PERSONAL FINANCE

History:

The first research about personal finance was by hazel kyrk in 1920. The research she did has laid the foundation for home economics and consumer economics. Numerous disciplines related to personal finance were taught in various institutions as part of home economics for almost 100 years before personal finance was taught as a formal discipline in institutions.

What is personal finance :

Personal finance means managing your financials like budget sorting, tax, saving, investing, mortgages or making retirement plans are all aspects of personal finance. Personal finance is a term that often refers to the financial industry, where people receive financial services, like investment opportunities, insurance advice etc. Personal finance is about coming up with solutions to eliminate financial hurdles and meeting your personal financial goals. Let us dive into this article and learn more about personal finance.

Why is personal finance important

One of the most important things you can do in a comfortable, healthy and fulfilled life is to have an essential personal finance skill. Your knowledge of saving, budgeting, and investment are fundamental principles that will affect any part of your life and can make a difference between being wealthy or poor.

There is a saying that you need to be a high-income earner to be financially independent, This is true to some extent, but you do not need to be earning high to be financially independent. All you need is to have financial literacy and an understanding of your financial activities.

Whether you want to save enough money to send your kid to a good college or you want to invest in a profitable stock for a good return. You will have to make a solid plan. For making such plans, you will have to be financially literate and that financial literacy is known as personal finance knowledge, which comes through studying personal finance. It is crucial to be financially literate because without financial literacy. You will end up making poor financial choices, which might lead to bankruptcy. There is a famous quote by warren buffet in which he states,

The most important investment you can make is yourself.

The quotation is self-explanatory. The value of expanding your knowledge and abilities is the best investment you can make. The best investment you can make when it comes to personal finance is to enhance your financial literacy and skills.

Components of personal finance :

·         Income.

·         Taxes.

·         Insurance.

·         Debt.

·         Expenses.

·         Savings.

·         Retirement.

·         Investments.

How to Start off with Personal financing :

An effective financial strategy has much more than just balancing your chequebook and keeping to a monthly budget. You have to make a financial plan that suits your life goals and assists you in achieving them. To achieve and maintain those objectives, you must address all aspects of your finances. Here is how to get started.

1) Create a Financial Calendar.

People usually do not trust themselves in remembering their quarterly tax payments and credit report check. The solution for this is setting appointment reminders for these financial tasks. Keep a record, and fix days on your calendar for each task. The same way you would, for a regular doctors appointment or a car tune-up.

2) Track net worth.

An individuals networth is the difference between their debt and assests.Net worth is the point from where an individual can see where he is standing financially. Or it can be a motivation that you're heading towards your goal, so keep your net worth in check. So you can be aware of your financial status.

3) Check Your Interest Rate.

People get confused with debt and do not know which debt to pay first. The answer is simple, the one which has the highest interest rate. The same is the case with a saving account. Choose the one with a higher interest rate. Giving attention to interest rates helps with your debts and saving commitments.

4) Setting up a budget.

The c crucial part of personal financing is setting up your budget. Allotting a specific amount of money for your financial activities, the amount spent on that activity should not exceed the allotted amount. Keep track of the money spent on each activity. This will help you devise the money in portions, and you will have a clear idea of financial spendings.

5) Allocate  20% (atleast)  of your Income Towards Financial Priorities.

Priorities mean putting money aside for an emergency, paying debts, and increasing your retirement funds.

6) Take a Minute Daily.

Alexa von Tobel, the CEO and founder of LearnVest, stands by giving away one minute each day to monitor her financial transactions.

This 60-second act will help you in the quick identification of difficulties, the tracking of goal progress—and the setting of your expenditures tone for the remainder of the day!.

CONLCUSION :

To be financially successful in life, one must make wise judgments.

By learning personal finance, an individual can live a financially happy life, even if he does not earn a lot of money. He will be able to plan his budget in a way that will benefit him or his family in the long run. Personal finance is not college restricted. It is something that anyone can learn from any place.