Personal finance
Personal finance refers to the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.
Overview[edit | edit source]
Personal finance involves the understanding of one's financial situation and making an appropriate plan to meet personal financial goals. Through this, a person can start to achieve personal financial stability and success.
Components of Personal Finance[edit | edit source]
Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.
Budgeting[edit | edit source]
Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.
Saving[edit | edit source]
Saving refers to the excess of the income earned over the expenditure incurred. Saving is the key to building wealth and it is closely connected to investing.
Investing[edit | edit source]
Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit. You can invest in endeavors, such as using money to start a business, or in assets, such as purchasing real estate in hopes of reselling it later at a higher price.
Retirement Planning[edit | edit source]
Retirement planning is the process of determining retirement income goals, risk tolerance, and the actions and decisions necessary to achieve those goals.
Personal Finance Management[edit | edit source]
Personal finance management is a key component to making a person's life balanced and full of peace. It not only helps in keeping track of the income and expenditure incurred by a person, but also helps in planning for the future.
See Also[edit | edit source]
References[edit | edit source]
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Contributors: Prab R. Tumpati, MD