Personal finance

Personal finance refers to the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

Overview

Personal finance involves the understanding of one's financial situation and making an appropriate plan to meet personal financial goals. Through this, a person can start to achieve personal financial stability and success.

Components of Personal Finance

Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.

Budgeting

Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

Saving

Saving refers to the excess of the income earned over the expenditure incurred. Saving is the key to building wealth and it is closely connected to investing.

Investing

Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit. You can invest in endeavors, such as using money to start a business, or in assets, such as purchasing real estate in hopes of reselling it later at a higher price.

Retirement Planning

Retirement planning is the process of determining retirement income goals, risk tolerance, and the actions and decisions necessary to achieve those goals.

Personal Finance Management

Personal finance management is a key component to making a person's life balanced and full of peace. It not only helps in keeping track of the income and expenditure incurred by a person, but also helps in planning for the future.

See Also

• Financial planning
• Investment
• Retirement planning
• Budgeting
• Saving

References

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