Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Chapter-3 Mastering Personal Finance CHAPTER- 3 MASTERING PERSONAL FINANCE “What sculpture is to a block of marble education is to the soul.” Outline of the Chapter 3.1 3.2 3.3 Introduction Factor That Influence Financial Planning Reviewing and Revising 3.1 Introduction In the first lesson we will look at the ‘hierarchy of goals’ a hierarchy is a system of ranking thing in order of priority. When we build a hierarchy of financial goals, we take all of the identified goals; we then decide which one is the most important, then the next in importance, and so on, until all the goals are placed in the most sensible order, creating the hierarchy Life is series of events, some of which we can plan for, and some of that we can’t. You can be more certain of retirement from work than you can be winning the lottery! We can therefore, breakdown our life into a series of events, where our needs, goals and priorities will change as we get older. In this lesson, you will learn about:a. The basic hierarchy of financial goals b. What needed when! c. Expected and unexpected events a. The Hierarchy of Financial Goals If you are currently looking for the job, your financial priority is probably to keep a roof our your head and to put food on the table. If you are starting your career after completing college or a technical school, your priority is most likely to be paying of debt you built up while studying. And if you are coming to the end of your career you are probably most concerned with building your retirement fund. Modules on Financial Literacy Page 1 Chapter-3 Mastering Personal Finance So all things considered, what is the basic hierarchy of financial goals? Take a look on the below mentioned chart where we have listed a number of possible financial goals. At this stage they are not presented in any order of priority. Priority 1 2 3 4 5 6 b. My Hierarchy Paying of debt Emergency fund Protection Buying a home Disability income insurance Other savings What needed when! You need to place these goals in order of priority. That mean the most important goals, relevant to your life stage, should be placed at the top. In the middle of your life this may be more difficult, as you may think that all of the goals share equal priority. It is important to understand that there is always an order of priority which changes as your life changes. Why is this hierarchy important? You will probably have a higher income in your 30’s and 40’s than you had in your 20’s, or you will have in your 70’s also, the demand on your money will change. In your 50’s and 60’s you may not still be considering buying your first home, and any children you may have could be financially independent. So, the hierarchy needs to change to take account of the changes. The order of priority will be changed as you progress in life. For example, you no longer need to worry about disability income insurance after you have retired, but you may still be paying off your debts, if you failed to make this a priority earlier in your life. Exercise What is your personal hierarchy of goals, right now? Take a little time to complete this exercise. Get a pen and paper and right down the basic hierarchy of financial goals. Then, rearrange those goals in your order of priority. Do this right now! Modules on Financial Literacy Page 2 Chapter-3 Mastering Personal Finance c. Expected and Unexpected Events Life has a habit of surprising us. Perhaps, that surprise might be winning a lottery ticket, in which case you will have diffident financial concerns! Perhaps, that surprise might be a new job. Which pay a salary high enough to allow you to obtain a mortgage, and purchase your first home. After completing the earlier exercises, perhaps the surprises are that you have discovered that your debt will spiral out of control if you do not take action! Perhaps, you have been laid off, been diagnosed with an illness, which mean you can no longer work, or perhaps you may die prematurely. All these are very possible events in a regular life. You should list all of the possible events which could be considered unexpected; jot them down on a piece of paper. Perhaps, you should concentrate for the time being on unexpected events such as losing a job or illness. Title this list: unexpected events Next, consider the potentially expected events which would have an impact on your finances: buying a house, raising a family, sending children to school or retiring. Try hard to list all of the possible events that you might expect throughout life. Jot them down on your paper. Title this list: Expected events Modules on Financial Literacy Page 3 Chapter-3 Mastering Personal Finance The above mentioned two lists will contain very difficult events but such event is important in financial terms. Now take each event on your unexpected list, and consider the consequences of not planning of them. Take losing a job for example, the consequences of this may include being unable to pay your rent and you may be evicted. Next, each event in turn and consider how you might plan for it. Start with dying prematurely for example. This is an easy one; you can take out of life insurance, which will provide your family with some money, in the event of your death. Consider that there may be a variety of ways that certain events, such as retirement, can be dealt with. You could try to the save the equivalent of a few months’ wages to help you maintain your standard of living while looking for a new job. Unemployment payments or welfare checks may offer some supplemental help, but you should try not to solely rely on them. 3.2 Factor That Influence Financial Planning Hopefully you now understand how your personal financial goals need to be modified as your life progresses. The choices if financial products available for these various goals and events will be influenced by your assessment of priorities at each stage. This lesson looks at the different products and factors which will influence your financial plan. In this section you will learn about:3.2.1 The guiding principles that support successful financial planning. 3.2.2 The range of financial products available to make your financial plan a reality. 3.2.3 The personal factors which influence your financial planning. 3.2.4 The external factors which will influence your plan. 3.2.1 The guiding principles that support successful financial planning. In this lesson we will focus on financial products. These products are tools to achieve your financial goals. Unfortunately, many people misuse the debt tools. Often, they do not realize that the underlying cause of their need for debt can be avoided. So let’s review Modules on Financial Literacy Page 4 Chapter-3 Mastering Personal Finance a few basic principles that you will need to guide your use of financial products in order to achieve your financial goals. a. Spend less than you make A lot less! A wise person once said, “It’s not that what you make that matter- it’s what you keep.” This is why creating and following a budget is so important. Learn to ell the difference between need and want. You need food. However, you want shrimp, steak, and a bottle of wine for dinner each night. Ultimately, this is an exercise of self control and deferred gratification- which run counter to society’s materialistic and ‘consume now’ mentality. Believe it or not, many billionaires do not drive a Mercedes and live in a mansion. Many who have achieved financial freedom done so with hard work, a little luck, but a lot of discipline and frugality. Sure, you may never be billionaires, but you can still save your way to achieve your financial goals, including a comfortable retirement. b. Pay yourself first Set a saving goal. 10 % of your income is a good place to start. One of your first saving goals should be to build that emergency fund (3 to 6 months worth of expenses) all of the financial experts talk about. This amount will give you a cushion if you lose your job or the hot water heater breaks. Instead go paying by credit; you can pay from your emergency fun- avoiding the finance charges and interest associated with the debt. Once you have emergency fund in place, turn your eyes to retirement and other saving goals. Get health insurance coverage Check into any state sponsored insurance for yourself and your children. Get out of debt, stay out if debt Other than a mortgage and/or necessary and manageable business loans, you are generally should avoid debt when it comes to money, you are either paying interest or earning interest. Guess which one will get you closer to your goals? Modules on Financial Literacy Page 5 Chapter-3 Mastering Personal Finance c. Don’t be greedy The old saying “ a fool and his money are soon imparted,” is unfortunately very true. There will be many people telling you that if you invest with them, you will have the potential to be rich in a few years. They may be telling you the truth. What they are not telling you however, is that with such great promise of reward there is an equal possibility of losing it all. you will need to take some risk to achieve your financial goals, but if you don’t allow greed to motivate you, you can reduce that risk considerably. d. Use debt wisely Debt should finance true emergencies and needs that you cannot pay out of saving, like a new roof or a used car; or the purchase of long term investments, like a house or business. It should not be used to finance short term wants such as vacations, new clothes, or plasma-screen TV. Debt like this is the enemy that will prevent you from achieving your financial goals. You will see the six principle reflected throughout the rest of the module. It doesn’t matter how much money you make. Following principles will help you achieve your goals. Remember! There are people making Rs. 10,0000/- a year but living pay check to pay check. But there are people making Rs. 50,000 a year who are saving and investing their way to their dreams and goals. How much you make matters some but how much you keep matters most. 3.2.2 The range of financial products available to make your financial plan a reality. Now that you understand the guiding principles for using financial products, we will take a look at the various types products available to help you attain your financial goals. The most important type of financial products for achieving your financial goal are those related to savings and investing. We will start with a quick review of saving accounts and certificates of deposit and then move on. Modules on Financial Literacy Page 6 Chapter-3 Mastering Personal Finance a. Savings account We have mentioned savings accounts already. These are provided by banks and other financial institutions. You deposit your money into a savings account. The bank uses this money to give short term loans to other customers. In return, you receive interest and you can withdraw your fund at any time. Typically the interest on any savings account is higher than interest-bearing checking accounts but lower than the rate you can earn in a certificate of deposit. A savings account is a good place to keep your money while you are saving to meet the minimum investment amount for other investments such as CD or Money Market Mutual Fund. b. Certificate of Deposit With a CD you give the financial institutions your money (usually a minimum amount such as Rs. 500 must be invested) for a specified amount of time (usually for a period between 3 months and 5 years) and in return you receive a specified rate of return higher than that offered by a savings account. The trade off is that your money cannot be withdrawn early without a penalty. c. Money Market Mutual Funds These products are offered by various financial institutions. When you give the institutions your money, they take it and invest it in short term debt. Think of it as getting together with hundreds of thousands of other people and loaning money to corporations, banks and the Federal government. Interest rate on money market mutual funds are typically higher than a bank savings account and may even be equal to those of CDs but with the advantage of not locking your money for a longer period of time. When you have accrued enough money to meet the minimum investment amount of your money market mutual fund, you should consider moving your intermediate and short term savings (money you won’t need for a year or more) to these accounts. While they are not insured by the FDIC, they are relatively safe investments. Modules on Financial Literacy Page 7 Chapter-3 Mastering Personal Finance d. Investment Vehicles Rather than attempting to describe all the different types of investment vehicles out there, we will talk about the two main categories- Debt and Equity. With debt instrument, you lend your money to a corporation or government either directly or more commonly through a mutual fund. As with all debt vehicles, you are compensated by earning interest. Example of debt instruments include corporate bonds, municipal bonds, treasure bills and so forth. On the other hand when you purchase an equity instrument such as a stock, you are an owner. Again, this purchase may lead to direct ownership (if you purchase shares of a mutual fund). The easiest and perhaps safest way to get started with investment vehicles is through mutual funds. A mutual fund is made up of equity and/or debt security of many different entities (government or corporate). The mutual fund price is like that of a stock fluctuating with the change in the prices of securities it holds. We’ll get into more detail about this in a later module. e. Loans Personal loans can be a short term form of finance. They are usually provided by a bank and they are many variations available. The term of the loans ranges from one to as many as 25 years. However, as a short term source of finance, 3-5 years is probably an average term. Loans can be secured usually with property or unsecured for a short term loan. Loans can also be insured against a loss of income by paying an additional charge. Interest is paid to the bank and the rate of interest varies with the product. To find out more about loans and interest rates, visit the website of any bank or walk in off the street and speak to one of the customer service employees in person. f. Credit In the context of life plan, credit should be considered a very short term source of finance of last resort. The credit card is perhaps the best known form of the credit, and its use (and abuse) is widespread. The credit card is an excellent payment tool, in that it can be used in many retail outlets, over the phone, and via secure payment systems on the web. Modules on Financial Literacy Page 8 Chapter-3 Mastering Personal Finance Be very wary of the convenience of buying with a credit card as its ease of use can deceive you into buying items you don’t need. A credit card can be cheap form of credit in the short term, if you clear the balance monthly. It’s a dangerous thing to go shopping with however, as it allow you to create large debt quickly! The bottom line with the credit card: use them (with great caution) but pay them off each month. If you don’t have the cash for an item that is not dire necessity, do not charge it! The best way to approach the big ticket item is to save extra money- above the 10 % you are saving to build your emergencies and then your retirement- in your saving account until you have then cash to cover the purchase. In this way you can avoid high interest rates associate with credit cards and avoid paying lot more for your prized them. Then, credit card debt is saved for those (hopefully) few and infrequent times you absolutely need them. (With an adequate emergency fund, this should be almost never!) g. Mortgage A mortgage is a long term loan. It is usually used to fund the buying of your home. The repayments are usually spread between 15-30 years. The borrower can decide to pay back their loan in a short term time as their circumstances change. The borrower has to also prove the ability to maintain monthly payment for the terms. The borrower’s income is considered and a multiple of annual salary is usually offered. This figure is sometimes even 4 or even 5 times the annual salary but debt can vary and joint income can also be taken into account. Use great caution when deciding how much of your mortgage you can afford. The amount the lender is willing to lend will also be more than you can afford while still financing other financial goals. Make sure you factor in all of the costs of home ownership. When you own a home, you will have to pay real estate taxes (local governments, school districts and country government all raise revenue through real estate taxes.) In addition your utility costs will be greater especially if you are moving from an apartment into a single family dwelling and don’t forget about repair for when things break. The more you are paying in the housing costs, the less money you will have for other important goals, especially retirement. Modules on Financial Literacy Page 9 Chapter-3 Mastering Personal Finance h. Insurance Think of insurance as a defense. In any team sport, you win by scoring a lot of points and holding your opponent to a few points. Financially, it’s the same. You need to save money but you also need to protect what you save as well. That is what insurance does; it protects you and your family from the unexpected. Sometimes, certain types of insurance may be mandated by the government, as with insurance on your motor vehicle, or by a lender, as with home owner insurance. But more often than not, you will need to proactively decide your need coverage for a particular risk and buy it for yourself. See the list below for more appropriate risks to consider Health Insurance You are covered for doctor’s care, hospitalization and/or prescription drugs needed in the event of an illness or accident (as stated earlier, don’t go without this coverage). Disability Income Insurance You receive a percentage of your income each month if you are disabled. Life Insurance Your loved ones receive the insurance amount tax free so that they can make ends meet in your absence. Insurance is such a huge area; it would benefit you to look up the various products on the web. 3.2.3 The personal factors which influence your financial planning. Now that you are familiar with the products which can help you create a financial plan, let’s take a look at which personal factors are important influences on that plan. The first of these factors is your adjusting resources or assets. Let’s take a closer look at the resources. The resources to be considered are: a. Income How much money is coming in? Are you likely to maintain that level, and if so, for how long? b. Savings Modules on Financial Literacy Page 10 Chapter-3 Mastering Personal Finance Do you have short term savings? Do you have any savings at all? Do you have a medium to a long term savings plan? Benefits and Tax credits: What is your tax position? Do you pay standard or higher rate tax? c. Your Existing Financial Products: Do you have any long term savings or investments? Do you have a retirement account? Do you have any shares of stock? Once you have figured out what your current resources are, the next factor to consider is time. When saving for retirement time is vital. If you start early and save for a long time, your monthly contribution could be quite low. Starting later in life would mean you would have to make bigger monthly contribution to receive the same pay out. If your goal is to create an emergency fund, then the time still could be very short. If you intend to save in order to fund your children’s college education, then the time available to build this fund is a major factor. Remember, the key is to start early. In speaking about time, we should distinguish between short, medium and long term. d. Health and Lifestyle This can be very significant in influencing a financial plan. Remember the two characters we spoke about before, Ram and Ramesh? Health is certainly a considerable influence in financial planning for these two especially when insuring against unforeseen events. Considering lifestyle, some people find it hard to limit their spending to needs and occasional wants. Lifestyle debt is caused by buying a flashy motorbike or simply buying small treats too frequently. Depending on your life stage, a glamorous lifestyle maybe important to you. But Remember! Life is about trade-off. Spending money for todays wants means it’s not available to pay for tomorrow’s needs. Modules on Financial Literacy Page 11 Chapter-3 Mastering Personal Finance 3.2.4 The external factors which will influence your plan. As you have learnt, events can occur which are beyond your control. These events range from changes of government to your country going to war. Changes in the economy are particularly important as inflation, economic growth, and interest rate can affect your financial plan. a. Planning and Practice In this lesson our attentions turns to the practical planning required to meet a selection of common financial goals. You need to be able to define your financial goals, assess how much money is required to meet them, and identify products to help you achieve these goals. The various goals that we will look at in this lesson are: 1. Creating an emergency fund 2. Managing debt 3. Insurance and Protection 4. Short term savings. b. Emergency Fund The first priority is to create an emergency fund to cover any unforeseen financial events. This way you can avoid using credit to cover the unexpected, which is always more costly to you. Estimate what size your emergency fund should be, and how quickly you can build up the required funds. Remember that building and maintaining the fund is an ongoing activity. How much should the fund be? Financial experts suggest 3-6 months of living expenses (not income) in the long term. That may sound like an insurmountable task. One method is to take a 3 step approach. Step 1: Put all other goals on hold until you have Rs. 1000 in your emergency fund. If you have credit or loans, pay the minimum payments. Modules on Financial Literacy Page 12 Chapter-3 Mastering Personal Finance Step 2: Once you have reached the Rs. 1000 goal, you can begin to look at funding other goals such as debt reduction and retirement, by reducing the amount you are allocating to your emergency fund. And finally, Step 3: When you have reached your final goal amount (3-6 months of expenses as a starting point) you stop contributing to the fund. If you have to use it, you will have to replenish the amount you used. A suitable product for an emergency fund is a simple savings account. High interest accounts usually has withdrawal penalties attached to them, some require that you lock up your money for a set period. These types of accounts would be useless, as you cannot easily get your money back. You need easy access to the fund in case of an emergency. c. Managing Debt Regardless of the causes of debt, it has to be reduced or eliminated if you are to achieve good financial health. It is important to mention that some debt such as mortgage is designed to be paid off over a longer period of time. Therefore, focus on reducing or removing more urgent short term debt. The types of debt you need to be concerned with are debts that appear to be stuck on your monthly budget sheet. These debts could be: 1. Debt incurred for urgent and necessary expenses 2. Credit card debt 3. A large overdraft 4. Multiple small loans 5. Student loan and 6. General lifestyle debt Each of the debts listed requires slightly different treatment. You will have to understand the basics and then apply your understanding to deal with the debt. The most important step you take is to make the removal of all the debts a top priority. Secondly, you should remove the debt in the cheapest and most effective way possible. Modules on Financial Literacy Page 13 Chapter-3 Mastering Personal Finance Your first job is to define the goal. For example the goal could be to clear a student loan. You should target a specific debt, prioritizing them as you go You may be able to consolidate your debt into one. Add up how much you owe, and work out what is costing you per month to make the payment on this debt. Decide how much you wish to borrow to remove this debt, and over what time period. Find out what the monthly repayments are. This consolidation will reduce your outgoings into cash flow and eventually repay the debt. d. Next, Financial Products that you can use to Repay the Debt If you are consolidating your debt, you will need a short term loan, not more than five years, less if possible. Shop around to find the lowest interest rate you can. Also, avoid loans that have penalties for early repayment. With a flexible loan you can always make larger repayments later on. When you are dealing with a few different credit and loan balances, the basic strategy is to pay the minimum on all balances. Put any extra payment to the one with the highest interest rate. Your goal is to pay that down faster, saving yourself some money in the process. e. Insurance and Protection There are a wide range of insurance products available to help you recover from life’s unexpected events. As stated earlier, some insurance products are mandatory such as auto insurance and home owner insurance. Others, you will need to decide for yourself whether you need and can afford to purchase them. Insurance can be complicated. It is helpful to have someone who can explain things to you and help you obtain the greatest value for your premiums. Therefore, when it comes to insurance, finding a trusted advisor is the best policy. Ask people you know and trust who they recommend in order to build a list of potential insurance agents and brokers with whom you can do business. f. Short Term Savings Modules on Financial Literacy Page 14 Chapter-3 Mastering Personal Finance Short term savings is a very important part of financial planning. Lets say you want a vacation, you could borrow the money to fund the vacation. But remember, borrowings have to be paid back with interest. A Rs. 2000 vacation will cost you more than Rs. 2000. It is never wise to borrow to pay for consumable items like an expensive dinner, entertainment or a vacation. Instead, you should consider saving for such events. The first thing you should do is decide what you want to save for and prioritize. Then identify the generic products that will allow you to save. Savings accounts are the best if you will want to get the money quickly. High interest is of less importance, because you are saving for the short term. Short term savings is defined as saving for less than five years, so any interest gained will be relatively low. If you want more interest and you can afford to wait awhile to get your money) a year or more), then a money market mutual fund or CDs could be suitable. These accounts usually are for higher interest rates than a savings account. Remember though, that you may face penalties if you withdraw your money early from a CDs. Saving over a short term is easy, it simply requires a small amount of determination and discipline. 3.3 Reviewing and Revising An element of financial planning that is often overlooked is time. Consider how your income might have changed over the last ten years. Regardless of whether your income has risen or fallen, the fact remains that it is very likely to be different than it was ten years ago. With this in mind, the process of constant review and revision becomes all the more important. If you plan regular reviews six monthly, annually, every 5 years or weekly if appropriate, you can keep track of where you are up to, and constantly assess your changing financial position. In this lesson, you will learn that: Financial planning is an ongoing process and that plans need to be reviewed. You will also look at the various statements that you receive, and identify whether any action needs to be taken to modify your plans in light of these statements. Modules on Financial Literacy Page 15 Chapter-3 Mastering Personal Finance Review A Financial Plan Financial planning is a continuous process. Review your plans regularly. If your goal is to pay off your credit card bill, using your monthly cash surplus, then review your plan on a monthly basis. However, if you have a long mortgage, then it would be inappropriate to review your mortgage plan monthly. An annual, or even five-yearly review, would be better. Perhaps it’s a good idea to schedule reviews for all your financial plans at the outset. For example, you could indicate on your budget sheet that a review is due on certain date; that way you won’t forget it. If you do this you can be confident that all your financial goals can be reassessed on a timely basis. In financial terms, five year can be a very long time , and a lot of changes can take place; your income could improve dramatically, you could purchase a new house, or get into serious debt (though hopefully not). These changes should trigger a review of your plans; that way you always be in the best possible position to make planning decisions. Another time to review your plan is when new products become available. Governments review their tax and saving programmes regularly, and governments like people to save money, particularly where retirement is concerned. So, they develop incentive as time passes. The same goes for banks and financial institutions. Modules on Financial Literacy Page 16 Chapter-3 Mastering Personal Finance ACTIVITY-A The Choice and decision making process Identify the problem. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… Gather information and list possible alternatives. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… Consider the consequences of each alternative. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… Select the best course of action. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… Evaluate the results. ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… Modules on Financial Literacy Page 17 Chapter-3 Mastering Personal Finance Factor that can influence a decision A. Values What is important to your family, others in your culture? B. Peers People you know Pressures that influence positive or negative behaviours C. Habits You are accustomed to doing it this way D. Feelings (love, anger, frustration, ambivalence, rejection) If you do make a certain decision If you don’t make a certain decision E. Family Your family’s preference Decisions other family members have made F. Risks and consequences What (or how much) you stand to win What (or how much) you stand to lose G. Age Minor Adult Modules on Financial Literacy Page 18 Chapter-3 Mastering Personal Finance Common decision making strategies Agonizing Intention Accumulating so much information that Choosing an option that will be both analyzing the options becomes intellectually and emotionally satisfying. overwhelming. Avoidance Procrastination Choosing the option that is most likely to Postponing thought and action until options avoid the worst possible result. are limited. Compliance Security Going along with family, school, work, or peer expectations. Choosing the option that will bring some success, offend the fewest people, and pose the least risk. Desire Spontaneity Choosing the option that might achieve the Choosing the first option that comes to mind; best result, regardless of the risk involved. giving little or no consideration to the consequences of the choice. Destiny Synthesis Letting outside forces decide; leaving the Choosing the option that has a good chance decision up to fate. to succeed and that you like the best. Inspiration Doing something because “it feels right” or because “it just seems like the right thing to do”. Modules on Financial Literacy Page 19 Chapter-3 Mastering Personal Finance Economic influences on decision making Before you make decisions about money, you must understand how economic factors may impact personal and financial decisions. Consumer prices Changes in the buying power of the dollar, inflation Consumer spending Demand for goods and services Gross domestic product (GDP) Total value of goods and services produced within the country Housing starts The number of new homes being built Interest rates The cost of borrowing money Money supply Funds available for spending in the economy Unemployment The number of people without employment who are willing to work choices Risk associated with decision making Making choices about money can be risky. The following are common risks that you should think about related to personal and financial decision making. Income risk Changing jobs or reduced spending by consumers can result in a lower income or loss of one’s employment. Career changes or job loss can result in a lower income and reduced buying power. Inflation risk Rising prices cause lower buying power. Buying an item later may mean a higher price. Interest-rate risk Changing interest rates affect your costs (when borrowing) and your benefits (when saving or investing). Liquidity risk Certain types of savings, guaranteed investment certificates (GICs), and investments (real estate) may be difficult to convert to cash quickly. Personal risks These are factors that may create a less than desirable situation. Personal risk may be in the form of inconvenience, embarrassment, safety, or health concerns. Modules on Financial Literacy Page 20