4. Personal financial management

4.1. Budgeting

Personal budgeting

Budget – it is a list of expenses and their estimated cost

Personal budgeting – it is a finance plan that allocates future personal incomes towards expenses, savings and debt repayment.

Steps in personal budgeting

1.      Set personal financial goals 

2.      Identify income

3.      Allocate savings

4.      Estimated expenses

5.      Identify priority expenses

6.      Unforeseen expenditures

7.      Monitor expenses

Types of financial institutions

1.      Banks

2.      Saccos

Importance of financial institutions

·         Protects money

·         Transfers money

·         Saving purposes

·         Offer loans

Factors to consider when choosing a financial institution

·         Location

·         Availability

·         Security

Type of employment

Source of finances

·         Personal savings

·         Salary

·         Borrowing from friends and family

·         Operating a business

·         Commercial loans by banks and saccos