Personal finance is the way individuals or families budget, save, spend, invest and set financial goals. When considering personal finance there are many products to consider as well as getting your financial house in order. It’s time to clear your mind, state your financial purpose and hold yourself accountable. Personal financial requires financial planning which requires assessment, monitoring and readjustment.
According to Investopedia:
All financial decisions and activities of an individual, this could include budgeting, insurance, savings, investing, debt servicing, mortgages and more. Financial planning generally involves analyzing your current financial position and predicting short-term and long-term needs.
Personal finance looks at how your money and future is managed. Often individuals will seek advice from financial planners, but the use of software or websites is also an option. For example personal finance would include monitoring your spending, budgeting for an emergency fund, and paying down debt.
Set the goals according to your standards. When it comes to personal finance it is not a cookie cutter approach, but a means to meet your ends.
Spend less than you earn
· Save money
While tracking your expenses it is prudent to create a budget before receiving a paycheck so that you are mindful of your expenses and how much it will take to pay toward your bills. Budgets are the roadmaps toward financial success.
See where you are spending all your money by tracking your purchases and spending. Mint is a website that offers great tools that will connect your accounts, track your spending and categorize where the monies are going. This feature will show you how to be more efficient.
When you set spending limits you are controlling your impulsive purchases.
Make the money you have work for you
It doesn’t matter which period you track from the Great Depression until the present, you will notice the average interest rate earned is 8%. If you were to budget a percentage or set dollar amount of your income toward a savings/retirement plan you will grow your money exponentially.
Protect your money
· Emergency fund
The ideal emergency fund should consist of 12 months of household expenses. Most advisors will suggest 3-6 months, but when you consider the longevity of unemployment this decade you may want to reconsider. While you have the monies to deposit, attitude and determination for a sound financial plan today is the day to begin. Although you may not be able to accumulate 12 months worth of emergency fund in a short time you should create a plan that will entail a due date and weekly deposit amount that will allow you to reach your goal.
· Renters’ Insurance
Since the economy has spiraled out of control for most who weren’t ready for the change many have lost their homes and are now renting. As a renter, you want to protect your assets in the event a catastrophe or loss occurs. Just as you would purchase home owner’s insurance you must do the same when renting (renter’s insurance).
In addition to the principles mentioned, you want to make sure that you meet with a financial advisor quarterly to discuss your goals, objections and timeline. Maintaining financial success is feasible when you put forward and implement the right tools and behavior.
“Love yourself enough to support yourself.” ~BL Shabazz
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