For financial freedom, personal finance has a significant role to play. It’s essential that we plan for and manage money at every step of our lives. Without proper planning, we would be living a life of bondage, not knowing how to get off debts and credit as well as sufficiently pay our bills.
Living paycheck to paycheck is a highly stressful way of living. While we may have a job that pays for our daily expenses, long medical bills or any other emergency could wreak havoc on us financially. Hence, possessing the adequate personal finance management skills can help us manage our money well. it further ensures a bright financial future.
Financial literacy is just like learning any other language. One needs to utilise and apply their knowledge to be proficient. Certain terms and concepts need to be on our tips and like any other task, even in this case, practice helps build awareness of money matters. Irrespective of our age, profession or income level, a robust understanding of one’s financial situation helps one be responsible with how they use and allocate the money that they earn.
Basic Tenets of Personal Finance
Personal finance primarily refers to the financial management of a person’s or a family’s resources. It comprises ways of managing money through investments, expenditure and savings, taking into consideration various life risks and events. Other facets of personal finance include budgeting, banking, planning for retirement, insurance, and more.
The term also stands for the various financial institutions which offer financial services to a person during their lifetime.
Personal finance majorly focuses on fulfilling an individual’s long-and-short-term financial goals. Everything from having enough money for important monthly bills to planning one’s retirement constitutes personal finance.
