Sophia Nicole Cagadas
BSBA 702P
FINANCIAL MANAGEMENT
Prof. Mr. Randy Enderina MBA
Introduction
Personal financial management is a crucial skill that plays a significant role in achieving long-term
financial stability and independence. In today's fast-paced world, many individuals face common
financial challenges, such as dealing with mounting debt, balancing household expenses, saving for
retirement, and managing unexpected costs. These challenges can often lead to stress and financial
insecurity. One of the most effective ways to navigate these obstacles is through budgeting, which allows
individuals to track their income, prioritize spending, and ensure they are living within their means. By
creating a detailed budget, individuals can make informed decisions about how to allocate their resources,
avoid unnecessary debt, and plan for both immediate needs and future goals. Mastering personal financial
management not only helps with day-to-day financial decisions but also sets the foundation for a more
secure and fulfilling financial future. Understanding and implementing these principles can ultimately
lead to greater financial freedom and peace of mind.
Income Analysis
My total monthly income is generated from two main sources, each contributing to my overall financial
stability. First, as a part-time delivery rider, I earn approximately 25,000 every month. This role allows
me to work flexible hours, giving me the opportunity to balance other responsibilities while still earning a
steady income. In addition to my work as a delivery rider, I also act as an agent for buying and selling
cars. This side job provides a varying income, depending on the number of transactions and deals I am
able to facilitate within the month. For instance, if I earn around 10,000 from my car business activities,
my total monthly income would be approximately 35,000.
The combination of these two sources of income not only helps to cover my living expenses but also
gives me the freedom to pursue other opportunities. The work as a delivery rider ensures I have a
consistent income, while my car business allows me to earn more depending on market conditions and my
efforts. Overall, these multiple income streams provide both stability and flexibility, enabling me to
manage my finances effectively and meet my personal goals.
Expense Tracking
Below is the total breakdown of my total expenses for the month of November with a total monthly
income of 35,000.
Fixed Expenses:
1. Rent: 6,000
2. Utilities:
o Water: 500
o Electric Bill: 1,500
Total Fixed Expenses = 6,000 (Rent) + 500 (Water) + 1,500 (Electric Bill) = 8,000
Variable Expenses:
1. Groceries: 5,000
2. Online Shopping: 150
Total Variable Expenses = 5,000 (Groceries) + 150 (Online Shopping) = 5,150
Total Expenses:
Total Fixed Expenses: 8,000
Total Variable Expenses: 5,150
Grand Total Expenses for November: 8,000 (Fixed) + 5,150 (Variable) = 13,150
Summary of Expenses for November:
Total Income: 35,000
Total Expenses: 13,150
Remaining Income: 35,000 - 13,150 = 21,850
Conclusion:
For the month of November, with a total income of 35,000, my total expenses amount to 13,150, leaving
me with 21,850 in remaining income after covering my rent, utilities, groceries, and online shopping. This
remaining balance can be saved, invested, or used for other discretionary spending.
Savings and Investment Planning
With the remaining income of 21,850 after expenses, it’s important to allocate this money towards both
short-term and long-term financial goals, ensuring financial stability and growth.
Short-Term Savings Goals (1-3 years)
1. Emergency Fund:
o Goal: Save 5,000 (or more if possible) for unexpected expenses, like medical
emergencies, car repairs, or sudden job loss.
o Strategy: Allocate 2,000 per month for the next 3 months into a high-yield savings
account. This will help build a safety net for emergencies while earning a bit of interest.
2. Vacation Fund:
o Goal: Save 10,000 for a vacation in the next year.
o Strategy: Set aside 1,000 each month for the next 10 months. This will help reach the
goal without overburdening the budget.
Long-Term Savings Goals (3+ years)
1. Retirement Fund:
o Goal: Start saving for retirement (e.g., a fund for when you're 60 or older).
o Strategy: Contribute 2,000 per month to a long-term investment account such as a
mutual fund or a pension plan. This could grow over time, potentially with compound
interest, securing financial stability in the future.
2. Home Purchase Fund:
o Goal: Save for a down payment on a house within the next 5 years.
o Strategy: Allocate 2,000 per month for the next 5 years into a savings account or a bond
fund that offers relatively low risk. This will provide a steady return while being safe for
a long-term goal.
Basic Investment Plan
1. Stocks:
o Goal: Invest in growth stocks for higher potential returns.
o Strategy: Allocate 1,000 per month to invest in stocks. Since stocks can be volatile, it’s
important to research or consult with an expert to choose stocks in industries that are
growing (e.g., technology, renewable energy).
2. Mutual Funds:
o Goal: Diversify investments with mutual funds, which are collections of stocks and
bonds managed by professionals.
o Strategy: Invest 1,000 per month into a low-risk index fund or mutual fund. This
strategy helps balance risk and return over time, making it a good option for long-term
growth.
3. Bonds:
o Goal: Add safer investments to protect part of your money.
o Strategy: Allocate 1,000 per month to a bond fund or individual government bonds.
These provide regular interest payments and are generally considered safer than stocks.
Total Monthly Allocation of Remaining Income (21,850):
Emergency Fund: 2,000
Vacation Fund: 1,000
Retirement Fund: 2,000
Home Purchase Fund: 2,000
Stocks: 1,000
Mutual Funds: 1,000
Bonds: 1,000
Remaining for Flexibility or Extra Savings: 11,850
Conclusion
This savings and investment plan aims to balance short-term needs (like emergency funds and vacation)
with long-term financial goals (such as retirement and home purchase). By dividing my remaining
income into these areas, I can build financial security for both today and the future. Additionally,
including investments like stocks, mutual funds, and bonds will help grow my wealth over time, while
providing options to reduce risk and increase returns.
Financial Goal Setting
For the next 6-12 months, I have set three key financial goals: paying off debt, increasing savings, and
starting to invest for the future. These goals are designed to improve my financial situation by reducing
liabilities, growing my savings, and beginning to build wealth for long-term security.
Goal 1: Pay Off Debt (if applicable)
Goal: Pay off any outstanding debt (e.g., credit card debt, personal loans) within the next 6
months.
Plan: If I have any debt, I will allocate 3,000 per month for the next 6 months toward debt
repayment. If my monthly income allows, I will prioritize high-interest debt first to reduce the
total amount paid over time. I will also try to limit new borrowing to avoid increasing the debt
balance.
Goal 2: Increase Emergency Fund
Goal: Build an emergency fund of 10,000 over the next 6-12 months.
Plan: Since my emergency fund is crucial for unexpected expenses, I will save 1,500 per month
for the next 6-7 months. I will deposit this amount into a high-yield savings account where it can
grow while remaining easily accessible in case of emergencies. Once I reach the 10,000 target, I
can redirect these savings to other goals like investments or larger purchases.
Goal 3: Start Investing for the Future
Goal: Begin investing in mutual funds or stocks with a target of 5,000 invested by the end of the
year.
Plan: I will allocate 1,000 per month for the next 5 months towards investments. To minimize
risk, I will focus on mutual funds or index funds that provide a diversified portfolio. I will
research low-cost funds with consistent growth history and invest through a reliable platform. I
will also explore stocks but limit this to no more than 20% of my investment allocation to
maintain a balanced approach.
Conclusion:
1. Pay Off Debt: Allocate 3,000 per month towards debt repayment for 6 months.
2. Increase Emergency Fund: Save 1,500 per month for the next 6-7 months to build a 10,000
emergency fund.
3. Start Investing for the Future: Invest 1,000 per month for the next 5 months, targeting 5,000 by
the end of the year.
By following these steps, I aim to reduce debt, improve financial security with a robust emergency fund,
and start building wealth through investments. Meeting these goals will provide me with more financial
stability and help me plan for the future.
Conclusion and Reflection
Managing my personal finances over the past few months has been a valuable learning experience.
Through setting clear goals, tracking my income and expenses, and planning for both short-term and
long-term financial objectives, I have gained a deeper understanding of how financial decisions impact
my overall financial well-being. I have learned the importance of budgeting, prioritizing savings, and
having a clear strategy for paying off any debts. Most importantly, I now realize that financial discipline
is essential for achieving both immediate and future goals.
Reflecting on my budget and goals, I see that my primary focus should be on balancing debt repayment
with building a savings cushion and starting investments. By carefully allocating my remaining income, I
have made progress in saving for my emergency fund, setting aside money for future investments, and
paying off any potential debt. However, after reviewing my current financial plan, I recognize that I could
have allocated more towards savings or investment goals, particularly in building wealth for the long
term. Additionally, I may need to review the speed at which I pay off debt and consider shifting some of
the money I originally planned for debt repayment toward investments to start building my portfolio
sooner.
In the future, I plan to apply these financial management principles by consistently reviewing my income
and expenses, ensuring that I stay on track with my goals. I will also adjust my approach to financial
management as my situation changes. If I receive any unexpected income or if my expenses decrease, I
will redirect those extra funds towards increasing savings or accelerating investments. Moreover, I will
continue educating myself about different investment strategies to make informed decisions that align
with my long-term financial objectives. Ultimately, my goal is to maintain a flexible yet disciplined
approach to managing money, enabling me to achieve financial independence and security over time.
