PERSONAL FINANCE

• Living within your means


  Spending less or only as much money as you earn, being aware of the difference between what you need and what you want
• Finding the best values

  Generally, the product with the lowest unit cost is the best value
• Cutting excess spending


  • Excessive Entertainment Expenses
  • Unplanned Shopping Sprees
  • Luxury or Status Items
• Shunning consumer credit


  Consumer credit is expensive, and it reinforces financial habits: spending more than can afford
• Traditional budgeting


  Budgets are based on past spending patterns, taking last month's budget or actuals and making incremental adjustments for the next period
• Zero-based budgeting


  Requires justifying every expense from scratch, regardless of previous budgets, assigning a specific purpose to every dollar of income, with no money left unallocated for the upcoming period
• Debt management


  A way to get your debt under control through financial planning and budgeting, with the goal of lowering your current debt and moving toward eliminating it
• Reasonable debt


  Helps an individual to achieve a most fulfilled life, with a manageable interest rate and amount, as opposed to slippery slope debt that grows and deteriorates the quality of life and damages one's credit
• Mortgage loan


  A type of loan specifically used to purchase real estate, where the borrower pledges the property being purchased as collateral to secure the loan
• Slippery-slope debt


  A course of action rejected because, with little or no evidence, one insists that it will lead to a chain reaction resulting in an undesirable end
• Taxes


  The enforced proportional contributions from persons, properties or rights by the lawmaking body of the state for the support of the government and all public needs
• Taxable income


  The pertinent items of income provided for in the National Internal Revenue Code
• Income tax


  The tax on all yearly profits arising from property, professions, trades or offices or tax on the person's income, profits, and the like
• Gross income


  Compensation for services in whichever form paid, including, but not limited to fees, salaries, wages, commissions and similar items
• Compensation income


  Income arising from personal services under an employer-employee relationship, whether it takes the form of salaries, honoraria, bonuses, pensions, allowances, representation fees, and other similar incomes
• Regular compensation


  Includes basic salary, fixed allowances for representation
• Professional income


  Income earned by an individual from the sole proprietorship business or from the practice of his profession, with tax rates ranging from 5% to 32% of taxable income
• Passive income


  Income earned which are subjected to different final withholding tax rates
• Withholding taxes


  Also known as "taxation at source," refers to the National Internal Revenue Code (NIRC) requirement that taxes imposed on income are to be deducted or withheld by the payer and remitted directly to the BIR
• Safety cushion


  Some companies store substantial amounts of cash and short-term interest-earning investments to be able to operate for a year even without any revenue, ensuring the company can continue to operate even in the face of extreme adversity
• Cyclical cash needs


  Some companies operate in seasonal business environments that need cyclical inventory build-up and large amounts of cash, followed by voluminous sales and cash collection
• Investment for a return


  Investors invest to earn money, through the receipt of dividends (profit distribution for equity shares) or interest income on notes, bonds, or income arising from the appreciation of investment value
• Investment for influence


  Companies can invest in other companies to ensure a supply of raw materials, gain access to a company's research or technology, diversify product offerings, or influence the board of directors over the conduct of that company's operations
• Investment for control


  A company or an individual purchases equity shares of another company large enough to be able to control its operating, investing, and financing decisions, with the view of expanding operations or creating operational efficiencies or increasing control over key markets
• Invest early as possible


  The sooner you can start investing, the quicker you can start taking advantage of compound interest, which can help your earnings grow exponentially over time
• How much to invest

  Depends largely on your financial goals, with experts suggesting eventually investing 10% to 15% of your income each year
• Diversification


  Building a portfolio with a broad mix of investments across assets, helping you avoid putting all your eggs in one basket
• Rebalancing


  Adjusting your portfolio over time as it changes, to maintain your intended asset allocation
• Timing


  Purchasing an asset just before it is likely to increase in value and selling the asset just before it is likely to decrease in value, assuming asset prices follow a pattern that can be accurately forecasted
• Ordinary shares


  Represent ownership interest in issuing corporations
• Class A shares


  Non-voting ordinary shares entitled to receive dividends
• Class B shares


  Voting ordinary shares not receive dividends
• Preferred shares


  Usually motivating but has ordinary shares in dividend and liquidation rights
• Short-term debt securities


  • Negotiable Certificates of Deposits
  • Commercial Papers
  • Banker's Acceptances
  • Treasury Bills
• Intermediate and long-term debt securities

  • Treasury Notes
  • Treasury Bonds
  • Corporate Bonds
• Derivative securities


  • Options
  • Commodity Futures
  • Financial Futures
  • Options on Futures
  • Rights
  • Warrants
• Real assets


  • Precious Metals
  • Real Estate
  • Collectibles
• International investments


  • Shares in multinational corporations
  • Foreign shares traded on domestic and foreign exchanges
  • Foreign currencies
• Cryptocurrency


  A form of encrypted digital currency, created, regulated, and kept secure by a network of computers
• Shares


  The ownership in a particular company