What is Personal Finance?
Personal finance is managing your money, saving, investing, budgeting, banking, insurance, and mortgages.
In addition to your retirement plan, and tax and estate planning.
Personal Finance is about meeting personal and financial goals.
Whether it’s having enough for short-term financial needs, or planning for retirement, or even saving for your child’s college education.
As a matter of fact, it all depends on your income, expenses, living requirements,
And your personal goals and desires.
Which will result in coming up with a plan to meet those needs within your financial limits?
How to make the most of your income and savings?
It’s important to become financially literate so you can know the difference between good and bad advice and make the right decisions.
We all make hundreds of decisions every day.
Most of these decisions are quite simple and have few end results.
Some are complicated and have long-term effects on our personal and financial situations.
The financial planning process is a five-step process:
Personal financial planning process:
The sooner you start financial planning the better.
But as a matter of fact, it’s never too late to create financial goals to give yourself and your family financial stability, security and freedom.
Here are the best practices and tips for personal finance:
know Your Current Personal Financial Situation
The most important step of the financial planning process is to know your current financial situation.
Regarding your income, savings, living expenses, and debts.
Preparing a list of current assets and debt balances and amounts spent on different items gives you a foundation for financial planning activities.
Analyze Personal Financial Goals:
You should always study your financial goals.
The purpose of this analysis is to differentiate your needs from your wants.
Specific financial goals are important to financial planning.
Others can suggest financial goals for you; however, you must decide which goals to pursue.
Your financial goals can vary from spending all your current income to developing a huge savings and investment program for your future.
Financial security Identify Other options.
you should always be prepared for making alternatives to make good choices.
Although many factors will affect the available alternatives,
choices usually fall into these categories:
-Continue the same course of action.
-Expand the current situation.
-Change the current situation.
-Take a new course of action.
In decision-making, creativity is important to effective choices.
Taking all the possible choices will help you make more fruitful and rewarding decisions.
Create and Implement a Financial Action Plan:
In this step of the financial planning process, you develop an action plan.
This requires choosing ways to reach your goals.
As you reach your immediate or short-term goals, the goals next in priority will come into focus.
To apply your financial action plan, you may need help from others.
For example, you may use the services of an insurance agent to buy property insurance or the services of an investment agent to buy stocks, bonds, or mutual funds.
Reevaluate and Revise Your plan:
Personal Financial planning is an ongoing process.
It does not end when you take action. You need to regularly check your financial decisions.
Changing personal, social, and economic causes may need more frequent assessments.
When life events affect your financial needs, this financial planning process will give you a way of adapting to those changes.
Reviewing this resolution regularly will help you make priority adjustments that will bring your financial goals and activities in line with your current life condition.