and this make change hard to achieve.
- Each family and each organization is a complex social system and contains a lot of components which
needs to be coordinated: a) The work or task
b) The people
c) The formal organization. The structure, the processes, the systems, and the identity
d) The informal organization. The collective values, attitudes beliefs, communication and lines of
influences, and accepted standards of behavior
- The management problems and decisions inherent in change must be addressed because households and
families are living in an increasing complex web of internal and external changes. For example, many
functions that were once the domain of households and families, such as child rearing and meal
preparation, are now purchased to some degree outside the home.

• Change management is a structured approach to transitioning individuals, teams, and organizations

from a current state to a desired future state, to fulfill or implement a vision and strategy.
• Change management means defining and adopting strategies, structures, procedures, and technologies
to deal with change stemming from internal and external conditions.
• Change starts with a vision (a vision paints a compelling work of desired future state), creating a vision
will clarify the direction for the change.
• Change requires a strategy to ensure that the vision is achieved.

Common Obstacles to change:

• Family members 'resistance: Leverage your relationship with your family to address member concerns
on a personal level.
• Communication breakdown: Communicate key information to members on an on-going and consistent
basis.
• Costs exceeding budget
Change Management model: Many change models have been developed over time to provide structure
in approach. In John P. Kotter’s book, “Leading Change” he outlines eight critical steps when
transforming an organization.
i. Increase Urgency: Raising a feeling of urgency is the first and most critical step in a successful change
effort. With low urgency and complacency, the change effort cannot get off the ground. ii. Build the
guiding team: It is important to get the right people in place who are fully committed to the change
initiative, well-respected within the organization, and have power and influence to drive the change effort
at their levels.
iii. Get the vision right: While creating a shared need and urgency for change may push people into
action, it is the vision that will steer them into the new direction. Position the change around a
compelling picture of the desired future state.
iv. Communicate for by-in: Once a vision and strategy have been developed, they must be
communicated to the organization in order to gain understanding and buy-in. Sending clear, credible,
and heartfelt messages about the direction of change establishes genuine gut-level buy-in, which sets
the stage for the following step: getting people to act.
v. Empower Action: Empowering action should be seen as removing barriers to those whom we want
to assist in pushing the change effort. Removing obstacles should inspire, promote optimism and
build confidence around the change effort. Recognize and reward excellence.
vi. Create Short-term wins: Short-term wins nourish faith in the change effort, emotionally reward
the hard workers, keep the critics at bay, and build momentum. By creating short-term wins, and
being honest with feedback, progress is achieved and people are inspired. Focus on one or two goals
instead of all and make sure no new initiatives are added until one of those goals is achieved and
celebrated.
vii. Don’t let up: In successful efforts, people build on this momentum to make the vision a reality by
keeping urgency up, eliminating unnecessary, exhausting work and not declaring victory
prematurely. viii. Make change stick: By creating a new, supportive, and sufficiently strong
organizational culture, the change should remain. A supportive culture provides roots for the new
ways of operating. Managing the emotions in change: Resistance to change is the largest obstacle
that leaders are faced with when initiating a change effort. It can be very damaging to the process
and can potentially stall the efforts to move forward if not addressed appropriately.
• William Bridges developed a model that reviews the emotional impact of change over time and the
leader’s role. He describes the difference between change and transition. Change is situational and
will happen without the people, whereas transition deals with the psychological impact on the
people.

• William Bridges model: 3 phases of transition

 • Managing the emotions in change: 3 phases of transition
1. Ending, Losing, Letting Go: In this phase, members must come to a point where they can let
go of the old situation and until they let go, they will not be able to move on.
2. The Neutral Zone: In this phase, members are in the gap between the old and new where the
“old” no longer works and the “new” has yet to be established.
3. The New Beginning: In this phase staff and faculty begin to show emotional commitment to the
new state.

MEETING INDIVIDUAL, FAMILY AND SOCIETAL NEEDS

- Along with all the external changes that are occurring, the family itself has become a more diverse
institution. Collectively, single-person households, single-parent families, and two-income families
outnumber one-income families with both parents sharing a residence.
- Even through the family is taking on diverse forms; it still remains an important stabilizing force in the
rapidly changing, often chaotic outside world.

1. Children and Child Care

- Child care is abroad issue with numerous ramifications for families and for society in general.
- Providing financial support for children is a form of child care and also physical and emotional care.
- As both parents increasingly are working outside the home, child care is becoming a more and more
critical issue for many families.
- Families manage child care in several ways:
a) One parent may stay home, or neighbors, relatives, may provide care
b) Family day care homes and child care centers in the community or at the parent‟s work sites are other
options
c) If the children are school age, parents may enroll them in before-school and after-school programs and
summer camps and parents often combine several of these methods
- Young families with children often have more management problems than other types of families. For
example; studies show that families with young children have the most time management problems
because children require so many hours of physical and nurturing care.
- These problems may be exacerbated in young families where parents may be completing education or
launching their careers at the same time that they are having children
- Although parental stress is associated with child abuse, it is important to note that most parents do not
abuse their children even when experiencing stress. Developing better management skills can help
parents deal with stress and a well-developed management skill bring a sense of mastery and a feeling
of being in control.
- A parent who has developed management skills will find it easier to form strategies, solve problems,
and adjust to change
2. Elderly, elder care and Aging
- The majority of caregivers are daughters, wives, or other females and their role can bring with it a
mixture of joy, guilt, service demands, and emotional and financial burdens.
- The difficulty of the role depends on many factors:
a) The health of the elderly dependent person
b) The personalities of the elderly person and caregiver
c) Their mutual resources
d) The social support they receive relatives and community groups
- From the management viewpoint, the need for care giving may develop slowly, allowing a family to
adjust and plan for it, or it can arise from a sudden crisis that completely depletes the family‟s emotional
and financial reserves\
- From the management perspective, care giving for dependent elderly can precipitate a number of
resource allocation problems.
- Time, energy, and money may all be strained in care giving situations. In addition the caregivers have
to maintain a sense of humor and be sensitive to the elderly person‟s desire for independence and
dignity.
- The adult child may also feel awkward managing her or his parent‟s affairs and avoid this task until
health or safety of the parent requires it.
- Understanding the aging process and the needs of the elderly can help caregivers perform their role more
effectively. The aging process has three aspects: Physical or biological, social and psychological.
- Gerontology: is the scientific study of the aging process
- Commonly, old age is defined as beginning at age of 65, but this is arbitrary boundary because
chronological age is poor indicator of a person‟s social, economic, physical, or mental condition.
- One of the most important life changes people make is adjusting to retirement. Regardless how much
workers plan and anticipate this change in work role, it can still be difficult because jobs gives people a
routine, companionship, and a sense of accomplishment.
- Retired people feel useless and aimless as without roles people feel a sense of loss and a lack of direction,
and a loss of work routine can be disconcerting.
- To counteract this feeling of loss and provide extra income, many retirees take part time or seasonal
work but if they are self employed, they may never retire.
- As with all age groups, older adults have varying lifestyles and, therefore differing management needs.
Other resources that may be affected in the later years include emotional, health, human energy, and
financial resources of both care givers and elder dependents.
- Besides changing of perceptions of aging, people need to enhance their mental and physical vitality by
focusing on active strategies that can extend life and improve the quality of life. The management
strategies may include:
• Thinking over what is essential and what is controllable
• Identifying strategies to help prevent health problems or poor quality of life
• Applying a proactive approach to diet, attitude, and activity levels
• Using practical techniques to incorporate improved lifestyles changes in everyday life
 TIME MANAGEMENT AS A RESOURCE
- Time is measurable and time management is the conscious control of time to fulfill needs and achieve
goals.
- The way time is allocated is based on an individual’s values and what is important to that person.
- Time is a resource that can be measured in units i.e. minutes, seconds, hrs, days, weeks, months and
years but comprehending time can be difficult because individual’s perception and use of time affect the
way they think about it
- Time has the beginning and the end.

TIME AS A RESOURCE

- People in business often say, “Time is money”. That is true. In economics time is considered a resource
because it is a scarce commodity.
- Sometimes money can be traded off for time. You can give someone money to do something for you if
you have no time to do it yourself.
- Time is a resource that we all have in equal amount. No one has 25 hours per day. We all have 24 hours
per day.
- Time as a resource is spent, saved and allocated to get something wanted. Students spend time in class
in order to learn. Students allocate time to study different courses.

DISCRETIONARY Vs NONDISCRETIONARY TIME

- Time can be classified as either discretionary or nondiscretionary

1. Discretionary Time
- This is a free time, which a person can use in any manner that she/he wants. Examples of discretionary
time include:
a) Time for sports
b) Time for chatting
c) Time for walking about
- Usually, children have more discretionary time than adults. However, all people have some discretionary
time e.g. Weekends, time for meals, time to take a bath, etc.
- Discretionary time allows an individual to make choices.

2. Nondiscretionary Time
- This is time, which an individual cannot control fully by him/her.
- Examples of discretionary time include:
a) Time for classes
b) Opening and closing time of cafeteria, banks, libraries, shops, etc.

TIME MANAGEMENT SKILLS

- Time as a resource must be managed

- Time management skills can help a person to use his or her time to the maximum in a beneficial way
- Both discretionary and nondiscretionary time can be managed successfully by the following suggestions:

a) Use a dairy planner

- Write down everything that you need to accomplish during the day
- This helps you to keep track of everything that you need to do as it is easy to forget the little things and
then kick yourself later when you remember.

b) Prioritize your tasks

- Use the ABC priority method in which the most important activities are designated “A,” medium-value
activities are “B,” and low-value activities are “C”

c) Keep Track
- Spend one or two days recording what you do throughout the day
- You will be surprised to find out how much time is wasted through interruptions and looking for items

d) Discover your productive time

- You probably have one time of the day when you feel productive - Schedule your toughest assignments
for that time.

c) Take breaks
- You cannot productively throughout the day. You need to take a break and get back to work.

d) Stay Organized
- It is time consuming and stressful to work in a messy environment - It can be difficult to find things
because they are hidden.
- Stay organized and save time that is spent looking for hidden documents and things.

e) Make the alarm clock your friend

- Your alarm clock is a time management tool that can pester you to stay on schedule.

f) Make waiting productive

- You spend a lot of time waiting. You wait for classes, buses, appointments, meetings, etc.
- Make use of waiting time by touching up your lecture notes, performing simple assignments, etc.

g) Consume information selectively

- You have too much flow of information from the internet, television, radio, newspapers, etc. - Only
choose information that is useful otherwise the rest wastes your time.

h) Stop other people and things from stealing your time

- Friends, family members, phones, etc, can sometimes be a constant distraction. - Do your work or study
where you are not likely to be disturbed.

i) Use technology to make life easier

- Sending email save time than using the post office. Fax and phones also save time.
 j) Contract out tasks
- Contract out tasks you do not have time for.

k) Divide your time

- Divide your time suit your activities and make sure the activities go by the allocated time.

l) Delegate
- Save time by giving simpler tasks to your subordinates

TIME PERCEPTION

- Time perception is the awareness of the passage of time. Researchers have found that many factors come
into play in time perception. Key factors include:
a) Drug and alcohol consumption
b) Changes in body temperature
c) Lack of exposure to natural daylight
d) Culture
e) Environment
f) Absorption in the task at hand

TIME PERCEPTION ACROSS CULTURES

- In Anthropology, a widely held concept is that time perceptions are strongly influenced by culture. The
following models illustrate what time means to different cultural groups.

1. Linear-Separable Model of Time

- Most western cultures including those that have been influenced by western cultures view time as linear.
- Linear time is related to economic time where an investment in time is expected t payoff in future - This
model values speed and time saving products are encouraged.

2. Procedural-Traditional Model of Time

- Individuals with procedural perception consider the actual steps, procedures and events to be more
important than the time spent in the activity.
- Time saving is not as critical as doing things correctly, what is valued is to complete the task no matter
how much time it takes.
- Scientists trying to develop a cure for an ailment subscribe to procedural-traditional model of time.
 3. Circular-Traditional Model of Time
- This model emphasizes the repetitive nature of time. It assumes that today will be much like yesterday
and tomorrow will be more of the same.
- In this perception model things may move forward or remain the same and life goes on. The circular
perception is associated with poverty because life for poor today is the same as yesterday and will be the
same tomorrow.
- People living in primitive or agricultural subsistence cultures subscribe to this model of time.
• It should be noted that none of these models is good or bad because all of them simply illustrate cultural
differences on how time is perceived.
• Some countries use a combination of the models or have cultural groups that subscribe to different models.

QUALITATIVE AND QUANTITATIVE TIME MEASUREMENT

1. QUANTITATIVE TIME MEASUREMENT

- Quantitative time measurement refers to the number, kind and duration of activities that occur at specific
points in time e.g. minutes, hours, days, etc.
- Quantitative time researchers are concerned with how much time an individual spends in food preparation,
shopping, eating, playing, childcare
- Many of these time-use data are gathered in four ways:
a) Self report or dairy method
- Individuals record their own time-use data on a form provided by the researcher
b) Recall Method
- Individuals are asked to think back i.e. recall and explain in detail the previous day‟s activities.
c) Observation Method
- A researcher observers and records the precise way, duration, and lining up of an individual‟s activities.
d) Self-observational control-signaling method
- This method is used in business management studies. Employees are asked to record their time use at a
given signal e.g. when a bell sounds, a telephone rings, a light flashes, etc.

2. QUALITATIVE TIME MEASUREMENT

- Qualitative time measurement investigates the significance of time use as well as the satisfaction it
generates to individuals. It also measures who the individuals are spending time with.
- The „who‟ part of how we spend time is important because daily life is defined by what we do and who
we are with.
- We feel we have spent our time well when we are with certain individuals e.g. spouses, close friends, etc.
- People spend time in three social context:
a) Public: This is time spent with strangers, coworkers, fellow students, etc
b) Family members and relatives: This is time spent for kinship, special bonds and home c)
Solitude: This is time spent alone
- There is an increased use of qualitative time measurement in a response to the growing recognition that
simply knowing how many minutes are spent washing dishes or caring children does not provide as
meaningful time use as knowing hoe individuals performing the task feel or how they interact with others
involved in the task.

FACTORS AFFECTING TIME ALLOCATION

 Since time is a limited resource, individuals have decided how to allocate time. Time allocation decisions
are affected by the following factors:
a) Demands
- As lives for individuals become complicated, increasing demands are placed on time and most things in
our lives demand time e.g. education demands attendance; employment demands a certain number of hours
of work.
- Sometimes demands for time conflict. For instance; a lecturer might be required to teach and at the same
time attend a meeting; a student might be required to submit two assignments on the same day; a woman
might be required to care for a child and prepare food at the same time.
b) Dovetailing
- (Doing two or more things at a time) may help to solve time demands especially where it is possible to
do so.
- Ladies often prepare meals and pound maize at the same time.
- Where the activities cannot be combined, priorities must be set when allocating time.

c) Sequencing
- Sequencing means following of one thing after another in a series. For example, sharpening a pencil before
writing with it, attending an interview before you start working, washing clothes before ironing them, etc.
- Time allocation has to be done with the guidance of the sequencing of activities.
d) Standards
- A standard is an acknowledge measure of comparison. Standards serve as guides or measures of human
behavior.
- In today‟s fast-moving world, individuals do not have enough time to meet the standards they would like
to have.
- Fulfillment of standards requires time and if many things require standards, time demand will be high.
- When allocating time it is important to take note of the standard to determine how much time to allocate.

MANAGING WORK AND FAMILY

- Voydanoff (1989) several job demands that are related to work/family conflict:
• Role ambiguity (doubt or uncertainty)
• Role conflict
• Intellectual or physical effort
• Rapid change
• Pressures for quality work
• Pressure to work hard and fast
• Heavy workload
- The list above implies that work is a stressor on the family. It can be, but work also benefits families
- Most women in the labor force work primarily because they or their family needs the money and
secondarily for their own personal self-actualization
- Promotions, praise, awards, and raises are other benefits of work that can increase self-esteem

ATTRIBUTES OF HOUSEHOLD RESOURCE

- Resources have certain characteristics/attributes such as:
2. Resources are interdependent
3. They are exchangeable
4. Material resources are limited
 5. Resource use relies on person‟s ability to process information and make decisions
6. Sometimes resources can be stored e.g. fuel, books, furniture, clothes
- Household resources can be characterized as affective, cognitive and psychomotor attributes

THE MANAGEMENT PROCESS

- This involves thinking, action and results. Since it s results oriented, management is considered an applied
social science. The knowledge obtained through the study of management is evaluated in light of its ability
to make an individual‟s of family‟s management practice more effective.
- Although management is practical, it is not necessarily simplistic as it becomes complex because
individuals‟s and families choices are constrained by limited resources - Since management is result
oriented, we have to think of the outcome

1. The process begins with the problem, need, want, or a goal.

- As a manager you have to define the problem and how has it come into existence.
- Problems are questions, dilemmas, or situations that require solving
- Needs are things that are necessary while wants are things that are desired or wished for, such as a million
dollar.
- These words sometimes are used interchangeably but in management they are viewed as distinct. A need
is something required to survive or to sustain life.
- According to Dennis Bristow and John Mowen (1994), there are four types of needs and these are:
a) Physical needs- A person‟s need to sustain life, obtain sensory pleasures, and maintain or enhance
her or his physical characteristics (i.e. muscle tone and physical beauty)
b) Social needs-An individual‟s need for relations and interactions with other people; the desire to
be included in a group
c) Wealth needs- An individual‟s need to obtain money, goods, property and other assets with
monetary value that are transmittable between two or more people
d) Information needs- A person‟s need to gain knowledge and invstigate, explore, study, and/or
understand phenomena; the need to satisfy intellectual curiosity and engage in cognitive activity
- For example people will need food, air and shelter to survive. Wants are specific, they are things or
activities that make people feel comfortable and satisfied.
- Goals are end result that requires action. A college diploma is a goal of most college students, and passing
courses is the action required to reach that goal. In greater schemes of life, goals are arranged in a hierarchy
from fairly ordinary to extraordinary.

2. Clarification of Values
- What do they really want and does it fit into their value system?
- As the move through the management process, individuals need to clearly identify what they want to
achieve and to ensure that their goal-seeking behavior is compatible with their values. For example, an
 individual may desiremore money, but robbing a bank to get it may not fit the person‟s or society‟s value
system.
- Management is based on values and goal-seeking behavior; without these the process would be aimless
and misdirected.

3. Identifying resources
- Whatever is available to be used and these include time, information, skills, human and mechanical energy
and money. The manager needs to identify the resources available either tangible or intangible.
The resources are reconciled by quantitative and qualitative criteria known as standards.
- Standards-These provides measures of values and goals. They are set by individuals and families
themselves, friends, employers, schools and government

4. Deciding, planning, and implementing

- There is decision-making and this involves choosing between two or more alternatives.
- Planning- Series of decisions leading to action, and implementation is putting plans into action. Plans give
focus and direction to the pursuit of needs, wants and goals.
- Throughout this step, evaluation takes place and adjustments are made as needed
- For example; an individual planning a trip may select a new route or time of arrival as circumstances
change.

5. Accomplishment of goals and evaluation

- The process as a whole is evaluated. Individuals are pleased when they achieve their hard-sought goals,
but they often overlook evaluation, which in many ways is the most important step in the process.
- The following questions should be asked when evaluating:
a) Was the problem solved?
b) What was learned?
c) Which decisions or plans worked and which ones failed?
d) What adjustments should have been made?
- The answers to these questions are part of feedback (information that returns to the system) that enables
the individual‟s overall management knowledge and ability to grow
- The management process is never stagnant as it deals with action and replication; and its tests are results
- In summary the stages are shown below:

SUCCESSFUL PLAN: PUTTING

MANAGEMENT INTO ACTION
 - Planning is the operalization of choices.
This is the stage when people say „okay, we
know what we want; now how are we going to
go there?‟ So, a particularly
critical management skill is the ability to
create and execute an effective plan.
- Planning offers several benefits; it:
• Highlights important problems and
opportunities
• Invests resources in the right tasks
• Encourages the development of goals
• Make decision making more effective and
efficient
• Motivates and coordinates efforts
• Provides a feeling of growth and
accomplishment
• Involves others
- How much planning is necessary? The
answer depends on the situation and individual‟s goals, resources, levels of motivation, and abilities.
- One fundamental management principle is that planning skill increases with knowledge, practice, and
effort. The more individual‟s plan, listen to feedback, and evaluate their decisions, the stronger their
management skills become.
- To be successful, plan needs to be realistic, clear, flexible, and well thought out and executed. The
experience of job hunting provides a good example of how planning works and how feedback can help
individuals make adjustments to their plans.
- Most college students want to graduate and get a good job that uses their skills, education, and training.

WHY MANAGE?
- The answer to this question is that people have no other choice
- Certainly, life involves non managed actions, such as everyday activities that do not require a lot of thought
or planning (e.g. getting up in the morning and brushing one‟s teeth), but the bigger things that most people
want, such as a job and a family life require management skills
- Management takes people from where they were to where they want to
-

-
Management also provides new ways of critiquing life situations and offers new perspectives on the nature
of change
When you are frustrated or confused, management supplies constructive order, reduces chaos, and suggests
steps to follow.

WHO MANAGES?
- The answer to this question is that everyone as management is such a natural and normal part of life that
few people stop to think about themfor it.
- The management process should be employed every time a school, career, or personal decision is made.
- Individuals consider their needs and wants, their resources, their resources, their preferences, the situation,
the other people involved, and so on. Then they create a plan of action and implement it.
- The individual making decisions lies at the heart of the management experience.
- Management requires more than decision making; it is a multifaceted process involving many concepts,
actions, and reactions.
- Management also includes organizing, scheduling, synthesizing, analyzing, resolving tension, negotiating,
reaching agreement, mediating, problem solving, and communicating. This makes management a difficult
process.
Although everyone manages, each has his or her own management style, or characteristic way of making
decisions and acting.

FACTORS THAT INFLUENCES MANAGEMENT STYLES

1. History
- Influences the way decisions are made and the options considered. - This
includes the history of individuals, families, and societies.

2. Biology
- Dictates basic physiological needs such as food, shelter, air and water.

3. Culture
- Provides a systematic way in which to fulfill needs. As social beings, people care about each other.

4. Personality
- Sum total of individual characteristics, enduring traits, and ways of interacting. For example, personality
affects how a person interacts with the environment.

5. Technology
- Applies method and materials to the achievement objectives. Technology includes; laws, techniques, tools,
material objects and process that help people get what they want.

MASLOW’S HIERARCHY OF NEEDS

-

-
- Developed by Psychologist, Abraham Maslow (1908 – 1970) who observed that physiological needs must
be met before higher-order needs are undertaken
He hypothesized that each individual has a series of needs ranging from low-order needs to higherorder
needs
Of these the most fundamental influence is biology.
- In Maslow‟s hierarchy of needs, physiological needs (e.g. thirst, hunger) must be at least partially met
before higher-order needs such as safety, belongingness, and love, esteem, and self-actualization can be
fulfilled.

Figure 1: Maslow’s Hierarchy of Needs (Maslow, 1954)

- The highest level of need, self-actualization, means to fulfill one‟s highest potential. Self-actualizers fully
integrate the components of their personality, or self.
- It can also be said that they attain self-realisation, the process in which individuals have the opportunity to
invest their talents in activities which they find meaningful.
- Other factors influencing management style, history, culture and personality help define human needs and
aspirations. Technology provides the means by which the human race progresses. -

1. DECISION-MAKING

- Decision making is essential to maintaining and improving life conditions and value guide decisions.
- A decision maker values an issue or a life condition enough to spend time thinking about it.
- Values also influence decision makers because they realize that the choices they make will have positive
or negative consequences
- Decision vary in intensity and important
- The purpose and content of decisions are related to other aspects of the management process, such as
planning, implementing, and cost/benefit analysis. For example, each decision entails a cost in time and
energy and sometimes money.
-

-
- Decision makers try to minimize the costs and maximize the benefits of a decision
- This desire to maximize positive outcomes and to minimize mistakes motivates individuals to make the
best decisions that they can.
De4cision situations present both problems and opportunities as such in analyzing the decision situations,
individuals appraise alternatives and identity useful information and resources.
An important resource is time and an individual or family can save time by eliminating alternatives that do
not fit their values
- Decision making is value based as such it is highly personalized
- Each person‟s decision making also tends to follow a pattern, with successful decisions being repeated
again and again.
- The types of decision made, the speed at which decisions are made, and the amount of information gathered
before making a decision are all part of a person‟s style. For example, some individuals are quick deciders,
others are more deliberate - Some decision styles are irritating

STEPS IN DECISION MAKING

- Decision making involves a series of steps that result in the choice of an alternative. The process can be
long or short and it is obvious that more time will be spent deciding where to build a new home than in
choosing which movie to see.
- When the process is long and complicated and includes a sequence of intentions, it constitutes a decision
plan.
- Decision makers use different strategies for different situations. The strategy selected will depend on a
number of factors such as:
a) The decision involved
b) The characteristics of the decision task
c) The decision making style of the decider

- The following are the 6 steps:

1. Define the decision

- In defining the decision, the individual should take into account the purpose of the needed behavior, the
relevant background information, what information is needed, and how it will be used in decision making
- In so doing, the layers of a potential decision are peeled back to reveal the core of the situation.
- Once the decision has been defined, the decision maker can move on to the next step

2. Estimate the Resources Needed

- The decision maker has to decide what resources will be needed and these resources can include Time,
money, information, and anything else that is useful in decision and subsequent planning and action.
- The number of possible alternatives is limited by the resources possessed or anticipated in the future

3. Consider Alternatives
- Given the limitations on their resources, individuals seldom consider all alternatives
-

-
- Narrowing down the possibilities to one or two acceptable alternatives is an important part of the decision
process.
 4. Imagine the consequences of Alternatives Courses of Action
- Imagining or thinking through the most likely alternatives is the next step
- Envisioning what will happen if a certain decision is made is enjoyable or distasteful that some people get
stuck on this step.
- For example; in consumer decision making, the step is called pre-purchase expectations, which are beliefs
about anticipated performance of a product or service. Before buying, an individual tries to imagine how much
pleasure or pain he or she will get from the purchase

5. Develop an Action Plan and Implement it

- Once an alternative is selected, a course of action, a strategy must be developed - Putting the decision
into action is called implementation.
- During this step, the decision maker monitors the progress being made and evaluates how well implementation
is proceeding. Are things going as planned? On schedule? Are adjustments to the plan necessary?

6. Evaluate the decision

- After the process has been completed, the decision maker looks back to judge how successful the decision
was. Did I make the right decision? Should I have done something else?
- In consumer decision making, this step is called post-purchase dissonance.
- After a major purchase, such as a car, the buyer is likely to seek some reinforcement for the decision by talking
to other owners of the same model or reading advertisements or news stories about the car.
- Being assured that the right decision was made reduces doubt and anxiety.

DECISION MAKING MODELS

- Because decision making is an abstract concept, decision-making models are useful because they provide a
way to visualize how elements of a decision interact
- These models include Central-satellite and chain models.

a) Central-satellite Model
- Central-satellite model, a central decision is surrounded by decisions that are off-shoots of the central decision.
- This model is suitable for larger, more complicated situations.

b) Chain Models
- In this model, each decision builds on the previous one forming a sequence of decisions
- It is appropriate for smaller, systematic decisions
- Businesses such as catering services or conference and wedding planning services use both models to organize
receptions, banquets, meetings, and events. E.g. preparation of meals
 Figure 2:
Chain
Model
1. PERSONAL
DECISION
MAKING

- Although all decisions-from which car to buy to whether to smoke-are influenced by others, ultimately the
individual is responsible for his or her own decisions
- Individuals begin to learning how to make decisions at an early age
- During the socialization process, children are given the opportunity to make choices and to learn from decision
situations.
- By the time they become adults, most people assume they are competent decision makers
- In reality, however, this assumption may fall short if there is a difference between the actual and perceived
quality of decision
- The actual quality refers to what is happening while the perceived quality of decisions refers to what an
individual thinks is happening in the decision process.
- Potentially, then, a person could deceive themselves into thinking that a poor decision is a good one or at least
an acceptable one.
- Experience and improved decision making skills can narrow the gap between the perceived and the actual. -
Decision making style is affected not only bb an individual‟s socialization, knowledge, ability, and
motivation, but also by his or her personality traits, such as open mindedness, innovativeness, self confidence,
and courage
- Another factor that can affect decision-making style is self esteem. Low esteem often results in indecisiveness.
- Indecisiveness can be a major problem for individuals, families, and organizations. Possible causes of
indecisiveness are:
a) Fear for the unknown
b) Procrastination
 c) Fear of making a wrong decision or mistake
d) Fear of acting on one‟s own
e) Lack of „good judgment‟
f) Feeling overwhelmed
g) Fear of taking responsibility or standing alone on an issue
h) Over dependency on other people‟s opinions

2. FAMILY DECISION MAKING

- The main difference between personal and family decision making is that the latter is more complex.
- The more people involved in making a decision or potentially affected by a decision, the more complex the
decision process is likely to be.
- In a more complex situation, each family member may suggest a course of action and sometimes they cannot
agree to.
- Homes and families can provide a base for cooperation, coordination, and negotiation. Family members being
in the base their own needs and wants, but sometimes one family member‟s needs and wants are in conflict
with others.
- When conflict rather than harmony is characteristic of the home or family, the decision making process
becomes more complicated
- A practical example of a family making situation is who does what in the home. E.g. Women are more likely
to do the laundry, prepare meals, shop for groceries, clean the house, care for children, buy gifts, make
decisions about furniture and decoration, and pay bills.
- There are three types or styles of family decision making and these are:

a) Accommodation
- The family reaches an agreement by accepting the point of view of the dominant person. - Power is a critical
factor in accommodation.

b) Consensual decision making

- The family reaches a mutual agreement equally acceptable to all individuals involved

c) De facto decision making

- This is characterized by a lack of dissent rather than by active assent. It usually occurs when no one really
cares about the outcome of the decision. For instance, no one in a family may have strong feelings about which
television show to watch.
- Families in which the husband and wife share equally in making most of the decisions are syncratic.
- Families can also be autonomic, which means that an equal number of decisions are made by each spouse.
Thus, in syncratic families the decisions are shared, whereas in autonomic families the spouses make an equal
number of separate decisions.

2. PROBLEM SOLVING

- Problems are questions or situations that present uncertainty, risk, perplexity, or difficulty.
- Problem solving involves making many decisions that lead to a resolution of the problem. In some disciplines,
the terms decision making and problem solving are used interchangeably, but in resource management they
are used differently
- Decision making encompasses all sorts of situations (many of them routine), needs, and wants, whereas
problem solving implies that a certain degree of difficulty or risk is involved.
- Since the more the people involved in a decision, the more complex the decision process. Thus the family
problem solving is usually is more complex than individual problem solving
- As motivated processes, problem awareness and analysis are subject to five levels of motivation influences.
Ie.
a) Needs, motives and goals of the problem solver
b) Perception and believe of the problem solver
c) Values of the individual solving problem
d) Resources of the problem solver
e) Learning background and previous experience of the problem solver
- These influences, affects the way the person defines the problem and makes decisions to solve the problem

STEPS TO PROBLEM SOLVING

1. Problem definition:
- Is a creative process requiring the individual to see common threats and sends vital calls effect relationship.
- Problems are best defined in form of a questions

2. Problem analysis
- Not two problems are the same but each of them require its own timing, individuals and circumstances and
stems from specific situations
- Since many complex problems, one approach is to divide the problem into sub problems and analyses each
separately

3. Plan of Action
- Once the defining and analysis phases are over the individual design the plan of action. Planning involves
putting together the activities/steps to follow
- The objective of planning is to produce system and solutions that can provide satisfaction to the problem
solver and other participants in the problem
- Motivation is the key part to solve the problem which depend on the amount of discrepancy between the
desired and the actual state, important of the problem
- Search for the information which leads to the formation of alternative courses of action and evaluation through
internal search (within yourself) and external search (environment searching)

3. PLANNING
- It is a process involving a series of decisions leading to need or goal fulfillment. A plan is a detailed schema,
program, strategy, or method worked our beforehand for the accomplishments of a desired end result.
- For example a student planning to graduate in a specific time will follow a plan of action that entails
completing required courses and filling out the paperwork necessary to ensure graduation. As the graduation
date nears, he/she must rent a gown and a cap.
- Plans such as graduation require a systematic approach to problem solving and goal attainment.

THE PLANNING PROCESS AND TASK

- Planning is more complex than decision making.
- A process is a system of operations that work together to produce an end result. The word implies movement
or change
- Planning is the thinking and information-gathering process involving a series of decisions.
- It is a process because formulating plans requires several steps, such as information gathering, sorting, and
prioritizing; then, based on this information, the planner must decide which plan most likely will succeed.
- The decision and steps are not random, but proceed in an orderly, logical sequence. For example; after living
in a dormitory for a semester, but she will not move out of dormitory without doing some planning.
- When individuals and families plan, their task is to figure out what needs to be done and how to go about
doing it
- A plan should have a purpose and it should be going somewhere.
- One of the reasons individuals and families engage in planning activity is to help them visualize what may or
may not happen
- Among the questions they may consider are the following:
i. Will others cooperate ii.
Is there enough money? iii.
Is there enough time?
iv. Is there enough information?
- Planning takes time, but sometimes time is in short supply. Individuals, families, and organizations may
become caught up in everyday activities and crises that they have no time to plan - Planners have to be
motivated; they must want their plans to succeed.

- There is a planning process model i.e.

Awareness Gathering and analyzing information forming a plan implementing a plan evaluating
a plan
- All these steps are happening in an environment of which it can be affected by other environment factors
TIME STRESS AND PLANNING
- Planning takes time but sometimes time is in short supply. Individuals, families and organization may become
so caught up in everyday activities and crises that they have no time to plan. In that case, they are victim of
Gresham‟s law of planning. The paradox of planning is that it can create stress and also relieved stress.
- Stress is relieved when people are more relaxed once a decision is made. Planning is affected by the following
factors:
a) Situational aspects
b) Personality characteristics
c) Motivations

A) Situational Factors
- Situational factors including environment context, shape, wants, myths, needs. Individuals and family only
respond to such changes in situation
- Among the situational influences to be considered in making plans are:
a) Physical surroundings
b) Social surroundings
c) Time
d) Task

B) Personal Traits and characteristics

- Although situational factors are important the person making decisions lies at the heart. The planning and
implementing that will take place will be based on how that individual assesses the situation. That’s
personality plays the critical role in planning.
- The types of personality are introverts with extroverts. Extroverts are less interested in self and more interested
in others and the environment while introverts tend to think about themselves first and their thoughts are
directed inwards.
- Other personality factors that affect planning e.g. if a person is a dreamer or realistic, consistent or inconsistent,
patient or impatient.

C) Motivation
- Motivated planning behavior, is thinking activity that is directed towards a particular goal or achievement
- Achievement motivated people set goals for themselves and work hard towards attaining those goals -
Motivation has three main aspects i.e.
a) Goal/objective must be attractive and desired
b) Goal/objective seeker must be persistent
c) The seeker becomes discontented if she/he does not reach the goal/objective

STANDARD SETTING
- Standards are another important part of the planning process.
- The procedures, conduct, and rules of individuals, families, and organizations all incorporates standards
- In planning, standards provide criteria for action and these standards set affect the assessment and allocation
of resources, leading to the clarification of demands, decisions, plans and actions.
- It is important that the plan fit the standards of the individual or situation.
- Standards evolve or develop over time. For example a couple gradually develops compatible standards and
defines what constitutes a comfortable life together. They explore what they value and define what they want
as individuals and what they want as a couple. They will undergo changes as such throughout these changes;
the couple‟s standards will adjust to their needs, life stage, and resources.

SCHEDULING AND SEQUENCING

- Almost all plans include schedules or sequences of events and activities. Scheduling refers to the
specifications of sets of time bounded projected activities which are sufficient for the achievement of a desired
goal set.
- Schedules include written plans with deadlines or end points, diaries, lists, and timetables.
- Scheduling involves the mental process of sequencing and sequencing means ordering of activities and
resources necessary to achieve goals. One goal succeeds the other until the need or the goal is fulfilled.

- These activities can be independent, dovetailed, interdependent, or overlapped.

- a) Independent
- Takes place one at a time and they stand alone.
- None of the work depends on the others.

b) Dovetailing
- Occurs when two or more activities take place at the same time; some examples, a person eating popcorn
while watching TV, Listening to the radio while doing homework.
- It can be useful time management tool, but it is panacea.
- Each individual must decide how many activities she/he can reasonably handle at once.

c) Overlapping activities
- Involve a combination of activities that require intermittent and/or concurrent attention.
- For example, college students with children combine child care with schoolwork, going back and forth
between activities
d) Interdependent activities
- Activities are interdependent when one activity must be completed before another can take place. In other
words, the activity builds on another and is not effective in isolation. For example; hiring someone before a
position is set and money is allocated.
- In a family, plans should accommodate the different scheduling needs and preferences of the individuals in
the household.
-

ATTRIBUTES OF PLAN
Workable plans have the following attributes:
1) They are clear: must be understood by everyone not ambiguous
2) Flexible
3) Adaptive: Ability of the plan to respond to unanticipated events that may occur
4) Realistic: Implies that the plan is feasible and likely to work
5) Appropriate: It be suited to the situation and the people involved 6) Goal directed

TYPES OF PLANS

- Many different types of plans exist and these may be categorized by time, such as short-term plan and
longterm plan.
- Plan can be distinguished by the parties involved: individuals, households, organizations, communities, or
nations.
- Plans that are commonly associated with individual and family resource management are: a) Directional
plan
- It progress along a linear path to long term goal fulfillment. E.g. plan to graduate from high school and then
graduate from college and then go to law school to become an attorney. b) Contingency plans
- These are backup or secondary plans to be used in case the first plan does not work. The military,
organization are known for contingency plans. c) Strategic Plans
- Use a directional approach and include both a proactive search for new opportunities and a reactive solution
to existing problems.
- Strategic plan focuses attention on the initial stages of the decision-making processes-the opportunities and
occasions for the choice and the design of new action strategies.
- Strategic plans are often associated with the military, business, politics but they can occur in an individual
and family life. For example Job hunting.

4. IMPLEMENTATION
- It means putting plans and procedures into action and controlling the action. Controlling takes place because
once plans are activated, they need to be checked to make sure that they are leading to the desired end state.
- It is easier to make plans than to initiate and monitor them. Environment, economic, social, and a variety of
other forces and conditions can positively or negatively affect the outcome of the most carefully prepared
plan. For example, planning a dream house and building an affordable house are two different things.
- The factors that affect implementation are the same ones that affect planning: a) Situations
b) Personal traits and characteristics
c) Motivational factors

- Possible blocks to successful implementation include:

-
a. Other people: They may not believe in the same plans you do, or they may drag their feet b.
Costs and other restrictions
c. Competition: Perhaps there are competing plans that are better
d. Crises: Long-term plans may be put on hold if resources are required for more immediate needs
e. Procrastination or lack of motivation
f. Close mindedness
Several strategies can be employed to avoid these blocks and the main strategy is to intelligently size up the
situations that arise and respond accordingly.
- In the end implementing requires scanning sensibility-a monitoring of your actions and the actions of those
around you. Scanning is activity in which individuals or families “read the world”, looking for signals and
clues that could have strategic implications.
- Checking and controlling some of the elements that play a part in scanning

CHECKING AND CONTROLLING

- Once the plan is activated, different situations or personal factors may indicate the need for corrective action.
- To be successful, plans need to be checked and rechecked and this checking or adjusting activity is a type of
controlling.
- Checking: is defined in management as determining if actions are in compliance with standards and
sequencing
- Controlling takes time therefore the implementation has to weigh the costs against the benefits of spending
time and energy on checking.
- Controlling is most effective at significant milestones or critical points in a plan. Teachers do this by giving
tests or assignments at appropriate intervals of learning. This is the way of checking learning progress.
- As with so many other aspects of management, the key to successful planning and implementing is a balance
between wants, goals, and actions.
- In checking phase, achieving a balance is essential to obtaining a successful outcome.

5. EVALUATION
- The word evaluation comes from an old French verb, evaluer, meaning to be worthy or to have value.
- To evaluate means to determine the worth of an effort and thus a process of judging or examining the cost,
value, or worth of a plan or decision based on such criteria as standards, met demands, or goals.
- It occurs throughout the management process: in setting goals in the first place and at each step along the
way. Since judgments are subjective, evaluation can turn out to be flawed or biased as such to ensure better
end results, people engage in assessments.
- At the end of management process, a final evaluation takes place. If a goal is achieved, the manager can look
back with satisfaction on how things turned out. Whether the outcomes are effective or not, the manager
should review what went wrong right and what went wrong with the process so that she or he can learn from
it for future decisions
- Since evaluation can be painful, people often ignore this step and proceed immediately to the next problem
or goal.
- Nevertheless, looking back and evaluating past decisions are crucial steps in becoming a better manager.
-
- Improving management skills is important because competence in problem solving has been identified as an
essential part of healthy marriages and family systems.

ASSESSMENTS

Involves the gathering of information about results, the comparison of these results with the past results and
the meaning of the results, the way they have been gathered and their implications for the next moves of the
family and the individual.

FINANCIAL MANAGEMENT
- Is the science or practice of managing money or other assets and it requires systematic and discipline thought
and action.
BUDGET
- It is a spending plan or guide which can be helpful by providing a visible means of controlling money.

INDIVIDUALS AND FAMILIES AS CONSUMERS AND PRODUCERS

- Individuals and families are both consumers and producers. Consumption choices include what to eat, what
to wear, where to shop and where to bank.
- Consumption decisions affect the present and future standards of living of an individual and family

INCOME
Is the amount of money or its equivalent received during a period of time.

TYPES OF INCOME
1. Discretionary income
- It is income that is regulated by ones one desecrated judgment e.g. pocket money. This is the money you
have after paying for necessary expenses like rent, utilities, and food. It is what you use to buy non-essentials
throughout the month.
2. Gross income
- Is all income received that is not legally exempt from taxes. Also known as Gross pay and it is an individual’s
total pay before taxes or other deductions.
3. Disposable income
- Amount of take home pay left after all deductions are with held for benefits, taxes, contributions, loans etc
(net pay). It is the amount of net income a household or individual has available to invest, save or spend
after income taxes. Real Income
- It is income measured in prices at a certain time reflecting the buying power of current dollars.

STEPS IN FINANCIAL MANAGEMENT

1. Identify goals and set priorities
-
2. Assess available resources
3. Estimate the cost of achieving the goals
4. Make a budget or focus of future resources spending which are in balance
5. Devise ways of controlling the implementation of the plan
6. Evaluate progress towards the goal

ASSESSING RESOURCES

- It looks at how wealthy we are or how liquid (cash) we are

- Net worth: it is an indication of your financial capabilities in terms of assets available and liabilities incurred
during the course of subsistence. To calculate a net worth:
1. List all financial assets and liabilities (an organization’s legal debts or obligations that arise during the course
of business operations) for half year or a year depending on the need of your financial prudence
2. Find the difference between assets and liabilities
3. If you have assets that are not paid for, list them in their present value in the asset column and include the
outstanding debt in the liabilities column

PRINCIPLES OF BUDGETING

1. Successful and effective budgeting must begin with an active plan and planning process i.e. written budget
2. Individual and family budgets must begin with realistic spending levels for the basics or essentials of life
e.g. Water, food, shelter, utilities
3. Once the basics have been provided for, the spending of the descretionary income should be related to
meeting high priority spending objectives by immediate and direct commitment of discretionary funds
4. The process of budgeting must seek to control spending not only from current income and savings but from
all sources.
5. There should allocation of money table spent on day to day. Essentials such as food e.g. vegetables that
cannot buy in bulk and transport
6. Determination of any leftover funds should be put for savings

MAJOR PROBLEMS IN BUDGETING

a) Price recognition
- Prices changing back of devaluation or inflation
b) Changes in income
This may come back sudden unemployment, retirement; from dual earner to single earner, disability or
chronic illness.
c) Adjusting to traumatic life changes
- From married to singlehood or widowed, death of spouse

MAIN IDEAS ABOUT CONTROLLING A FINANCIAL PLAN

-
- All those handling money must share commitment to the plan i.e. all should know what is available and what
is not
- The control system should be compatible with your lifestyle and habits
- Controlling a plan requires that you know where your money is going
- The funds for major groups of expenditures must be separated to avoid overspending.

FACTORS TO CONSIDER IN THE OPERATION OF CONTROL

1.Unexpected expenditures
2.Use of credit especially credit cards
3.Personal allowances
4.Unrealistic plans

REASONS FOR NOT MAKING FINANCIAL PLANS

a) There are those who are too rich/too poor
b) There are those who have already established a pattern of spending which fits their resources
c) There are those who can balance their expenses and resources intuitively without referring to a plan
d) People who are dependent on others for financial support
e) All those who ought to do some financial planning but do not, for this group usually they give
reasons such as:
i. The income and expenses are very unpredictable to plan for anything
ii. Plans are too restrictive
iii. Plans take out all the fun out of spending

CREDIT MANAGEMENT

- Credit is the amount of money/goods you borrow in a specific period of time for payment purposes.

CONSUMER CREDIT AND CONSUMER DEBT

- Those refer to the same transaction from where it is being reported.

- Consumer credit is from the lender‟s side and debt is from the creditor‟s side. If you borrow you become a
debtor and if you lend you become a creditor
- Consumer debt is defined as all the personal debt incurred by households excluding mortgage debt and
business debt

WHY DO WE USE CREDIT

Convenience
a) To bridge the gap in our incomes especially for people with irregular income such as farmers and self
employed
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b) To consolidate loan to offset outstanding loan which is costly to execute

CAUTION ON CREDIT
During inflation, borrowers tend to benefit at the expense of lenders. Under inflations, savings would not
help to buy items because of the changing prices in the market price

CONSUMER LOANS
- These loans can be gotten from banks, SACCO

VENDOR CREDIT AND COST OF PAYMENT

- It is a credit which one gets at a point of sell to compare with the loan credit which is available from lending
institutions which do sell goods or services

TYPES OF VENDOR CREDIT

a) Charger account
b) Revolving acc/variable credit
c) Credit cards
d) Conditional sales agreement
e) Charger account is a regular 30 days charge acc which requires payoff outstanding bills and there is no
interest charges unless the account becomes delinquent e.g. lay bye.
f) Revolving acc/variable credit is when an acc requires paying over a month but a consumer can keep on
adding to his/her acc whenever need arises
g) Credit cards are often offered by commercial bank. They carry both a revolving charge account and loan
credit. It can be used to purchase goods or services. No interest is charged. Credit cards gives one some
liquidity whereby instead of carrying huge sums of money you just use the card
h) Conditional sales agreement is used to purchase high priced goods such as ears, appliances, furniture
which is to be paid by installments. The retailer may use a conditional sales contract increasing security.
i) A conditional sales agreement permit a creditor to retain the title of the goods until they are paid with the
condition of repossessing them if the buyer defaults

CONSUMER PROBLEMS WITH CREDIT CONTRACT

There are two distinct problems which consumers face when signing the contracts: a)
Weak bargaining power
b) Difficulty In understanding the legal terminologies used
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COST OF BORROWING

1.Interest rates
- It has the implications for both the borrower and the lender
- Simple interest: is used when the total loan and all interest in it are to be repaid as a lump sum on a special
date. It can be calculated as follows:
I (Interest) =
Example: You borrowed K1500 at NBS Bank at 11% rate to pay for a period of2.5 years

2.Compound Interest

- It is paid most on savings account and is charged in many loans including mortgages.
Compounding mean that at specified intervals and the interest accumulated is added to the principle and in
the next period, interest is also calculated on the new balance. Therefore, interest is reinvested to earn more
interest
- Compounding can be done daily, monthly, semi-annually, and annual. There is a rule in calculating this
that‟s: the more frequently interest is compounded with faster the investment grows
- Calculation of compound interest rate is the same as simple interest rate only that it is repeated at specified
intervals if there is no payment or if there is no withdrawal of the whole amount (savings) Example:
Calculate interest on principle of K1500 where the interest is calculated semi-annually and calculated at
11%. The loan will be paid in 2.5 years.
Note: Commercial banks will calculate their interest on monthly basis. Example
2
What will be the value of K10, 000.00 in 30 years invested at 10% interest compounded annually?
(Formula used; p (1+(R/N) ⁿ*T

RISK MANAGEMENT

- Risk is the possibility of experiencing harm, suffering danger or loss. Although we tend to associate risk
with physical danger, it can also involve such thing as using money, energy, time or reputation, but risk can
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also take other forms including health and safety risk, educational risk, relationship risk, occupational risk
and financial risk
- There are several types of risk that affect decision making that is:
a) Functional or performance risk
- The possibility that a choice may not turn out as desired or have the expected benefits b) Financial risk
- The possibility that substantial amounts of money may be lost
c) Physical risk
- The possibility that harm may come from a choice
d) Time risk
- The possibility that ability to satisfy wants will decline over time

RISK AVERSION
- It is avoidance of risk
Risk management in practice
Risks are not always seen in the same way. Collier and Agyei-Ampomah (2006) explain that risk appetite and
risk culture are important in understanding the nature of risk management.
Risk appetite: This is the amount of risk an organisation is willing to accept in pursuit of value. It is directly
related to an organisation's strategy and may be expressed as the acceptable balance between growth, risk and
return.
Risk culture: This is the set of shared attitudes, values and practices that characterise how an entity considers
risk in its daily activities. Risk culture is mainly derived from an analysis of organisational practices, namely
rewards or sanctions for risk-taking or risk-avoiding behaviour.
APPROACHES TO MANAGING RISKS
There are many approaches to managing risks. These include but are not limited to : the committee of sponsoring
of Organization’s (COSO) ERM Framework, HM Treasury’s Orange Book, CIMA’s risk management Cycle.
Here is an approach that does not rely on any particular model. Managing risk involves risk assessment, risk
management policy, risk response (also known as risk treatment), risk reporting and residual risk reporting.
1. Risk Assessment: This comprises the analysis and evaluation of risk through processes of identification,
description and estimation.
a. Identification: this aims to determine an organisation's exposure to uncertainty. It requires a
thorough knowledge of the organisation's strategy, its products/services and markets, and the
legal, social, political, economic and technological environment in which it exists.
b. Description: identified risks need to be displayed in a structured format, using a table to
facilitate risk description and assessment.

c. Estimation: risk estimation can be quantitative, semi-quantitative or qualitative in terms

of likelihood of occurrence and possible consequences. Assessing the impact of each risk
can be done using a variety of tools including: probability; scenario planning; simulations,
including Monte Carlo spreadsheet simulation; decision trees; real option modelling;
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sensitivity analysis; risk mapping; statistical inference; SWOT or PEST analysis; root
cause analysis; cost benefit/risk benefit analysis; and human reliability analysis.
Risk mapping is the most frequent example of how risks are assessed. Mapping involves
a matrix of likelihood/probability and impact/consequences.
2. Risk Management Policy: Before responses are developed for each of the risks identified, it is
necessary to determine the organisation’s attitude to risk or risk appetite. The risk appetite will
be influenced by the size and type of organisation, its culture and its capacity to withstand the
impacts of adverse occurrences.
3. Risk Response (Treatment): This is the process of selecting and implementing measures to
manage the risk. The challenge for risk managers is to determine a portfolio of appropriate
responses that form a coherent and integrated strategy such that the net remaining risk falls within
the acceptable level of exposure.
It is important to note that there is no right response to risk. The choice of response will depend
on issues such as the organisation’s risk appetite, the impact and probability of the risk and the
costs and benefits of the mitigation plans.
Responses to risk generally fall into the following categories:
• Risk Avoidance
• Risk Reduction
• Risk Sharing or Transfer
• Risk Acceptance
4. Risk Reporting: There are two areas of risk reporting:
• Reporting to external audiences. External risk reporting has developed rapidly in the last
five years.
• Reporting to internal audiences. The reporting of risks and risk management information
is essential for internal decision makers to integrate risk evaluations into their operational
and capital investment decisions, review of performance and compensation/reward
decisions.

5. Residual Risk Reporting: Residual risk reporting involves comparing gross risk (the assessment
of risk before controls or risk responses are applied) and net risk (the assessment of risk, taking
account of any controls or risk responses applied) to enable a review of risk response
effectiveness and possible alternative management options.

RETIREMENT PLANNING (Planning for elderly)

FUTURE CHALLENGES
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Why there is so many challenges
1.Multiculturism
2.Technology
3.Leadership
1.Multiculturalism; Expression of ethnic groups their cultural beliefs. This have affected mainly because of
the inter-marriages. This affects the household management as well