FINANCIAL PLAN
A financial plan is documentary
roadmap that outlines a
comprehensive strategy for
managing an individual or
organization’s finances, in order to
achieve financial goals.
What is a Financial Plan?
A financial plan is a
way to manage your money so
you can save for things you
want, cover your needs, and
learn how to spend wisely.
Importance of Financial Plan
• A financial plan helps you learn how
to budget your money, track expenses,
and save for goals.
• It encourages to set short-term and
long-term financial goals.
• Help us understand the importance
of saving.
Income - the money that an individual
or entity earns or receives regularly
through various sources
It can come from various sources like:
wages, salaries, bonuses, and
commissions earned from services
rendered for an employer, retirement
benefits, and royalty or payment
earned by authors, artists and creators
for the use of their intellectual property
income generated by running one’s
own business
Expenses -
The costs or outflows of
money that one incurs as part of
daily life or in the operation
of a business. It can be
categorized as fixed expenses or
variable expenses.
Tell whether each item is categorized as an income or
expenses.
[Link] allowance 6. Water bill each month
from 4p’s 7. Boarding house rental
[Link] load 8. Profit from online selling
[Link] rental for outing 9. Interest from savings
[Link] prize of P1,000 account
[Link] wage 10. Buying a new gadget
Fixed expenses are regular,
predictable expenses that are usually
paid monthly. These are costs that you
have to pay no matter how many
products or services you provide.
Examples of fixed expenses include
wages to employees, house rentals,
electric consumptions bills, loan
payments, rent /mortgage payments,
insurance premiums, subscription
services, property taxes.
Variable expenses vary from month to
month and are sometimes discretionary.
They are sometimes non-essential
expenses that individuals or businesses
choose to incur. Examples of variable
expenses are entertainment, personal
shopping, luxury purchases, vacation
trips, hobbies.
Tell whether each item is categorized as a FIXED or VARIABLE
expenses.
1. home repairs 6. Subscription services
2. loan payment 7. Boarding house rental
3. dining out 8. travel
4. salary 9. Property taxes
5. groceries 10. medical expenses
Remember:
- A financial plan is documentary roadmap that outlines a comprehensive
strategy for managing an individual or organization’s finances, in order to
achieve financial goals.
- Income is the money that an individual or entity earns or receives regularly
through various sources.
- A budget is a financial plan that outlines one’s income and expenses over a
specific period.
- Saving is the act of putting money aside for future use rather than spending
them all immediately
- Expenses is the cost or outflow of money that one incurs
as part of daily life or in the operation of a business.
Example No. 1
Suppose Ben is planning to give his
mother a microwave oven on her 60th
birthday 10 months from now. Ben’s
monthly allowance is fixed at P4,720. He
devised a budget plan for him to
achieve his goal
Example No. 1
Suppose Ben is planning to give his mother a microwave oven on her 60th birthday 10 months from
now. Ben’s monthly allowance is fixed at P4,720. He devised a budget plan for him to achieve his goal
Ben’s Monthly Budget (in pesos P)
Fixed Expenses: Budget Percent
cost
Savings for 500
microwave oven
Meal expenses 2,000
Transportation 960
Cell phone load 360
Variable Expenses:
Class project 200
Emergency fund 500
Miscellaneous 200
expenses
TOTAL 4,720 100%
Ben’s Monthly Budget (in pesos P) Complete the table by
Budget calculating the percent for each
item.
Fixed Expenses: cost Percent 1. What is Ben’s goal?
Savings for 2. Is it a short-term or a long-
microwave oven 500 term goal?
11% 3. How much does he save for a
Meal expenses 2,000 42% microwave oven in 10
Transportation 960 20% months?
Cell phone load 360 4. Based on his budget costs,
8% how much can he still save in
a month?
Variable Expenses:
Class project 200 4% Sample Computation:
Emergency fund 500 500 ÷ 4,720 = 0.106
11%
Miscellaneous 200 = 0.11
expenses 4%
TOTAL 4,720 100% = 11%
Compare Ben’s budget goals and his actual budget. Determine if he is a good budgeter. Analyze
Ben’s spending to determine why he is not on track to save for the microwave oven he plans to give
his mother.
Example 2:
Aloha plans to join her cousins in their trip to
Boracay in summer. She made a list of her
usual expenses and categorized them as
wants or needs. From her monthly
allowance of P4,000 that she receives from
her parents and P1,000 from her scholarship,
she aimed to budget her money and make
savings for her goal.
Aloha plans to join her cousins in their trip to Boracay in summer. She made a list of her usual
expenses and categorized them as wants or needs. From her monthly allowance of P4,000 that she
receives from her parents and P1,000 from her scholarship, she aimed to budget her money and
make savings for her goal.
Aloha’s Budget
Percent Budget 1. Get the percentage of each item and
complete the table.
Needs
5000 x 0.25 = P1250
Food 25% 1,250
Cell phone load 5% 250 2. Compare her allotment for her wants and
Transportation 10% 500 needs.
Toiletries 15% 750 How many percent were allotted to her
Savings 5% 250 needs? Wants?
Projects 10% 500 Aloha allots 70% of her money for her
needs and 30% for her wants
Wants 3. How much would be put to her
Midnight snacks 10% 500 savings if she will disregard all her
wants?
Milk tea 5% 250
P1500 + P250 = P1750
Entertainment 10% 500
Netflix 5% 250
subscription
TOTAL 100% 5,000
Aloha plans to join her cousins in their trip to Boracay in summer. She made a list of her usual
expenses and categorized them as wants or needs. From her monthly allowance of P4,000 that she
receives from her parents and P1,000 from her scholarship, she aimed to budget her money and
make savings for her goal.
Aloha’s Budget
4. In 6 months’ time how
Percent Budget
Needs
Food 25% 1,250 much will her saving be
Cell phone load
Transportation
5%
10%
250
500
then?
Toiletries 15% 750 .
P1750 x 6 = P10,500
Savings 5% 250
Projects 10% 500
This can be good enough for the
Wants
transportation and accommodation
Midnight snacks 10% 500 on a 2- day stay in Boracay
Milk tea 5% 250
Entertainment 10% 500
Netflix 5% 250
subscription
TOTAL 100% 5,000
How to Create a Financial Plan?
There are certain steps needed in creating a financial
plan. Here are suggested steps:
Allowance per month = P_________
1. Create your own budget:
Think of a goal you would like to save for.
2. Break down the budget:
Fixed Expenses
Variable expenses
3. Calculate the percent for each item.
Elsie is planning to buy a new smartphone worth P4,000 in 10 months. Elsie’s
monthly allowance is fixed at P2,000 on a basis of P100/day. She devised a
budget plan to achieve her goal.
Elsie’s Monthly Budget (in pesos P)
Fixed Expenses: Budget Percent
cost
Savings for smart P400 20%
phone
Meal expenses (snacks) 50%
P1000
Transportation P440 22%
Cell phone load P100 5%
Variable Expenses:
School supplies P30 1.5%
Miscellaneous expenses P30 1.5%
TOTAL 2,000 100%