What is finance?

What is personal finance?

Personal Finance means ‘manage your wealth or property properly’. Today, every kind of financial services organization has financial advisers, even though it is important that every person has information about their own financial affairs.

When a person moves towards managing his personal finances, then he understands where and how his money is being spent, with the help of which he can move more and more to meet his determined goal. ‘Under personal finance, it is necessary that the person has complete knowledge of his income, expenditure and deposited capital’

Classification of Finance (Classification of Finance): 

Short term finance – When a loan is taken for a very short period of time, for at least 15 months and it meets your daily needs, this loan is called short term finance.

 Medieval finance – The method of taking this loan is from 15 months to 5 years and its purpose is to buy the machine or purchase the property.

Long Term Finance – The loan taken for more than 5 years is termed long term finance. Its purpose is to build assets.

What is included in personal finance, What is included in personal finance?

Friends, Personal Finance is a very big topic, which is a subject related to Money Transaction by a different person, In this way, if you talk about what is happening inside the personal finance, So if you pay a little attention to yourself and think that – If you said the behaviour of money-and how and how-to-do, then whatever behaviour you see associated with money is the subject associated with the Money Transaction “Personal Finance”.How To Make Personal Financial Planning The main component of personal finance is Personal Financial Planning, which changes over time, we need regular monitoring and re-evaluation on it.

Steps for Personal Financial Planning

First – estimation 

We know what our income is and how it will be in the coming years. We also know our expenses, but how much more expenses will be in the future, it is not known more than the future expenditure can be assessed by the concept of finance. 

How much debt do we have and how much debt we have given to others. What percentage of the property we have, what percentage of the price is increasing, is not growing in the percentage of inflation. If the growth rate of our property is below the inflation rate, it means that we are becoming poor.

Remove the pen and write it

 Our income – now and in the coming years

Loans – We have given to someone or how much we have

Expenses – Immediate expenditure and future expenses

Second – Set the target

We should decide for ourselves the financial target, we should write the immediate and long-term target. According to the age of our life, we should decide the target of every 5 years and 10 years! 

If you started working in 25 years and invested for 10 years continuously. Initial investment gives you financial security as well as boosts your income. 

Third – Make plan 

If you want to be happy in life, then never forget this thing. Do not ever let your expenses grow from your income. If your expenses are increasing, look for ways to increase income, do not go into debt. 

What is your savings in months and years, and what do you do with that savings. If saving is not there, then find out the reason and deal with it quickly.

Invest in first-time savings income in short term, when the amount is big, then invest it in the long term. There are good options in the short-term investments in the stock market, mutual funds, and fixed deposits.

Different Categories of Personal Finance 

As I mentioned earlier – Personal Finance is a very big topic, and thus all kinds of things coming within Personal Finance can be distributed in some categories, so that we can easily understand the big subjects of personal finance – like

Budget – which includes all our types of income and expenses

Insurance – All types of insurance plans that we take on time such as life insurance, health insurance, home, car, or other insurance,

Tax – which has some major taxes – Income Tax, TDS, and others Saving and Investment

Financial Planning – where we plan and work on financial freedom, retirement, children’s education, marriage, and other expenses,

Apart from this, a lot of sari category can be made for personal finance, but these five categories are considered as the most prominent ones.

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