Slide MGT312 Slide01

Introduction to Personal
Finance
Chapter 1

Spend Less to Save More
• Consume less to be able to save.
• Part of saving needs to be invested.
• Investments help us to grow our wealth.
• Investments relate to standard of living.

Financial Success and
Happiness

• Financial success is the achievement of
financial aspirations.
• Financial security is living comfortably.
• Financial happiness is satisfaction with
money matters.

Business (Economic) Cycle
• It is a process by which the economy

grows and contracts over time.
• It repeats continuously.
• It consists of various conditions such as
expansion, peak, contraction, and trough.

Economic Indicator
• Procyclic Indicator, ex: GDP.
• Countercyclic Indicator, ex:
unemployment rate.
• Leading Indicator, ex: stock market index.

Inflation, Prices, and Interest
Rates

• Inflation is the increase in overall level of
prices.
• Inflation erodes purchasing power.
• Inflation affects interest rates positively.
• Inflation increases business risk.