,Money is a terrible master but an excellent servant.“- PT Barnum.
Personal finance is the branch of finance concerned with the finances of the individual. It deals with how you earn, spend, invest and manage your debt, especially in your pursuit of financial freedom.
,Beware of small expenses. a small leak will sink a great ship, Benjamin Franklin once said. Thus, at the core of personal finance is budgeting, that is, the art of financial planning.
When people talk about personal finance, they are talking about the important areas – earning, spending, saving and investing – in which they need to manage money. they talk about how, like PT Barnum Resonantly, they can make money their slave, not their master.
Here, we will be discussing exactly the same shortly.
The starting point is earning. Earnings provide the income, cash flow that you spend, save and invest. In fact, without it, there is no personal finance, no financial planning, and certainly no budget. After all, you can only plan on what comes your way.
Earnings come in the form of salary, wages, allowances, pension, or any other income type. Often, to earn, you have to produce.
In day to day life, you spend. As, you earn Through the goods or services you produce for others, do you pay for the goods and services that other people produce and that you use.
The goods and services you pay for can be serialized need And Wants. The needs are housing, food, transportation, insurance, health care and utilities. On the other hand, there are personal care, entertainment, hobbies and subscriptions, i.e. expenses that you can essentially do without. You pay by credit or cash for your needs and requirements.
Saving it is considered a virtue. In the classic personal finance book, richest man in babylon, Author, George Samuel Classon, wrote; ,I found my way to wealth when I decided to keep a portion of what I earned,
he is Savings, And it can be targeted for different targets. Among those goals are saving for spending, investing or making emergency purchases. Savings can earn interest or not. They can be physical cash, savings or checking bank accounts, or certificates of deposit (CDs).
You want to reach the point where you are financially secure enough to stop working. While many have to work until age 70 before retiring, you may want to retire early and young. Either way, you have to invest. When you invest, you buy properties which produces a stable return.
While you are still actively working, you can also reinvest the returns. Generally, persons investing in property include shares, bond, mutual funds, Exchange Traded Funds (ETFs), real estateAnd Goods,
Without the necessary knowledge, investing can easily go wrong. That is why, before getting involved, it is recommended to seek professional help.
Lastly, another area that comes under personal finance is concerned. Security Including products (eg, insurance) Used to reduce the negative effects of unexpected life events.
