BUSINESS FINANCE

Name of Learner:_________________________________ Grade Level:_______

Section:_________________________________________ Score:_____________

LEARNING ACTIVITY SHEET

MONEY MANAGEMENT PHILOSOPHIES

Background Information for Learners

Every person is doing capital budgeting, business or investment in life. As a Senior

High School student, you still rely on your parents or guardian for finances. While you are still
young, it is very important to have enough knowledge of the different ways of managing
resources in the future. As an ABM student, there will be a lot of opportunities that will come
your way. You will, later on, meet a rewarding and fulfilling job or will have your own business
to manage. Wouldn’t it be nice if you contain the awareness of properly managing your future
assets? Through it, you can avoid financial illiteracy and can take effective and efficient
personal financial decisions.
Managing personal finance is when an individual gains an understanding of proper
utilization of funds, efficient planning and controlling financial transactions, budgeting and
proper financial decision-making to meet one’s short term or long term goals. Being
knowledgeable of it, an individual can determine and predict assets based on past and future
performance. Also, he can properly assess the capability of generating future cash flows.
To give an example, the following successful individuals had accurately managed their
personal finances therefore, they were able to increase their net worth and become one of the
most successful people in our time.
Ranking Business Net Worth
1. Henry Sy SM Investment Inc. $ 14.4 B
2. John Gokongwei, Jr. Universal Robina Corp. $ 5.5 B
3. Andrew Tan Alliance Global Group $ 4.5 B
Inc.
4. Lucio Tan Philippine Airlines Inc. $ 4.3 B
5. Enrique Razon Jr. International Container $ 4.1 B
Terminal Services Inc.

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 6. George Ty Metropolitan Bank and $4B
Trust Company
7. Aboitiz Family Aboitiz Equity Ventures $ 3.6 B
8. Jaime Zobel de Ayala Ayala Corporation $ 3.5 B
9. David Consunji DMCI Holdings Inc. $ 3.2B
10. Tony Tan Caktiong Jollibee Foods Corp. $ 2.2 B
Source: Forbes.com (Forbes Magazine : Philippine Richest Individuals 2015)

Moreover, the following are the nine (9) money management philosophies in managing
personal finance (Keown 2010).

1. The Basic Protection is Knowledge

The first step to getting your personal finances under control is to have a clear
understanding of where you are now. Determine and list your assets, liabilities and
expenses. Yes, it may be too small now, but it would soon grow when you will later on
have your job or business. You must find a way or method on how to properly determine
your cash inflows and outflows by simply listing down on your notes or making your
balance sheet. Once you understand its importance, you will learn to appreciate what
needs to be done to get there, how much you’ll spend to earn, how much you’ll need to
save and when you will be able to achieve such goals.

2. Nothing Happens without a Plan

Financial planning is not limited to companies alone. Individuals should also practice
financial planning to achieve the set goals and objectives. One must learn to practice
budgeting to properly account one’s resources. In the very basic level, budgeting is
easy. All you have to do is look at what you make, look at what you are spending, and
look at how much to be put away for the rainy season.

3. The Time Value of Money

Individuals must see the importance of investment. One may invest his resources
through debt reduction, bonds, banks, pension plans, active businesses, real estate, stock
market and mutual funds. Do not forget to select the best investment alternative by
determining its face value and future value before deciding which investment scheme

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 is to be utilized. Through time value of money, one can determine how much will be
the return value one should get in entering an investment scheme.

4. Taxes Affect Personal Finance Decisions

Before entering into an investment, learn to analyze first the impact of taxes in it.
Almost 1/3 of the company’s or individual’s income will go to taxes, thus; learn to
compare the returns of your potential investment after tax basis.

5. Stuff Happens, or the Importance of Liquidity

Remember to liquidate your assets (cash and cash equivalents). Liquidating assets will
allow the individual to cover unexpected needs and expenses. Not liquidating assets
will lead the individual to a fund irregularity and chaos.

6. Waste Not, Want Not – Smart Spending Matters/Live below your means
This is the only way to ensure you save and grow your net worth. Most of us spend
beyond our means because we fail to distinguish needs versus wants. There are times
that we are impulsive in buying items that we think are our needs. But the truth is, it is
only our wants, not needs that we spent for. Therefore, one must identify which goals
should be prioritized to avoid unnecessary expenses.

7. Insure your needs

It provides another margin of safety. Most importantly, insurance is not a primarily
vehicle for creating wealth, merely protecting it. One must protect his resources from
event risks including natural calamities by securing insurance. We must accept the fact
that life has always a way of throwing unexpected curves, so it is also an advantage if
an individual ensures his financial health and not be interrupted by the things that cannot
be foreseen. While it is true that no one wants the worst things to happen, we still need
to be prepared to handle such and not sacrifice our finances and assets.

8. Risk and Return Go Hand in Hand

One must have to understand that to gain a higher return, he must face certain risks. A
concrete example of this philosophy is when an individual invests in the stock market,
e.g., Jollibee Foods Corporation. It is very risky to invest now that we are experiencing
a pandemic, but, after this, a high return will take place due to business’ high demand.

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 9. Mind Games and Your Money
Now that you already know the different money management philosophies, it is now
time to adopt or practice managing your personal finances. Yes, many of these
strategies entail order and control, but, once you come to a decision, make sure that you
will stick to it. It may be hard to adjust to a new lifestyle to properly managing your
personal finance, but you have to take note that long term financial goals require short
term sacrifices. The secret is to always find a way to discipline yourself in managing
your personal finances to meet your long term objectives in life while still enjoying life
to the fullest without sacrificing all your resources.

Learning Competency
Enumerate money management philosophies
(ABM_BF12-IVo-p-26 Quarter 2 week 3-4)

Exercise 1: “NEEDS versus WANTS”

Directions:
1. Think of at least five (5) items that you had bought recently. Determine if those are
needs or wants by checking the appropriate box provided below and write
2. Analyze your cash outflows.
3. Reflect on your answer.
Item Needs Wants
1.
2.
3.
4.
5.

Reflection:__________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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Exercise 2 . “WHAT TO BUY”
Directions: Make a list of 5 things you want to buy in descending order and answer the
following guide questions below.

1. Why did you choose item number 1 as the most necessary thing to buy? How about
item number 2 ? Item number 3? Item number 4? Item number 5?
2. What personal value does the item gives you?
3. How will the item help you reach a goal in life?
4. Will the item make you feel happy? Why?

Answer:____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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Exercise 3. “MY BUYING PLAN”

Directions: Imagine yourself buying two major items. Make a buying plan for the two major
purchases you want to obtain. Use the following questions to consider when making a buying
plan.
1. What do I want to buy? Where can I find my options?
2. How much is my budget and how much will I spend?
3. What are the criteria am I looking for?
4. What are the possible choices that can meet my criteria?
5. Which choice works best for me?

A. What you want to buy:_________________________________________

Budget Criteria Choices Decision

1.
2.
3.

How did you come up with your decision?

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

B. What you want to buy:___________________________________________

Budget Criteria Choices Decision

1.
2.
3.

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How did you come up with your decision?
___________________________________________________________________________
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Exercise 4. “MY WEEKLY BUDGET OF EXPENSES”

Directions: Make a budget of your expenses for one week. After this, compare your budgeted
amount with your total expenses. Is the difference favorable or unfavorable? Why?

Day Budgeted Amount Actual Expenses Difference

1

TOTAL

Answer:____________________________________________________________________
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Exercise 5. “MY BUDGET TOOL”

Directions: Assume that you are already employed or have your own business to manage and
is now earning your own money. Use the budget tool provided below to determine the
monthly inflow and outflow of your cash. What will you do if your total income is more than
or less than your total expense?

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Month of:_____________________

Sources of Income Amount Gained

Salary ₱

Government
₱
Benefits

Others ₱

TOTAL ₱ ____________

Expenses Amount Spent

Housing ₱

Utilities ₱

Health
₱
Expenses

Transportation ₱

Education ₱

Clothing ₱

₱
Others

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 ₱ ___________
TOTAL

Now make your budget tool using the formula

Total Income - Total Expense
₱ _____________ - ₱ ___________ = ₱ _____________
Answer:____________________________________________________________________
___________________________________________________________________________
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Exercise 6. “MY SAVINGS FIRST AID KIT”

Directions: Identify at least 5 unnecessary items that you are willing to give up so that you
can have your savings first aid kit. Compute for the amount that you can save over time.

ITEM PROJECTED SAVINGS SAVINGS SAVINGS

MONTHLY AFTER 3 AFTER 6 AFTER 1
SAVINGS MONTHS MONTHS YEAR
1.
2.
3.
4.
5.

Guide Questions.

1. Where will you plan to store your savings first aid kit?
2. How frequent will you make a deposit?
3. As a student, what will you do in order to increase your savings first aid kit?

___________________________________________________________________________
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