Personal finance is the management of individual finance that includes budgeting, saving, expenses, planning, financial protections, and goal setting. Here individual means a single person as well as a family unit. To make it simple, personal finance covers everything that a person has to deal with when it comes to the money. Money comes and goes; it just doesn’t stick to anyone forever. So, dealing with both, incoming and outgoing money, is covered in personal finance. And the objective of personal finance is to deal with money in such a way that all the current needs, as well as future needs, could be fulfilled easily.
We as a human being are dealing with personal finance since ever it was invented. Probably, the invention of money was the biggest invention as its impact is the highest. Money is now like circulating blood in a living body for human being’s social affairs. Every single living being on the planet is born with a single goal of living life as better as possible. And for the human being, money is the critically vital for making live comfortable. Hence, it is our core responsibility by birth to take care of our finance. We have to understand the importance of money in our life (it seems like we all know, but the fact is only a few knows it. And this is exactly why most of the people are living miserably.) We have to understand the science behind the money management. We have to give our full attention to personal finance.
Personal Finance Management:
The first thing one need to do in personal finance management is to realize the self-current financial position. How much money is coming in and how much is going out? What are current, near future, and later future needs? How one is going to fulfill those needs? Is there any Plan-B? How one is going to fulfill the emergency needs? How family will run if the ultimate miss happening (death, disability, etc.) happened to the earner of bread and butter? And more.
Next comes is figuring out what one need to accomplish. This is such an important thing as without a goal no one can reach there. Setting a goal not only help in giving our decisions a direction but also, give purpose to work for. When it comes to personal finance, it is important to make short term goals, mid-term goals and long-term goals. Personal finance example: if short term goal could be like buying a new car in a month or two. Mid-term goals could be like buying a home in next 4-5 years. And the long-term goals could be like getting retirement at the age of 55 years with say 10 crore rupees. The goal setting should be done in such a way that it just not overload on one’s head that makes him paralyzed to work. They should realistic and should seem achievable at a first or second glance.
Then there is a need of making a solid plan which is executable practically. Personal finance plan must consider all the assets, resources, options, liabilities, protections, and everything else which revolves around money. One of the biggest mistake people usually make is that they just don’t include all the options they have. Today, there are several options for personal finance. For example – In order to save money for future needs (say the marriage of children), there are several options. One could save money in insurance, buy shares, bonds, mutual funds, saving in a post office, fixed deposits, invest in property, commodities, and several other things. Not only this, there are further several options with each one of these major options. Like—investment in insurance, there is several companies offering a big range of insurance products. Each one of them targets wealth accumulation along with protection benefits. Next, one needs to compare the insurance products (products with products as well as products from company to company). Hence, making a personal financial plan is the most important thing where one should put a great amount of time and energy.
Conclusion:
After this, one need to become determined to stick with the plan. Believe it or not, just sticking to one plan needs tons of determination (much more than it is required to make a sound plan). This is one thing with which we should stick to for whole life. One need to upgrade the options time to time which he has picked initially because the world is very dynamic, new options come in and old ones become obsolete. Personal finance management comes with practice. Just keep on practicing, hit and trial method is the only way to proceed, keep on refining, and meet the financial goals in the life.
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Personal Finance Basics for Beginners Module
Currently Reading: What is Personal Finance? Definition, Examples, Basics, Management
Chapter 2: Financial Assessment of a Company or an Individual
Chapter 3: Primary Objectives and Goals of Financial Management
Chapter 4: Personal Banking Products and Services of Financial Management
Chapter 5: Income Tax Slab, Deductions, Tax Planning Strategies for Individuals
Chapter 6: Difference, Relationship, Importance of Savings and Investment
Chapter 7: Types of Insurance offered by Insurance Companies
Chapter 8: What is Debt Management? Definition, Examples, Strategies, Plans
Chapter 9: What are Wealth Creation Strategies, Ideas and Tips?
Chapter 10: Personal Financial Assessment and Monitoring Techniques
Chapter 11: Basics of Personal Finance Quiz – Question and Answers
Personal finance is all the decisions you make to earn, budget, save, spend and give your money. Personal finance is 20% head knowledge and 80% behavior. The basics of personal finance include living on less than you make, getting and staying out of debt, planning for the future, and protecting yourself with insurance.
According to Investopedia, “Personal finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings and retirement planning.” Understanding these terms can help you better control your funds and prepare for future financial success.
Personal finance management is the process of planning and budgeting for how your money is saved or spent. Managing your personal finances involves setting financial goals, such as saving for retirement, and working hard to achieve them. The first step in managing your money is to determine your long-term goal.
There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.
Finance basics include developing, managing, and analysing funds and investments. It comprises projected cash flows to fund current projects via credit and debt, securities, and investments.
Say the CEO of a toothpaste company wants to introduce a new product: toothbrushes. She'll call on her team to estimate the cost of producing the toothbrushes and the financial manager to determine where those funds should come from — for example, a bank loan.
It includes preparing a budget, knowing how much to save, recognizing favorable loan terms, understanding what impacts credit, and distinguishing different investment options that can be used to save for retirement.
When your bank balance is looking healthy after payday, it's easy to overspend and not be as careful. However, there are several issues at play that result in people relying on borrowing money, racking up debt and living way beyond their means.
The five C's, or characteristics, of credit — character, capacity, capital, conditions and collateral — are a framework used by many lenders to evaluate potential small-business borrowers.
Personal finance is the process of planning and managing personal financial activities such as income generation, spending, saving, investing, and protection. The process of managing one's personal finances can be summarized in a budget or financial plan.
Understanding personal finance is key to managing money wisely and building a secure future. At its core, personal finance is about knowing how to handle your income, expenses, savings, and investments.
Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more.
A personal loan (also known as a consumer loan) describes any situation in which an individual borrows money for personal need, including making investments in a company.
Personal financing means that you can borrow a fixed amount of money from financial institutions for various purposes and return it with interest on agreed repayment terms.
A Personal Loan is money you borrow and pay back with a high or low interest rate over multiple years. However, a Personal Finance is a Shariah-compliant product designed to provide you with liquidity based on the Shariah concept of Murabaha (cost plus profit). Thus, this product is riba-free.
Introduction: My name is The Hon. Margery Christiansen, I am a bright, adorable, precious, inexpensive, gorgeous, comfortable, happy person who loves writing and wants to share my knowledge and understanding with you.
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