Personal Finance

 Personal Finance

Managing your money—including saving, investing, and setting financial goals—are all part of personal finance. So are areas like budgeting, retirement planning, and saving for your children’s college educations.

BUDGETING

Managing finance for beginners starts with budgeting. In simple terms, budgeting refers to the process of creating a plan of spending your money. A fine art, it allows you to allocate money for a range of needs.

During budgeting, you need to identify your source of income and be clear about your needs and wants. Needs refer to things necessary to survive, such as food, clothing, shelter, etc. On the other hand, wants comprise desires such as buying items of décor, going on vacation, and eating out often.

While budgeting, you also need to make room for emergencies and identify short and long-term goals, which form the basis of the next two components – savings and investment. Note that you must make a realistic budget, stick to it and review it periodically.


SAVINGS

To address and achieve your financial goals, you need to save. While there’s no fixed rule on the amount you must save, as cash flow and needs vary across individuals, you can follow the 50/30/20 rule. As per this rule, you must spend 50% of your income on needs, 30% on wants and save the remaining 20%.

If you find it difficult to save otherwise, you can automate the same. There are several financial instruments that help you automate your savings, and as a beginner you can opt for a recurring bank deposit. By giving standing instruction to your bank, a fixed amount is deducted from your primary savings account and deposited in the recurring account.

INVESTMENT

Investment is essential to grow your money and build a corpus for addressing short and long-term goals. You can make investments in fixed-return and market-linked products. In the former, the returns are fixed, while in the latter they depend on the performance of the market.

Bank fixed deposits, company deposits and recurring deposits are examples of fixed return instruments. On the other hand, stocks and mutual funds fall in the category of market-linked products.

Depending on how much risk you can take or absorb, and your investment horizon — the time frame of investment — you can choose to invest in the products of your choice.

IN CONCLUSION

Personal finance hinges broadly on the three components mentioned above. There’s more to it, and you can learn them with time. With changing priorities, you can seek help from a professional for an in-depth understanding.

  1. Step 1: Identify your current financial situation. ...
  2. Step 2: Identify your goals. ...
  3. Step 3: Identify financial gaps. ...
  4. Step 4: Prepare your personal financial plan. ...
  5. Step 5: Implement your financial plan. ...
  6. Step 6: Periodically review your plan.




40% of your income goes towards your savings. 30% of your income goes towards necessary expenses (food, rent, bills, etc.). 20% of your income goes towards discretionary spending (entertainment, travel, etc.). 10% of your income goes towards contributory activities (donations, charity, tithe, etc.).
Location: United States

Comments

Post a Comment

Popular posts from this blog

Phuket city|location, Economy, Facts |best placces to visit in phuket beaches|travel|tour

Image
  Phuket Thailand Phuket, city and island, southern Thailand. The island lies in the Andaman Sea, off the west coast of peninsular Thailand. Phuket city, located in the southeastern portion of the island, is a major port and commercial centre. Its harbour exports tin, rubber, charcoal, lumber, and fish products south to Malaysia and Singapore and north to Myanmar (Burma). Rice and manufactures are imported. The city airport has regular flights to Bangkok, towns of southern Thailand, and George Town, Malaysia. Phuket, Thailand Thailand ,  country  located in the centre of mainland  Southeast Asia . Located wholly within the tropics, Thailand  encompasses   diverse  ecosystems, including the hilly forested areas of the northern frontier, the fertile rice fields of the central plains, the broad plateau of the northeast, and the rugged coasts along the narrow southern peninsula.The island’s surface area is mostly level land but is dotted with isolated hill...
Read more

World's most beautiful place paris

Image
    Come to Paris What to do in Paris? If we had to select ten places, here are the ones we would recommend you to visit in Paris. Go ahead and fall in love! 1 Eiffel Tower What would Paris be without its symbolic Eiffel Tower? Built by  Gustave Eiffel  to commemorate the centenary of the French Revolution, it is presented at the Exposition Universelle in Paris in 1889.  324 meters high , it is one of the most visited monuments in the world with nearly 7 million visitors a year. The first floor houses the  Eiffel Tower 58  which extends over two levels, 58 meters above the ground as its name suggests. On the second floor, the view is the best at 115 meters because you have a diving view on the ground below. Finally on the 3rd floor at 275 meters, you can see what the office of Gustave Eiffel was. For the more adventurous one, it is possible to use the stairs and climb the steps (1,665 to the summit). The ascent of the Eiffel Tower is a must to enjoy th...
Read more

Top-Rated Tourist Attractions in Beijing, China |world tour

Image
  Top-Rated Tourist Attractions in Beijing Beijing, only eclipsed by Shanghai in terms of size, is not only the political center of China - a position it has held for more than 800 years - it also plays an important role in the nation's cultural, economic, scientific, and academic life. Located in the northwest of the North China Plain, not far from the western slopes of the Yanshan mountains, Beijing - still sometimes referred to as Peking - is a great place from which to explore this dynamic country due to its dense network of road, rail, and airline connections with other major cities Beijing itself has no shortage of unique sightseeing opportunities . It is home to some of the  country's best-known tourist attractions , including a section of the famous  Great Wall of China  at  Badaling Pass . Among the city's many historical and cultural points of interest are the Imperial Palace, Beihai Park, Coal Hill Park, and the Heavenly Temple, most of them within th...
Read more