Personal finance
August 21st, 2010
Personal finance
Personal finance is simply about managing one’s personal or household finances. It involves budgeting, saving and spending one’s financial resources, while at the same time, considering the myriad of financial risks and life events. It includes a host of monetary concerns such as checking, consumer loans, credit cards, savings account, income tax, insurance, retirement, social security benefits, and stock market investments. Gleaning through this, one is quick to note how vast a field like personal finance is. The word “personal” preceding the word “finance” simply means that one exercises his or her financial responsibilities. Personal finance is basically taking care of one’s money and making sure that nothing goes out of the pocket unchecked. So why do you need to have a system of personal finance? Because surely, you would not want to lose money to something that is worthless. And keeping track of the inflow and outflow of your money is only the most effective method to do that. Personal finance involves assessment. Compile your income statements and a list of your personal assets which could range from car, clothes, bank account, alongside your liabilities. It would also help to make your own personal cash statement where you could glean your expenses and income and have them compared. These documents are usually needed when making a decision about applying for a loan or financing. Like any other personal thing, it is important to keep your eye on a doable and realistic personal goal. Most financial plans seem to be going nowhere because of the absence of a goal. Set some long-term and short-term goals on something like saving half a million by the age of 30. Goals are only the platform of a plan. Thus, after you have set your goals, draft and finalize a financial plan such as reducing expenses when necessary, increasing one’s income, or investing in a business or the stock market. Plans are just plans until they are executed. Oftentimes, the best way to do this is to contact an accountant or financial adviser. They usually offer more help than talking to even the most well meaning of friends and relatives. Monitor your spending closely and note the areas where you have “slipped”. Pay credit card debts and loans as much as possible. Now, paying off credit card debt is very important if you want to see your credit record clean and want to get away from any financial trouble. Credit cards may be just a piece of plastic, but procrastinating your response to your billing statements is disastrous to your financial future. The solution is to pay all bills on time. Knowing your personal income and putting it side by side with your spending will give you an idea of whether to lessen your expenses or increase your income. The best solution, of course, is to spend within your means. Since personal finance covers a vast area, it is also good advice to come up with retirement plans, aside from savings plans, investing into a business, and checking your insurance. Many times when details like these are ignored, financial results can be devastating. But then again, personal finance, as was already said in the beginning of this article, is your sole responsibility. Keeping your finances in check is your sole responsibility.