How important is personal finance for the public in general
"Question about managing monthly expenses with worrying about the future is what everyone thinks about. "
Due to COVID-19, many lives have changed in the past one and half years. The Work-from-Home mode has reduced our expenses on rent, food, transport, etc charges while many of us have lost the job. These are many reasons why we should think about personal finance. It is none other than managing our income.
How? Why? When to start Personal Finance? These are many questions that you may get while reading the title. So let’s deep dive into personal finance.
Personal Finance is defined as managing your financial goals which may include securing the future through savings, investments, bonds, etc with simultaneous spending on our daily needs, outings, dining out, etc.
These can be distinguished by being financially literate. The good and bad financial decisions can be distinguished by financial literacy and with the help of financial advisors as well. Many mobile applications are available to help you find good savings and investments opportunities.
There are many ways to work on Personal Finances such as being disciplined, time to time check on bank statements, paying premiums of policies, deciding the percentage of savings and expenses from net income gained.
Why Personal Finance is important-
● Ensuring our need of money-
Recognizing our expenses and sudden needs that can arrive, savings so our future is secure, etc can make us aware of our need for money.
● Managing our Net Income-
Our over-spending on any item can hamper our monthly needs so managing our net income is important.
● Budgeting-
Our monthly, yearly, and future securing budgets should be clear in our minds so that we can manage them from our income. Also, budgeting of our expenses should be considered here.
● Cash Flow-
Our cash flow i.e. how much money we spend or gain in terms of cash should be known to us so that we can manage our Finance.
● Offering Family Security-
Our monthly expenses should meet our family’s needs. The total family income should be managed in a way that our net income and savings can be made.
● The offering of a better understanding of our total income and spending.
● Managing Debts-
Our debts if any are present then personal finance allows us to reduce them in minimum time and clearing them shortly if we stick to our plan of budgeting.
● It can help us in growing our assets with personal savings and investments.
● It also helps us in raising our standard of living as we have planned our expenses.
After considering all the above points, you can see how important is Personal Finance in this developing world. If you are working and earning then having a bank balance for emergencies, for our happiness, for our family is all that we need to have. Personal financing helps us achieving these goals and securing our future too.
The few methods to start with personal finance can be to save 1/3rd of your income and invest in some bonds, policies, life insurances, or even adding them to a savings account is an option. Another way can be to have a constant check on your gross income on your investment to work on them as well.
The initial phase may include the above measures and to have savings for ourselves for emergencies or travelling in the future is a good thing. Even if you are not earning at the moment then also you can reduce your spending and that money can be added to your savings. Many professional advisors can help us to manage our finances and give the advice to invest and save in many bonds, debentures, insurances, etc.
As they say, “Wise person should have money in their mind and not in the heart”; explains why personal finance is important. So start working on managing your income to secure the future and enjoying the present.