Some people have an intuitive ability to deal with their individual or organisation’s finances in order to maximise their assets. Others need some help to enhance their knowledge and make better decisions with a variety of financial challenges. This course is ideal for those wanting to build their own personal wealth, enhance the financial success of their organisation, or lay the foundations for a career in the finance industry.
The Certificate of Personal Finance Management will give you insights into how to spend, borrow, save, invest and ultimately manage your finances. In this course on how to manage personal finances, you will learn about financial terminology, how to plan and manage your money, capitalise on your home and minimise taxation. You will also study the intricacies of the money market and superannuation, and how to communicate with and leverage the benefits of banks.
Outcomes achieved by undertaking a course that helps you manage personal finances include:
- Understanding financial terminology
- Learning about financial management goals
- Exploring financial terminology and language
- Studying financial statements
- Gaining insights into planning and managing your cash
- Examining budgeting and cash flows
- Understanding profit and loss
- Learning about balance sheets and financial records
- Exploring how to problem solve
- Studying how to borrow for goods and against property, assets etc.
- Gaining insights into the types of loans and sources of funds
- Understanding how to get mortgages that suit you
- Learning about credit card control
- Exploring debt management
- Studying buying and what to look for
- Gaining insights into hidden traps and consumer protection
- Examining when not to buy on credit
- Understanding forms of credit
- Learning about the money market
- Exploring sterling money market operations
- Studying reserve averaging scheme
- Gaining insights into standing facilities
- Examining OMOs
- Understanding investment types – housing, land, stocks, bonds, trust funds, annuities, antique business investments and more
- Learning how to buy shares
- Exploring about investment appraisals and how to spread your investment
- Studying how to manage your cash, debt, insurance, housing and strategic planning
- Gaining insights into making, using, keeping, counting and enjoying your money
- Examining how to invest in shares
- Understanding how to buy or start a business
A Quick Guide to Financial Terminology
In order to manage personal finances well, you should be familiar with some basic financial terminology. Here’s a quick rundown …
- Asset – an item of a tangible (like real estate) or intangible nature (like a business brand name) that has a benefit or value, such as the capacity to generate interest or revenue. An “encumbered asset” is an item of value used as security or collateral for a loan, which has a registered interest against it. For example, a property for which you have a mortgage. An “unencumbered” asset is one without any debt or interest registered against it, such as property for which you have paid off a mortgage.
- Balance sheet – a statement of equity, assets and liabilities that shows the financial position of an individual or organisation.
- Balance transfer – the movement of money from one account to another. For example, a credit card balance transfer involves the movement of an amount of money on another account to a credit card. It can also refer to the movement of money to another institution to consolidate debt or take advantage of better interest rates and/or payment terms.
- Collateral – also known as “security”, collateral is an asset which a borrower uses to secure funding from a lender. If the borrower can’t repay their debt, the asset can be acquired by the lender.
- Compound interest – this is interest calculated on the total amount of funds including the principal amount and any previously accumulated interest. “Simple” interest is only calculated on the principal amount.
- Depreciation – the loss in value of an asset over time.
- Dividends – an amount paid to shareholders from an organisation’s profits relative to the number of shares held.
- Equity – the value of an asset after all debts against it has been calculated. For example, if a property is worth $800,000 and has a $500,000 mortgage against it, the owner has equity of $300,000.
- Fixed interest – this is the amount earned on funds to be paid on top of a principle calculated as a percentage that remains unchanged for the term of the loan. It can also refer to a loan type where the interest rate doesn’t fluctuate during a period, being the fixed-rate term.
- Guarantee – a non-cancellable indemnity bond that is backed by an insurer. It offers investors the security that an investment will be repaid. A “limited” guarantee is when the amount the guarantor is responsible for is limited to a set time frame or sum. A “non-limited” guarantee is when the guarantor is obligated to repay all amounts due.
- Line of credit- a loan that allows the borrower to withdraw money from an account up to a specified limit.
- Loan to value ratio (LVR) – the amount, as a percentage, borrowed for an asset against the value of the asset.
- Managed fund – an investment account supported by collateral or security from a number of different investors.
- Margin call – an amount requested by a lender when the value of a loan is too high compared to the value of the security or collateral the borrower has offered. This is related to the loan-to-value ratio. This generally relates to loans used to purchase shares.
- Negative gearing – the process of using borrowed money to fund an investment where the returns from the investment are less than the repayments on the borrowed funds. It allows for a deduction of losses against taxed income.
- Official cash rate (OCR) – this is defined by the Reserve Bank of Australia (RBA). It is an operational target for the implementation of monetary policy. Broadly speaking, it is used to denote the interest rate which financial institutions pay to charge or borrow to lend funds in the money market on an overnight basis.
- Offset account – this is an account linked to a loan account where any amount in credit reduces the principal of the loan for the purpose of calculating interest. It is typically used to reduce interest calculated on the principal but has the flexibility of transaction accounts.
- Product disclosure statement (PDS) – a document provided to a client containing details of the financial product subject to legislation.
- Redraw facility- a feature that allows a borrower to access excess funds that have been paid towards a loan.
- Self-managed super fund (SMSF) – an investment vehicle that houses your retirement savings that you can manage yourself, subject to certain legal rules. SMSFs are regulated by the Australian Taxation Office.
- Stamp duty – a tax imposed by a state or territory government incurred upon purchasing a property or business.
- Term deposit – a deposit held with a financial institution that has a fixed term with maturities ranging from a month to a few years.
- Unencumbered security – an asset or property that is not encumbered by a creditor claim. For example, a house without a mortgage is unencumbered security. An encumbered asset is one with a registered interest against it, for example, a property for which you have a mortgage.
- Variable interest – an amount earned on funds to be paid on top of a principal calculated as a percentage that changes throughout the term of the loan. It can also refer to a loan type where the interest rate fluctuates with market forces, often in response to changes to the official cash rate.
Source: Macquarie Bank
Enhance your understanding of finance and money management to secure a job in the finance sector or manage personal finances to increase your cash flow with our Certificate of Personal Finance Management.