As a term personal finance refers to the process of managing one’s finances – whether individual or that of family’s. It is also about proper saving and investing one’s money to not only accumulate the same but also grow it over time. Largely, personal finance encompasses aspects like planning, budgeting, insurance, mortgages, investments, retirement planning and tax planning. The term also often refers to an entire industry that offers financial services to people in general or individuals and households and gives them advice about how to go about investing money.
Every individual has goals and desires that they dream of fulfilling. Needless to say, that in most cases dream fulfilment requires money – for example you daydream of travelling to you dream destination – Machu Pichu in Peru and you live in Delhi. For visiting such far-fetched land you need to buy flight tickets, book a place to stay and even if you avail local transport you of course need to pay for it too. Nothing comes for free in this world. We have to pay a price for everything. Hence it is very necessary to not only gain financial freedom but also to be financially savvy – it will help you to distinguish between good and bad advice and also eventually help you realise your dreams.
Managing personal finance is all about meeting or achieving your financial goals. These goals can range from short-term to long-term ones. Usually these include a luxury vacation or a big-ticket purchase in the short-term and in the long-term ones include children’s education and marriage, retirement planning and so on. The entire game of personal finance management depends upon four major things – income, spending, investing and personal protection.
Importance of Personal Finance Management
To be able to have an in-depth understanding of personal finance is essential in today’s time. It empowers you to make cognizant decisions about the money you make, prepares you for unforeseen circumstances followed by ensuring a stable and secure future.
Managing your finances in a wise manner allows you to take control of your budget, plan for your goals and get a grip on unexpected life turns without stress. Being proficient about personal finance is not just about managing money in the present but also to be able to secure your future in the true sense of the term.
Most importantly, effective personal finance management is the key to secure a comfortable life with absolute financial freedom, thus allowing you to realise all your dreams and lead a meaningful life.
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