What is Personal Finance? Know it better. (India)
Personal finance plays an important role in each and every individual. This is because we take our day to day decisions which affect our finance or you can say our pockets.
Thus, any wrong or incorrect decision related to our life which is connected to finance will have impact on our money/pockets at the end of the day.
Let’s understand what is Personal Finance. This word is a general term or word which is not derived from any language. It is the concept which financial planners and expert have evolved over a period of time.
In school and colleges we all learn economics, financial management and money management. There are somewhere connected to personal finance. Personal finance is a very broad concept which covers from penny to all big financial matters.
To be frank, Personal finance cannot be covered in a single article or blog. Whereas i would like to point out certain key elements of personal finance which will surely help you to know more about personal finance.
Let’s know what key areas are covered under Personal Finance.
- Investments: Your investments are covered under personal finance. Personal finance covers all matters related to your investments like Investment planning, Investment decisions, etc. Thus, all decisions related to your financial or non-financial investments are covered under Personal Finance. Whether you are investing in Fixed deposits, PPF, Mutual Funds or Immovable Properties all are part of personal finance. Thus, Investment planning which is a part of Financial Planning becomes an important part of Personal Finance.
- Debts: Your all debts are part of your personal finance. Personal finance includes all matters related to your financial debts. Thus, matters like debt planning, debt assessment, debt repayment and other debt issues are part of personal finance. Thus, any decisions taken on debt will have a direct impact on your personal finance. Most noteworthy, debt management is an important part of personal finance.
- Expenses: Your all expenses whether day to day household or one time or any other expenses. All are part of personal finance. Personal finance covers all matters related to your expenses i.e. expense planning, budgeting, delaying payments, defaulting on payments or any other expense related issue. Thus, expense management or budgeting is an important part of personal finance.
- Income: Income is the most important pillar of personal finance. All things start from Income and ends at investments, debts, expenses or other application of money. Thus, knowing your income well is very important. Bifurcating it into recurring, one time, temporary or permanent income is very important part of your personal finance. Thus, your income management becomes part of personal finance.
- Financial Protection: Financial protection plays an important role in personal finance. If you do everything like income management, debt management and investment planning but forget to take financial protection then all your efforts will go in vein. Financial protection is taking an adequate protection in the form of insurance to protect your finance, obligations, debt repayments, future of your loved ones, etc. Thus, taking term insurance, debt insurance plays vital role in personal finance. In other words, financial protection is the most important thing under personal finance.
- Financial Status: Financial status is derived after above all. If you have done your income management, debt management, investment planning, financial protection and then you reach to the point which is called “Financial status”. All good decisions under income, debt, investments will automatically lift up your financial status or position. Thus, assessing your financial position or status every year is very important and it is a part of personal finance.
There are lot more areas to be covered under personal finance. Will surely cover them in next articles.
Hope you like it. Know more on personal finance at taxepaper.