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Human Relations­ MGMT611
VU
Lesson 34
MANAGING PERSONAL FINANCES-1
Quotations
Spend sensibly ­ remember that tomorrow's need is more important than today's want.
Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual
income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Charles Dickens (1812 - 1870) British novelist
Managing personal finances
The purpose of this lecture is to help the students and learners lead a better personal life by managing
finances effectively. Management of personal finances is an important component in managing human
relations.
Personal attitude towards the management of debt will also be covered with good personal financial
management; people with even modest incomes can amass a large amount of money.
Your personal financial plan
A highly recommended starting point in improving your present financial condition and enhancing your
future is to develop a personal financial plan. Two key elements of the plan are financial goals and a budget.
Why finance in relations course. It affects personal and work relations. Money is increasingly becoming
important. Social and psychological needs will be met with money. In other words, personal satisfaction and
happiness will have a strong bearing of money.
Reasons for over spending
Let us have a look at the reasons of over-spending of money.
1. Shop Keeper is friendly
Some times it so happens, that shopping mall or the environment or the salesperson is so friendly that
people spend unnecessarily on the things they do not need actually.
2. Enjoy shopping
Some people are spendthrift. They enjoy shopping. They spend money and get pleasure.
3. Shopping as a social and group activity
Some time people shop goods as a group activity. They waste money on buying goods unnecessarily.
4. Desire for possessions
Some people buy precious things for the sake of possession.
5. Credit is available easily (use of credit card)
In this age of credit card, people have developed the habit of spending money on unnecessary things.
Tips for managing personal finances
1. Having a long term debt
It is not advisable to borrow money for longer period of time. Suppose the leasing of a car would be
counter productive, if you take it for seven years or more. In this way you will end up in paying more
amount of money.
2. Giving Control of Your Money to Someone Else
If you give control of your money in the hands of others they might spend it lavishly.
3. Spending Leaks
Spend your money according to the budget.
4. Not Setting Goals
If you have not set any goals, you can not manage your finances.
5. Incurring Too Much Debt
It is not a good habit to incur debts more than your needs. Avoid incurring debts unnecessarily. It will be
difficult to repay the debts in future.
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6. Not Saving Enough for Retirement or Starting Too Late
Try to save some money from your earnings for future expenses.
7. Cashing Out Retirement Funds
Avoid cashing out retirement funds. You will leave with nothing if you spend it earlier.
Establishing financial goals
A common approach to financial goal setting is to specify amounts of money you would like to earn at
certain points in time. Another common goal is to obtain enough money to cover specific expenses.
Financial goals are sometimes expressed in terms of allocation of money, such as putting pay raises into
savings or reducing debt.
A more motivational approach is use financial goals to point to a lifestyle one hopes to achieve with specific
amounts of money. In this way money becomes the means to ends that bring satisfaction and happiness.
Developing a Budget (Spending Plan)
A budget is a plan for spending money to improve your chances of using your money wisely and not
spending more than net income.
Steps in budget making
Developing a budget can be divided into a series of logical steps.
Establishing goals
You should keep in mind your goals while establishing a budget so that you could make the best use of your
money.
1. Estimating income
First of all estimate your income and then plan the spending of money. You should be aware of the total
amount that you have in order to develop realistic budget.
2. Estimating expenses
Do this by keeping careful track of current spending.
3. Comparing expenses and income.
Remember that the true profit from your labor is the difference between your net income and total
expenses. If you spend all your money and you are left with nothing, it is not sensible. You must save
something for unseen expenses that may arise in future.
4. Carrying out the budget
Try to spend money according to your budget. If you spend more than the expected amount on various
things, then it is no use of making budget.
6. Evaluating the Plan
A budget usually needs reworking until it fits your needs. You can evaluate your budget time to time.
Self assessment Quiz
Here is a self assessment quiz to find out your attitude about your financial control. Assess your money
personality through this quiz.
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Human Relations Self Assessment Quiz
Your Money Personality
Below is a two-part quiz that addresses your willingness to take risks and your desire to
be involved with the investment decision making process. Take it and perhaps you will
find out something you didn't about yourself.
1. If I found a secure job which I thoroughly enjoyed, I would
a. Probably stay in it indefinitely
b. Stay unless a better opportunity came along
c. Be on the look out for a better opportunity or investigate ways to start
business of my own
2. I would become involved with a new business
a. Only as customer
b. As an employee if I have checked it out and it seems as if its a good
opportunity
c. As an investor if there is a chance of a big payoff
3. Buying care, I prefer
a. An economy model with good performance ratings and extended warranty
b. An exciting model, still unrated, with a standard warranty
c. A sleek and prestigious vintage care that would increase in value but may
be costly to maintain
4. Visiting a casino, I
a. Generally feel uncomfortable
b. Enjoy some games but budget how much I can afford to loose and stop
after that
c. Get caught up in the games and sometimes have big losses
1. I have discovered that I am most nervous around someone who
a. Spreads frivolously and/or takes big risks with money
b. Misses opportunities because of risk or fear
c. Never takes a chance in hopes of a big payoff
Interpretation of results
Risk vs Safety
If you scored three or more as, you tend to be safety oriented
ˇ
ˇ
Three or more bs, you tend to be more at ease with some risk
ˇ
Three of more cs, you tend to be a risk taker
If you are taking inappropriate money decisions because you are miscalculating your
willingness for risk taking, Kathleen Gurney, Chief Executive Officer of financial
psychology corporation says, you might counter those reactions by taking the time to
carefully consider any decisions about money before you make them. For those who are
overly cautious, her suggestion is to take small calculated risks to buildup your
confidence and risk tolerance.
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High Involvement vs Lack of involvement
1. At any given time, I know
a. my total assets and liabilities, down to the last Rs2000
b. More or less, what my assets and liabilities are
c. Which bills I have to pay from latest paycheck
2. If the interest on my credit card were raised, I would
a. Shop until I found a lower rate
b. Look into a few other cards
c. Go on paying as before because its convenient
3. My personal cheque book is
a. Always balanced
b. Balanced every few cheques of every week
c. Only balanced when I receive statement and sometimes not even then
4. If suddenly I have a much larger income, I would
a. Manage all of it myself and enjoy doing it
b. Work with my partner as well as with financial experts
c. Hire financial expert as well as someone to manage my day-to-day
expense money
5. I prefer an investment that
a. Would make money for me if kept an eye on it constantly
b. I need to evaluate only every few months
c. I never have to worry about
Interpretation of results
High involvement vs Lack of involvement
ˇ  Three or more as-you tend to like being incharge of money
ˇ  Three or more bs- you tend to be responsible, but not share control
ˇ  Three of more cs- you tend to easily relinquish control over money
According to Gurney, those who score high in involvement, need control over their
money to have peace of mind.
Source: DuBrin, Andrew J. `Human Relations: Career and Personal Success', Pearson Prentice Hall, 2005.
References:
Dubrin, A.J. (2005). Human Relations: Career and Personal Success. Upper Saddle River, New Jersey,
07458.
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Table of Contents:
  1. HUMAN RELATIONS:Some Guidelines for Effective Human Relations, Communication has 3meanings
  2. CULTURE AND PERSONALITY:Definition of sub culture, Definition of Personality, Types of Persons
  3. PERSONALITY AND STRESS:Personality, PERSONAL TOOLS TO CONTROL STRESS
  4. PERCEPTION AND INDIVIDUAL BEHAVIOUR:Three concepts of personality, Bias in Perception
  5. PERCEPTION AND GROUP BEHAVIOR:Characteristics of Groups, Individual and Group Behavior
  6. ATTITUDE AND BEHAVIOUR:Types of Attitudes, Steps to turn attitude into action
  7. PERSONAL MOTIVATION AND ACHIEVEMENT:Needs and Motivation, Self-discipline and motivation
  8. SOLVING PROBLEMS SKILLFULLY:Problem solving and cognition, Ways to solve problems
  9. CREATIVITY IN PROBLEM SOLVING:Barriers to creativity, Tips to solve problems creatively
  10. HANDLING PERSONAL ISSUES:Self-Defeating Behaviour, Positive attitude to tackle personal problems
  11. CONFLICT RESOLUTION:WHY SO MUCH CONFLICT EXISTS, TECHNIQUES FOR RESOLVING CONFLICTS
  12. COMMUNICATION AND HUMAN RELATIONS:Process of communication, Improving gender barriers to communication
  13. ORGANIZATIONAL COMMUNICATION:To improve listening skills, Types of organizational communication
  14. UNDERSTANDING COMMUNICATION STYLES:Modeling communication style, Sociability continuum
  15. SELF-ESTEEM:Building process of self-esteem, Self-esteem and public image
  16. BUILDING SELF-CONFIDENCE:The importance of self-confidence and self-efficacy, Balanced Self-Confidence:
  17. BECOMING A LEADER-1:Assessing leadership role, Traits and Characteristics of Effective Leaders
  18. BECOMING A LEADER-II:Theories of leadership, Developing leadership potential
  19. GLOBALIZATION AND CROSS-CULTURAL DIFFERENCES:Religious Values and Bicultural Identities
  20. IMPROVING CROSS-CULTURAL COMPETENCE:Strategies to improve cross-cultural relations, More steps to improve Cultural Relations
  21. BUILDING GOOD RELATIONS WITH MANAGERS:Impressing your manager, Coping with a problem manager
  22. BUILDING GOOD RELATIONS WITH CO-WORKERS:Make Co-workers feel important, Maintain Honest and Open Relationships
  23. BUILDING GOOD RELATIONS WITH CUSTOMERS:Salesperson Represents the Business, Approaching the Customer, Excuses vs. Objections
  24. CHOOSING A CAREER-1:Ten Myths about Choosing a Career, Attitude toward and Perceptions about Myself
  25. CHOOSING A CAREER-II:Choosing a career and developing a portfolio Career, Suggestions for career Preparation
  26. FINDING A JOB:Targeting your job search, The Internet and Résumé Database Services, Extreme Job Hunting
  27. SIGNIFICANCE OF RESUME:Major types of resumes, Electronic Submission of the Résumé
  28. IMPROVING INTERVIEW SKILLS:Successful interview, Knowing the employer or Organization
  29. IMPROVING WORK HABITS-1:Reasons of procrastination, Techniques for Reducing Procrastination
  30. IMPROVING WORK HABITS-2:Developing the proper attitudes and values, Time-management techniques
  31. NEW MODEL OF CAREER ADVANCEMENT:Career portability, HUMAN RELATIONS SELF-ASSESSMENT
  32. TAKING CONTROL OF YOURSELF:Develop Outstanding Interpersonal Skills, Business etiquettes
  33. EXERTING CONTROL ON OUTSIDE ENVIRONMENT:Important communication tip, Exerting control over the outside world
  34. MANAGING PERSONAL FINANCES-1:Your personal financial plan, Steps in budget making
  35. MANAGING PERSONAL FINANCES-2:Basic investment principles, Tolerance for Investment Risks, Types of investments
  36. ACHIEVING HAPPINESS-1:Finding happiness and enhancing your personal life, The key to happiness
  37. ACHIEVING HAPPINESS-2:The Five Principles of Psychological Functioning, Your mind and Happiness
  38. ACHIEVING HAPPINESS-3:Need for intimacy, Working out issues with relationships
  39. APATHY AND ITS REMEDIES:Let us try to understand the various definitions of apathy, Coping strategies for apathy
  40. ENHANCING PERSONAL ETHICS-1:Influence of Culture, Common ethical problems
  41. ENHANCING PERSONAL ETHICS-2:Common ethical problems, Guidelines for Behaving Ethically
  42. HELPING OTHERS GROW:Being a Nurturing, Positive Person, A list of mentoring behaviour, Coaching skills and techniques
  43. REVIEW-I:What is a Human Relation?, Meanings of Communication, Two types of stress, Some personal problem, Communication style
  44. REVIEW-II:Steps to build self-confidence, Globalization, Building Good Relations with Co-workers, Good work habits
  45. REVIEW-III:New model of career advancement, Choosing your investment, Tactics for Dealing with Difficult People