Start With Personal Financing — What, Why and How?

Aanchal Parmar
Master Investment
Published in
6 min readJul 5, 2021


Personal finance is a vast topic; there is a myriad of technicalities and terms involved. The idea of this blog is to spark your interest in personal finance so that after you read this blog, you go and learn more about it.

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COVID has taught each and every person to be mindful of finance and how significant financial planning is. But, when it comes to financial planning, people think that it is all about investments and stock trading. I agree that investment is a substantial aspect of personal finance but not the only one.

If you find yourself clueless every month regarding your expenses, consider this as your sign, to begin with, personal financing.

“A budget is telling your money where to go instead of wondering where it went.” ― Dave Ramsey.

Before I bombard you with heavy financial rules and terms, I want to discuss these terms without any further delay.

  • Budget: When you start thinking of personal finances, a budget will help you track your spending patterns. It tells you where your money is going and how much you can save. Setting up a budget helps you in getting your money habits in the right box.
  • Insurance: You might have heard those commercial jingles by dozens of insurance companies. So basically, insurance is a sort of financial protection in the world of uncertainties.
  • Savings: Do you remember those piggy banks and earthen pots that we used to save coins in our childhood? That was the first time we learned and practiced saving. But as we grew, this habit changed to spending more and saving less.


Oh really? Great, stick with me for a while, and if you still stick with this mindset, then you can leave.

These days, you hear from many people (including me 😁) that you need to have a basic knowledge of finance. But still, most of them and maybe you too have a mindset that finance is too risky and complicated.

Let me tell you a fact: the more time you are spending without financial literacy, the more you are reaching towards the journey of being insolvent.

I am going to give you some solid reasons that will make you learn about finance today.

  1. Saves You From Going Broke: You might be earning a hefty sum every month, but still, you will be in debt. Because you don’t know where your money is going, how will you control your spending habits without knowing the path?
  2. Boosting Cash Flow: Personal finance is not a one-point subject; it is something that is diversified in a wide array. When you start with personal financing, there are a lot of things you learn about in the process, such as tax planning, spending attentively, and the process of budgeting. These things make sure that you don’t lose your hard-earned money.
  3. Grow Your Assets: Every person wants to own assets but do you know some assets come with a set of liabilities? No, I am not bluffing. Ok, let me give you an example:

Most of us dream of having our own car, isn’t it? But do you know when you purchase a car by thinking that you have invested in an asset, you actually also welcomed liability?

A car is a depreciable asset, which means that in due course of time, the car’s market value is going to decrease. Also, you need to keep it maintained, weekly servicing, and other expenses.

But when you start to learn about finance, you start to think rationally and uncover the hidden liabilities.

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That’s commendable that you took the first step in uncovering the truth of finance and how effective it is.

So are you ready to know the process of personal finance and all the dynamic stuff it involves?

Let’s begin:

Start With Creating A Budget

I know budget is not that exciting topic, but this is the stepping stone of your finance journey. Now, if you have started thinking about the world of excel sheets and calculators, don’t.

Rather start with a simpler approach, start with pen and paper or on Notion. The whole motto is to not overwhelm yourself with the numbers and systems.

The world of spreadsheets is cool but complicated as well, and you don’t want to stop yourself just because it is complicated. Do you? So my advice for any person who is starting out with finance is to keep it simple.

The purpose of a budget is to keep everything in front of you at the end of every month. So you get an idea of how your spending and saving habits are.

A very popular rule of budgeting is 50/30/20. This rule is very simple to understand and follow.

According to this approach:

Your goal should be to spend 50% of your after-tax income on fixed expenses such as rent, mortgage, tuition fees, and any other monthly fixed expenses

30% on other needed expenses such as app subscription, books, or any other hobbies.

The remaining 20% has to be your savings, so basically, you can save money for your rainy days, retirement plans, or invest it in any other sector.

This approach is really effective and simple for anyone to start with personal finance.

Build Your Emergency Fund

Do you remember the exit doors in theatres and other public places? We used to go to these places before COVID. Not anymore, I hope you haven’t forgotten!

😅 Spare my weird jokes.

Now, you don’t know when there will be uncertainty in your life, and you will need some extra cash. COVID has taught us to keep money stocked for such other uncertain events in your life. You don’t mind keeping your money tucked away safely somewhere out of your reach, do you?

The process of creating an emergency fund starts with having a goal.

Generally, having 3 month’s worth of your living expenses is a good point to start, and 6 is much better. Are you worried that you might end up using the money instead of saving it?

Here is the catch, create a separate bank account and don’t take a debit card for that account, which means that money is unreachable. You can also set an automated system which means that a certain X amount will be automatically transferred to the emergency fund.

Save for your retirement.

Don’t tell me you are planning to work till the day you die? That’s not a wise and happy choice to have. But even if you are in your 20s and you think retirement is far away, let me tell you, it is the best time to start now.

The longer you wait, the larger amount you will need to accumulate for your retirement goal. It is always recommended to start as early as you can. If you are in your 20s, you need to save 10% of your gross income.

This is the minimum you can go with. There are a lot of elements that are involved in the retirement bracket. The better choice is to start with a few.


You deal with money every second of your life. Be it shopping, getting a study loan, or paying for rent. But why do most people still rely upon professionals for every small piece of advice?

I know that professionals have better knowledge than us but still try to dive into this world. No one is telling you to risk your money with investments here; all I am saying is to learn how to manage your money.

Because of the increasing inflation rate, financial literacy is the need of the hour.

Now, go and do some research on these factors, and I will be back with another article next week.



Aanchal Parmar
Master Investment

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