Final essay personal finance management

Leading to spending management, also known as_ financial management, becomes very important, if in a field like business or in companies, financial management is considered the key to ho

HOCHIMINH CITY UNIVERSITY OF FOREIGN

LANGUAGES AND INFORMATION TECHNOLOGY

FINAL ESSAY

Personal Finance Management

Student 1: Lương Đức Thiện 22DH123708 Student 2: Nguyễn Đức Thuận 22DH123711 Student 3: Nguyễn Bá Thuyên 22DH122661

Class: KQ2209 Course: 211141012220

Instructor: Ngé Van Binh

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1.ABSTRACT

Currently, due to epidemics, wars, inflation, and world-scale economic crisis, have greatly affected the market, spending, and economy in the South Leading to spending management, also known as_ financial management, becomes very important, if in a field like business or in companies, financial management is considered the key to holding the business or whether the company exists and develops in the long term So

in a small area like individuals, we have personal financial management, which is a skill, a foundation necessary, in addition, it also helps every individual to be independent, develop and confident in life however, the reality shows that many people have little knowledge of this specialty So

we will learn about the concept, method, and way of this topic

2.INTRODUCTION

Financial management is the thing most important to operate as well as run a corporation, small company, or project, onside to factors such as quality

products, customer necessity, service, and marketing But not only companies and enterprises, but also financial management is always focused in all fields

As a freshman who has to step away from home and enter an environment, personal financial management is even more important, and this will be the topic that our team chooses for this final essay As mentioned above, as a student we have to face a lot of expenses, and to solve the problem, working part-time is the only option, but when we have the salary in hand, A freshman is faced with the problem of how to properly spend that money The definition of financial management is a management science subject that studies the financial relationships arising in the production and business process of an enterprise or

an organization Financial management, in other words, is the management of capital resources, such as cash, capital, assets, and emerging financial systems like receivables and payables, to maximize the company’s profits Personal finance is the application of financial principles to personal money or businesses Personal finance can be understood as simply as you can comprehend it at a smaller scale, such as personal finance management family Personal finance is concerned with everyday financial matters such as spending, eaming, investing, saving, etc Or it may be said that managing one's finances is the most efficient way to spend money It both makes liv makes living more comfortable and helps you avoid rds in daily life

3 LITERATURE REVIEW

I Personal Finance Freedom

“Tt is not essential how much money you make, but how much money you keep and how to make money work for you”, according to Robert Kiyosak1,

author of the well-known book "Rich Dad, Poor Dad." and allows money to grow in value

Avery crucial life skill is personal finance management Many international experts and organizations advise popularizing this skill even while students are still in school because of numerous advantages like:

Your attitude will be raised and your level of productivity at work will increase if you are financially secure

If you have plenty of money, you can seek higher education, pick up new languages, make wise investments, and do many other things that will help you grow personally and financially

Before incidents or unexpected events, you can easily take the financial initiative in things in life (car damage, accident, disease, etc.)

Create a solid financial foundation for a comfortable and comfortable

retirement later in life

I Personal Finance

2.1 What is Personal Finance?

Personal finance is a concept used to define how well you manage your money It takes a look at how you spend, save, cover, and invest your fiscal coffers to produce the type of life you want to enjoy

particular finance covers a range of motifs, including:

e¢ Income generation

® Budgeting

¢ Banking

e Insurance

e¢ Loans and mortgages

e¢ Investments

¢ Retirement planning

e duty and estate planning

Examples of personal finance might include:

® Planning your monthly spending

e Balancing your checkbook or disbenefit regard

® Transferring money from your checking account to your savings

account

e Setting up direct deposit for an IRA

e Take only the cash you plan to use on groceries into the store so you don't overspend

2.2 The importance of Personal Finance

Personal finance is about meeting your personal financial goals These pretensions could be anything — having enough for short-term fiscal requirements, planning for withdrawal, or saving for your child’s council education It depends on your income, spending, saving, investing, and particular protection

2.3 Why is Personal Finance important?

Personal finance is a pivotal procedure to attain fiscal freedom, which liberates individualities from debts

It also helps them manage coffers, make salutary fiscal opinions, meet short and long- term requirements within income limits, and adequately pay for bills

Getting this operation skill will help you handle your finances well with generalities that offer fiscal stability and how to raise fiscal stability

HH Personal Finance Strategies

3.1 Know Your Income

Income operation is one of the most pivotal reasons why particular finance

is essential

With proper planning, income can be managed effectively, prompting savings and investment and helping to avert unnecessary or overspending Prioritizing expenses concerning savings, tax payments, and bills are elements incorporated into income management

Several free resources can be used regularly to watch spending, manage the budget, and improve fiscal responsibility

3.2 Devise a Budget

A large amount of income does not guarantee financial stability because an individual may incur huge debts if they neglect budgeting, planning, and prudent spending

Personal finance will help individuals prioritize their expenses within the limited available resources by assisting them in understanding their income, recurring expenditure, and how to plan within the income

Astrictly followed budget can prevent an individual from overspending on status symbols, unwanted goods, and luxuries

3.3 Financial Understanding

Personal Finance offers you an elite perspective of your finances by establishing financial goals, understanding financial decisions and their effects, and assessing prior financial results

IV Personal financial management skills

Currently, there are many effective ways to manage personal finances, the most prominent of which are the 50-30-20 rule and the 6-jar rule: 4.1 The 50-30-20 rule

This is considered a basic personal cash flow management rule but extremely effective because you only need to divide your income into 3

amounts:

© 50% of income is for necessary living expenses such as housing, food, and transportation

© 30% spend on flexible expenses like entertainment that you can cut if needed

© 20% will be spent on debt repayment as well as savings for goals You can divide these savings into multiple accounts for each goal for easy tracking

Advantages:

Easy to remember, easy to understand, and easy to use

Can be applied to many objects with different incomes

Defect:

Requires high self-discipline with each individual

4.2 Rule of 6 jars

The rule of 6 jars was created by author Harv Eker, the author of many world-famous financial books such as "Secrets of the Millionaire Mindset" and "Get Rich Quick" Your entry will be broken down into more detail

than the 50-30-20 rule:

© Bottle 1 — Essential expenditure (55% of income) provides expenses for daily living activities such as meals, house rent, electricity, and water bills

© Bottle 2— Long-term savings (10% of income) for long-term savings goals for life such as buying a house, buying a car, getting married, doing business

© Bottle 3 — Education fund (10% of income) to participate in certificate courses, skills, workshops to improve professional knowledge for yourself, and increase opportunities for career advancement

© Bottle 4— Enjoy (10% of income) to reward yourself after working hard and saving

© Bottle 5 — Financial investment fund (10% of income) used for investment, savings, business capital contribution profitable, generating passive income

© Bottle 6 — Charity fund (5% of income) will be used to help relatives and friends or for community funds

Advantages:

Create high discipline for savers

Defect:

Complicated, and not suitable for beginners

Difficult to apply with income from average or below

V Principles of personal financial management

5.1 Always check your spending

2 basic types: can be cut (little or not important) and cannot be cut (important)

The most important and often large part of a family's expenditure is tuition However, you cannot reduce this amount Instead, you can cut down on less important things such as shopping for clothes, watching movies, coffee with friends,

5.2 Set clear financial goals and roadmaps

Always set financial goals Your goals can be long-term, medium-term, or short-term, but need to be clear to have the nght savings route

5.3 Don't spend more than 10% of what you earn

The rule of financial management often used by experts for young people is not to spend more than 10% of what you earn

5.4 Try to get out of the "spiral" of debt

Many people habitually spend all their money in the middle of the month, then borrow debt to "maintain life” in the second half of the month It is very difficult to get out of this "whirlpool" without strong determination You should try to pay off your debt now and avoid taking on more debt next month At the same time, you should tighten spending, and avoid buying unnecessary items As a result, getting out of the "whirlpool" of debt will no longer be too "far away”

5.5 Save 10-15% of monthly income

Saving at least 10-15% of monthly income is a basic but extremely effective financial management principle for beginners You can increase your power saving from 20%, 25%, 30% to 50% with monthly input Note that you should raise it slowly and don't put it too high that you will give up

5.6 Increase income by many sources

The success of entrepreneurs lies not only in the secret of effective financial management but also in their diversity of income channels They can do many different jobs in their spare time to earn extra income for themselves