Learning the Art of Personal Financing... - Deepstash

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STEPHEN COVEY

"Your economic security does not lie in your job; it lies in your own power to produce—to think, to learn, to create, to adapt. That's true financial independence. It's not having wealth, it's having the power to produce wealth."

STEPHEN COVEY

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What is Personal Financing ?

What is Personal Financing ?

Personal Financing means managing your funds which includes saving, investing setting financial goals etc.

  • It is all about meeting your personal financial goals. These goals could be anything—having enough for short-term financial needs, planning for retirement, or saving for your child’s college education.
  • People often connect Personal Financing with Investing, but investing only doesn't mean Personal Finance. Investing is a part of it but Personal Finance is much a bigger task.

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Why is it Important ?

Why is it Important ?

 Personal Finance is important so that one can set its financial goals whether Long Term or Short Term, achieve them and become financially free. 

Earning Income is not the task here , the point is how we manage those funds to get most of it without compromising our future needs and uncertainties.

Personal Financing mainly focuses on planning about 3 things :-

  • Budgeting,
  • Meeting Financial Goals, and
  • Provide for Future Contingencies

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Learning the Art of Personal Financing..

Learning the Art of Personal Financing..

Personal Financing is not a subject which can be taught in a class, instead it an Art of Living which comes through the life experiences and consistent efforts. But is does not mean that no one can learn it in short span.

Here are some Tips which helps not only to learn this Art but also to guide you to take the most of it. 

Further, the ultimate outcome will take place when you follow these tips in a consistent way in your daily life.

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1. Know Your Income

1. Know Your Income

It's all for nothing if you don't know how much you bring home after taxes and withholding.

So before deciding anything, ensure you know exactly how much take-home pay you receive cause this will build the base for your next step towards Personal Financing.

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2. Devise a Budget

2. Devise a Budget

The next step is Devising a Budget which includes all the essentials to living within your means and saving enough to meet your long-term goals.

The 50/30/20 budgeting method offers a great framework. It works like this:

  • 50% of your take-home pay or net income (after taxes) goes toward living essentials, such as rent, utilities, groceries, and transport.
  • 30% is allocated to discretionary expenses, such as dining out and shopping for clothes. Giving to charity can go here as well.
  • 20% goes toward the future—paying down debt and saving for retirement and emergencies.

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3. Limit and Reduce Debt

3. Limit and Reduce Debt

 Don't spend more than you earn to keep debt from getting out of hand cause it can it can cause in a negative impact on your Budget and Income in hand.

On the other hand, minimizing repayments (to interest only, for instance) can free up income to invest elsewhere.

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4. Plan for Your Future

4. Plan for Your Future

To make sure that in future things will go as well and smooth as they were now, start planning for the future which includes any uncertainties and contingencies that can arise in future.

This includes taking Insurance Policies, Term Life Insurance, make Investments in Mutual Funds or some Retirement Benefit Plans which will insure your future safety and wellness.

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The Bottom Line

The Bottom Line

Personal finance is managing your money to cover expenses and save for the future. It is a topic that covers a broad array of areas, including managing expenses and debt, how to save and invest, and how to plan for retirement.

Understanding how to manage your finances is an important life-planning tool that can help set you up for a life without debt; you gain control of financial stresses and have a way to manage the expensive surprises that life can throw at you.

Further, it not only makes your present better but also paves the way towards a better future.

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CURATED BY

gahlot_adi_1603

Student, Eager to learn either through life , experiences or people, Passionate about the things i love #passionate .. #explorer

CURATOR'S NOTE

In today's world everybody is just in a Rat Race when it comes to Finance due to which their Financial position will remain unchanged. Further, making your present comfortable is important but what about your Future and due this the topic "Personal Finance" has a much greater importance in our lives for making our present as well as our futures better while meeting the needs and wants gap.

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