Why Personal Finance is so important?
Many of us might be feeling insecure when the end of the month arrives, as we will be on low of funds and eagerly waiting for the salary to be credited in the month. so lets find out the importance of the personal finance.
Lack of awareness of about how to manage the money leads people to ask a question “why personal finance is important?
The answers to this question are so many but one of the important thing is that to lead a secured and fulfilling life. Personal Finance skills are important because without these skills people usually spend their life slaving for money. They always stay in debt and cannot catch up ahead. This situation gets worse when this habits passed down to their children and even they end up slaving their lives for money and end up in debts.
In simpler words “Personal Finance is important, because without these generations of people most likely continue to live unfulfilling lives as slaves to money“.
one of the example of Celebrities went bankrupt due to lack of Personal Finance skills.
Every football fan has heard of this name. He is a Brazilian former professional footballer and ambassador for Barcelona. He used to have a very extravagant lifestyle. In 2018 he declared bankrupt having 5 pounds in his account. (https://www.sportskeeda.com/football/how-did-ronaldinho-become-so-broke-in-such-a-short-time)
Being rich does not mean managing money well. So today I will help you gain some knowledge on Personal Finance.
What is Personal Finance?
Personal Finance is a term that covers managing your money as savings and investing. Personal Finance includes the budgeting, banking, insurance, mortgages, investments and retirement plans.
But why we denote it as “Personal Finance”, because it varies from person to person. It solely based on person (individual).
Personal Finance is all about meeting the financial goals of each individual. It varies from individual to individual. It all depends on your income and expenses. All these financial goals are based and measured in money. So for fulfilling a financial goal we need money to do these 3 things :
- Earn money
- Save money
- Multiply money (Invest)
Basically we learn managing money from parents unconsciously. As we are doing it unconsciously we develop them biased from each individually. So my recommendation to each and everyone of you is do not copy any individual in managing money as each financial goals are different in the world.
The money management is not only for achieving your financial goals but also to help yourself and your dependents in hard times like when there is no income for you ( in times of retirement or any sudden loss of income source)
Using 3 E’s mantra to manage money.
- Education : Educate yourself how to handle money.
- Experience: Analyse your finance experiences, to find trends in where you are spending/saving money.
- Expression: Bring both education and experiences together to make an financial expression to manage (save and invest ) money.
Experiences include all to know which type of investments will help you in long run. So start early to experiment yourself to find your financial goals and what works for you.
For more on Financial Planning click the link and give it a read. It will help you to be one step closer to achieve your financial goals.
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