MAT8 Q2W8D1: Introduction to Financial Planning

🎯 Learning Goals

By the end of the lesson, you will be able to:

1. Define financial planning and explain its importance in achieving personal financial stability.
2. Identify the advantages of starting financial planning early compared to delaying it.
3. Analyze risks and potential consequences of neglecting financial planning during youth.

🧩 Key Ideas & Terms

• Financial Planning – process of setting and achieving financial goals through effective money management.
• Budgeting – creating and following a plan for income and expenses.
• Investment – using money to purchase assets with the goal of growing wealth over time.
• Financial Goals – specific targets for saving, spending, or investing money.
• Risk – the possibility of losing money or not achieving financial objectives.

🔄 Quick Recall / Prior Knowledge

Activity: “Pagdating ng Panahon – One-Question Survey”

Reflect on your future financial plans. Answer honestly:

Question: What is one important thing you want to achieve financially in the future (for example buy a house, finish college, start a business, save for travel)?

After writing your answer, think about:

1. Why is this goal important to you?
2. What steps do you think you need to take to reach this goal?
3. Do you think planning early will make it easier to achieve?

Show Answer

• Planning early helps anticipate future needs and challenges.
• Setting specific goals gives direction and motivation.
• Budgeting, saving, and avoiding unnecessary debt are key first steps.
• Reviewing and adjusting plans regularly ensures goals stay realistic.

📖 Explore the Lesson: Introduction to Financial Planning

Welcome to your first step in exploring how mathematics connects with your daily life - especially your money. This part of the lesson is about discovering how to make smart financial decisions. You will see how mathematics, especially percentages, ratios, and simple arithmetic, plays a role in financial planning.

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1. Why Talk About Financial Planning?

Imagine yourself 10 years from now. You might be working, studying in college, or starting your own business. All of these situations require money - tuition, rent, food, transportation, gadgets, or investments. Planning now will help you avoid stress and problems later.

Guiding Question: Why is it important to plan for your finances at an early age?

Show Answer

Starting financial planning early allows you to save little by little, avoid unnecessary debt, and take advantage of opportunities like investments that grow over time.

Mini-Summary: Financial planning is like setting a roadmap for your money. Without it, you may get lost in unexpected problems.

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2. What is Financial Planning?

Financial planning is the process of setting goals for your money and creating a strategy to reach them. It includes budgeting, saving, investing, and managing risks.

Key idea: Financial planning is not just for adults with jobs - it is for everyone, including students.

Example: If you want to buy a new phone that costs ₱15,000, but you only get an allowance of ₱1,500 per week, you need a plan. Without planning, you may overspend on food, games, or other things and never reach your goal.

Mathematical Illustration: If you save ₱500 each week, how long will it take you to reach ₱15,000?

$\frac{15000}{500}=30$

It will take you 30 weeks to save ₱15,000.

Mini-Summary: A simple budget plan helps turn a wish into a reachable goal.

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3. Needs vs. Wants

One of the first steps in financial planning is learning how to separate needs from wants. Needs are things you cannot live without, such as food, clothing, shelter, and basic education. Wants are extras - gadgets, branded clothes, or vacations.

Guiding Question: Which of the following is a need and which is a want?
a) Rice for meals
b) A gaming console
c) Internet access for school research
d) Branded sneakers

Show Answer

a) Need, b) Want, c) Need, d) Want. Internet access is a need for school. The gaming console and branded sneakers are wants.

Mini-Summary: Differentiating between needs and wants prevents overspending and strengthens your ability to save.

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4. Budgeting as a Foundation

Budgeting is the act of creating a plan for your income and expenses. Think of it like creating a timetable for your money.

Example: Suppose you receive ₱2,000 as a weekly allowance. You plan your expenses as follows:

Expense	Amount (₱)
Food	800
Transportation	400
School Supplies	300
Savings	500

Mathematical Check: Does the budget equal your allowance?

$800+400+300+500=2000$

Yes. The budget balances.

Guiding Question: Why is it important to always set aside savings in your budget?

Show Answer

Savings help you prepare for emergencies and future needs. Without saving, you risk borrowing money or failing to achieve your goals.

Mini-Summary: Budgeting is a tool that ensures your income is distributed wisely and that savings are secured.

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5. The Role of Time in Financial Planning

The earlier you start planning, the more time your money has to grow. This is true with savings that earn interest.

Suppose you deposit ₱10,000 in a savings account with a simple interest rate of 5 percent per year. How much will your money be after 3 years?

$I=P\times r\times t$

• $P$ = 10000
• $r$ = 0.05
• $t$ = 3

$I=10000\times 0.05\times 3=1500$

The interest is ₱1,500. The total money after 3 years is ₱11,500.

Guiding Question: What would happen if you waited 5 more years before saving? Would the total amount be bigger or smaller?

Show Answer

The total would be smaller because you would miss out on 5 years of interest growth. Starting early gives more time for money to increase.

Mini-Summary: Time is your best friend in financial planning. The earlier you begin, the more your money can grow.

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6. Risks of Neglecting Financial Planning

What happens if you ignore financial planning? Without a plan, people often spend more than they earn, leading to debt and stress.

If a person earns ₱12,000 per month but spends ₱13,500, what is the monthly deficit?

$13500-12000=1500$

The deficit is ₱1,500.

Guiding Question: If this continues for 12 months, how much debt will this person accumulate?

Show Answer

$1500\times 12=18000$

They will accumulate ₱18,000 of debt in one year.

Mini-Summary: Neglecting financial planning leads to overspending, debt, and long-term stress.

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7. Real-Life Applications

• Construction: Contractors must budget for labor, materials, and profit. Overspending may cause losses.
• Sports: Athletes plan for careers and future after retirement since earnings may not last forever.
• Navigation: Travelers must budget for transport, food, and lodging to avoid running out of money during a trip.
• Design: Business owners plan for expenses in design and production before launching a product.

Guiding Question: Think of one real-life situation in your family where financial planning was applied or should have been applied.

Show Answer

Examples: budgeting for school tuition, saving for medical bills, planning for house repairs, or saving for a family vacation.

Mini-Summary: Financial planning is applied in everyday decisions in homes, schools, and businesses.

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8. Checkpoint Discussion

• Why is saving money before buying something better than borrowing?
• How does planning for needs before wants help avoid financial stress?
• If you were to set one financial goal for the next 5 years, what would it be?

Show Answer

Saving avoids debt and extra interest. Prioritizing needs ensures essential expenses are covered and reduces stress. A 5-year goal could be saving for college, starting a small business, or buying a laptop for school.

Mini-Summary: Financial planning combines math skills with wise choices to build a secure future.

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9. References

• Investopedia. Financial planning.
• Organisation for Economic Co-operation and Development. Financial Literacy Questionnaire for PISA 2022.
• Practical Money Skills Workbook. VISA.
• THE SKILLS THAT MATTER in Adult Education. Money Management Lesson Plan.
• Wealthy Woman Finance. Financial Literacy Month ideas.

💡 Example in Action

These examples help you practice how financial planning uses mathematics. Follow the steps then check the hidden solutions.

Worked Example 1 – Weekly Savings Goal

Carlo wants to buy shoes worth ₱3,000. He saves ₱600 per week. How many weeks will it take?

Show Answer

$\frac{3000}{600}=5$

It will take 5 weeks.

Worked Example 2 – Budget Balance

Anna receives ₱2,500 per month. She spends ₱1,200 on food, ₱500 on transport, and ₱400 on supplies. How much is left for savings?

Show Answer

$2500-(1200+500+400)=400$

She can save ₱400.

Worked Example 3 – Simple Interest

Miguel deposits ₱5,000 at 4 percent annual simple interest. How much interest after 2 years?

Show Answer

Formula:

$I=P\times r\times t$

Compute:

$5000\times 0.04\times 2=400$

Interest is ₱400.

Worked Example 4 – Overspending Risk

James earns ₱7,000 per month. He spends ₱7,800. How much debt in 6 months?

Show Answer

$7800-7000=800$ $800\times 6=4800$

Total debt is ₱4,800.

Worked Example 5 – Cost per Unit

A 1.5-liter juice is ₱90, while a 2-liter juice is ₱110. Which is cheaper per liter?

Show Answer

1.5L cost per liter:

$\frac{90}{1.5}=60$

2L cost per liter:

$\frac{110}{2}=55$

The 2-liter bottle is cheaper at ₱55 per liter.

Now You Try

Task 1: Liza wants a bag worth ₱2,400. She saves ₱300 each week. How many weeks?

Show Answer

$\frac{2400}{300}=8$

It will take 8 weeks.

Task 2: Monthly allowance ₱3,000. Expenses: food ₱1,200, transport ₱800, supplies ₱600. Savings?

Show Answer

$3000-(1200+800+600)=400$

He can save ₱400.

Task 3: A ₱10,000 deposit earns 6 percent simple interest yearly. Interest after 4 years?

Show Answer

$I=P\times r\times t=10000\times 0.06\times 4=2400$

Interest is ₱2,400.

Task 4: Maria earns ₱9,500 but spends ₱10,200 monthly. Debt after 10 months?

Show Answer

$10200-9500=700$ $700\times 10=7000$

Total debt is ₱7,000.

Task 5: A 1-kg pack of rice is ₱52. A 5-kg pack is ₱250. Which is cheaper per kg?

Show Answer

1-kg pack:

$\frac{52}{1}=52$

5-kg pack:

$\frac{250}{5}=50$

The 5-kg pack is cheaper at ₱50 per kg.

📝 Try It Out

Solve the exercises. Open the hidden answers to check your work.

1. Jenny wants a book worth ₱720. She saves ₱120 weekly. Weeks needed?

Show Answer

$\frac{720}{120}=6$

6 weeks

2. Monthly allowance ₱2,800. Expenses: food ₱1,500, transport ₱700, supplies ₱300. Savings?

Show Answer

$2800-(1500+700+300)=300$

Savings ₱300

3. Carlo deposits ₱8,000 at 5 percent simple interest for 2 years. Interest earned?

Show Answer

$I=P\times r\times t=8000\times 0.05\times 2=800$

₱800

4. James earns ₱12,000 but spends ₱13,200 monthly. Debt after 5 months?

Show Answer

$13200-12000=1200$ $1200\times 5=6000$

₱6,000

5. 2-liter soft drink ₱95. 1.5-liter soft drink ₱72. Which is cheaper per liter?

Show Answer

2L:

$\frac{95}{2}=47.5$

1.5L:

$\frac{72}{1.5}=48$

2L is cheaper per liter.

6. Liza saves ₱450 weekly. Savings after 9 weeks?

Show Answer

$450\times 9=4050$

₱4,050

7. Maria deposits ₱6,000 at 6 percent simple interest for 3 years. Total amount after 3 years?

Show Answer

Interest:

$I=6000\times 0.06\times 3=1080$

Amount:

$A=P+I=6000+1080=7080$

₱7,080

8. Monthly allowance ₱3,200. Budget: food ₱1,500, transport ₱700, supplies ₱600. Is it balanced? Remainder?

Show Answer

Expenses:

$1500+700+600=2800$

Remainder:

$3200-2800=400$

Balanced with ₱400 savings.

9. Overspending ₱900 per month. Debt in a year?

Show Answer

$900\times 12=10800$

₱10,800

10. 25-kg sack of rice ₱1,150. 50-kg sack ₱2,250. Which is cheaper per kg?

Show Answer

25-kg:

$\frac{1150}{25}=46$

50-kg:

$\frac{2250}{50}=45$

50-kg is cheaper at ₱45 per kg.

✅ Check Yourself

Answer the quiz. Open the hidden answers only after trying each question.

Conceptual

1. What is financial planning?

Show Answer

It is the process of setting goals for money and creating strategies through budgeting, saving, and investing to achieve them.

2. Why is it important to start financial planning early?

Show Answer

Starting early allows money to grow over time and helps avoid unnecessary debt.

3. Give one difference between a need and a want.

Show Answer

Needs are essential for living while wants are non-essential.

4. Why is budgeting necessary in financial planning?

Show Answer

It allocates money for needs, controls spending, and secures savings.

5. What risk happens if you spend more than you earn?

Show Answer

You will accumulate debt.

Application

6. A student saves ₱200 weekly. Savings in 12 weeks?

Show Answer

$200\times 12=2400$

₱2,400

7. Maria has ₱5,000. She spends ₱1,800 and ₱1,200. Money left?

Show Answer

$5000-(1800+1200)=2000$

₱2,000

8. Juan deposits ₱10,000 at 3 percent simple interest for 4 years. Interest?

Show Answer

$I=10000\times 0.03\times 4=1200$

₱1,200

9. Carlo earns ₱9,000 but spends ₱9,800. Monthly deficit?

Show Answer

$9800-9000=800$

₱800

10. If the deficit in #9 continues for 6 months, total debt?

Show Answer

$800\times 6=4800$

₱4,800

Best Buys and Decision-Making

11. 500-ml bottle ₱25 vs 1-liter bottle ₱40. Which is cheaper per liter?

Show Answer

500-ml:

$\frac{25}{0.5}=50$

1-liter:

$\frac{40}{1}=40$

1-liter is cheaper.

12. Sack of rice ₱1,600 for 40 kg. Cost per kg?

Show Answer

$\frac{1600}{40}=40$

₱40 per kg

13. Liza saves ₱500 monthly. Savings after 15 months?

Show Answer

$500\times 15=7500$

₱7,500

14. Monthly allowance ₱3,000. Budget: ₱1,200 food, ₱900 transport, ₱700 supplies. Balanced? What happens?

Show Answer

Expenses:

$1200+900+700=2800$

Balance:

$3000-2800=200$

Balanced with ₱200 savings.

15. ₱12,000 deposit at 5 percent simple interest for 3 years. Interest?

Show Answer

$I=12000\times 0.05\times 3=1800$

₱1,800

🚀 Go Further

Apply financial planning to more complex, real-life scenarios.

1. Create a one-month budget plan for an allowance of ₱3,500. Allocate for food, transportation, school needs, entertainment, and savings. Make sure it balances.

Show Answer

Example: Food ₱1,500, Transport ₱800, School ₱700, Entertainment ₱300, Savings ₱200. Total ₱3,500.

2. Interview a family member about a financial goal achieved. Ask their plan, duration, and challenges.

Show Answer

Guidance: Look for consistent saving, controlled spending, and clear milestones.

3. Compare interest rates of two local banks for a ₱20,000 deposit over 2 years. Which gives more?

Show Answer

Sample: Bank A 3 percent → 20,000 × 0.03 × 2 = ₱1,200. Bank B 4 percent → 20,000 × 0.04 × 2 = ₱1,600. Bank B yields more.

4. Plan a small business with ₱10,000 capital. Propose 3 business ideas and estimate monthly profit.

Show Answer

Examples: food stall ₱2,000, online reselling ₱1,500, printing service ₱1,200. Justify your estimates.

5. Write how your life might change with and without financial planning in terms of education, health, and personal goals.

Show Answer

Without planning: higher risk of debt and stress. With planning: savings for education, stable funds for needs, and peace of mind.

🔗 My Reflection

Answer in your notebook.

3–2–1 Activity

• 3 things you learned about financial planning.
• 2 ways you can apply financial planning in daily life.
• 1 financial goal you want to start planning for now.