PERSONAL, SOCIAL, HEALTH AND ECONOMIC

EDUCATION(PSHE)

THEME: LIVING IN THE WIDER WORLD

FINANCIAL CHOICES

12/30/2023
Presented to Key stage 4 1
Training Objectives

• How to effectively budget

• Benefits of Savings

• How to effectively make financial decisions

• Opportunities and challenges in taking financial risks

• To recognize and manage the range of influences in financial

decisions

12/30/2023 OBUNTU 2
How to effectively budget

What is a budget ?

A plan to show how much money a person will earn and how
much they will need or be able to spend

“A budget tells your money where to go; otherwise you

wonder where it went”

12/30/2023 3
How to effectively budget

• Why budget?

Have set goals and objectives you wish to achieve

Ensuring you don’t spend money you don’t have

It helps to be prepared for emergencies

Budgeting will help address bad spending habits

12/30/2023 4
How to effectively budget

• Components of a simple personal budget

• Needs
Things that you cannot do without including Food, transport,
medical -- Essentials

• Wants
Things you can live without.
Non-essentials e.g Holidays, Entertainment, outings

• Savings
Income left after spending on needs and wants

The 50%, 30% & 20% Rule

12/30/2023 5
Savings

Savings represents funds available for use(Disposable income) but

instead put aside for future use.

Why is savings important?

 To meet financial commitments in future e.g Buy a house, car

Earn more money through investments – Money market, fixed

deposit – Investment vehicles

For unforeseen emergencies

12/30/2023 6
Financial decisions

Financial decision include:

 Spending money – Consumptions decisions

Investments decisions – Include purchase of assets and sale of assets

Difference between assets and liability?

Assets provides future economic benefits while liabilities is what you
owe other parties

Assets put money in your pocket and liability take money out
12/30/2023 7
Examples:

Assets:

• Rental house
• Shares/Stock
• Business vehicle

Liabilities
• Loan
• Personal Car, automobile

12/30/2023 8
Financial Risks

Financial risk is the possibility of loosing money on an investment

Including market risks, Credit risks, liquidity risks

Risk return trade offs:

The higher the risk the higher the return

Risk free investments

12/30/2023 9
What influences financial decisions

• Age - Young people have fewer responsibilities, supported by parents

and guardians. Older people are more independent, more
experienced. There need to know how to manage finances at the
tender age. Practice savings for 21 days it become a habit

• Marital status – Household size of the family

• Employment/ source of funds

• Knowledge in investing and financing

12/30/2023 10
Steps is making financial decisions

 Stop and give yourself time to make the decision.

Don’t pressure yourself, do not let other pressure you

 Ask question about the risks, return and the cost

Verify – Double check on your own and the experts

Estimate the total cost

Make a decision

12/30/2023 11
 END

12/30/2023 12