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Why there is need for personal finance in life of every individual ?

Personal finance can be defined as the art of managing monetary budget & resources, personal finance includes management of monetary budget for one self or the family members.

It is a systematic process, which one plans depending upon his earning and resources that he has. The personal financial plan depends on person to person.  The main goal for the financial planning is to save and plan for future.

We all have certain goals that we want to accomplish going to future. We are also aware of certain responsibilities in the life. If we don’t plan in well-defined and effective manner for the future then it will become very difficult for us to accomplish our goals.

Personal financial is very important for every individual and every one must make a constant effort to master it. These are the things that are not included in the curriculum, these skills are very essential for every individual, and will determine whether he will be successful or not.

Things you are going to learn:

  1. Personal Financial Planning Process.
  2. Need of Financial Planning.
  3. Personal finance principles.
  4. Conclusion.
  5. FAQ’s.

Personal Financial Planning Process:

There is a systematic process in which can we can do the financial planning for ourselves and our family members. These are the generalized steps and it may slightly vary for person to person.

Do the personal assessment, analyze what is your monthly income and your day to day expenses in that particular month. This assessment should include all your EMI’s, household expenses and other day to day expenses.

It is always recommended to include the worst-case scenario.  If we focus on worst case scenario then in that case our financial planning doesn’t get affected.

Now it’s time for the proper goal setting for yourself and your family members. Personal finance can act as the self exploration part in your life

As a result, you can easily figure out what are your short term and long-term goals. Your financial panning must consider both short term and long-term goals. It is one the best form of the financial planning.  Because your goals will vary depending upon your situation.

Create a well-defined plan, analyze your unnecessary expenses and ways to reduce them. Apart from its focus on investment in variety of funds, shares and assets that have a potential of delivering long term profits going into the future.

It a saying that don’t put your all eggs into one basket. Try implementing your financial plan with the proper disciple and try sticking to it. Take guidance from the from the people who are expert in that particular field of finance.

There are many platforms such as YouTube which help you and guide you in must better manner. Try seeking guidance from experience people it helps you a lot and implementing those things will definitely help you going further in life.

When you are following your well-defined financial management path, keep check of things that are going. Don’t put things on the auto pilot mode.

In the initial stages of the financial planning it is very important for us, to keep check on the things that are happening, if certain things are not going as per the plan. Then you need to work on the things, and try making things work in our favor.

Need of Personal Financial Planning:

Finance

It is very important for people, to start understanding the need of personal finance. They need to focus on understanding their personal finance and see how things go.
As we can see that, employable age is getting shorter and shorter. Try investing in yourself to become expert

Companies are investing in the youth and they are looking for the young and dynamic team to work for them. As a result, you can lose on job opportunities across the world. And no one wants, to work till the end of their life.

In order to solve this problem, you need to start figuring out your finances from the day you start earning and making your living. It is usually seen that medical expenses are rising at the rapid pace.

And we never know, when we face a huge medical expense in our life. It is very important that we plan for it. We need to plan for the medical cover or the insurance. Because we if need help, at any point of time.

It can create a huge financial Burden on us. Many people who didn’t understand its importance fall very badly in their life due to it.  So, keep in consideration this factor.

Personal finance principles:

Finance

Personal finance principles that you need to follow in order to lead a successful life going forward. Because these principles not only put you on the right path in your life but also check, what wrong are you doing in your financial planning.

Cut down your purchases which you make on EMIs, many people fall in prey to this method. They keep on shopping; they even purchase things that are not necessary at the current point of time.

The only reason that they are doing this is that get an option of EMI on it. It is the biggest reason why many people lose on financial planning. They are constantly paying for EMIs and it is like habit and it is very difficult to get rid of easily.

So, try avoiding it as much as possible and opt of it when there is urgency. Aim saving of at least 20-30% of your income, and try investing this money for your future. You will also aim for some freelancing work to generate part time income.

Many of us spend their whole income, without caring much for the future and as a result when they face a difficult situation in their life. They start search for the sources that can help them financially.

They fall into this situation because they are not saving from the starting of their career. If you start saving from the early stage in the life, figure out how you have already saved, going ahead 10 years from now. Small savings matters a lot going ahead in the life.

Finance

Start investing in the tax saving funds, and aim for the long-term investments in it. This tax saving funds gives you advantage at your age of your retirement.

Use this type of funds to your advantage, if you need financial adviser, try consulting him and ask him for this type of funds and how to invest in this type of funds. And take small details out of it and invest in it.

It is seen many of us miss on this type of funds because we are not aware of this type funds. We never know this type of funds exists.

Start segregating your investments in two major categories which is risky and risk free. Depending upon your savings, distribute them into these two categories. See risky investments give more returns as compared to that of risk-free investment.

So, plan it according, plan for the worst-case scenario and as result your financial planning will never get affected. Create an emergency fund, this the fund you will only use when you or your family member loses his job for 6 months.

So, create a fund for the 6 months, so if the situation is not in favor for you. You can manage very easily. Many successful people always plan for the emergency fund. It is very essential and you realize its important only when you need it badly.

Always go for the term insurance of your family. If some bad thing happens to our family member that our whole family is financially secured. So, go for the well-defined term insurance in life.

Don’t go for the small insurance because are not that profitable in life, go for the term insurance, no other insurance is needed after that type of insurance.

Of course, you can go the medical cover for your whole family. if see the medical condition of your family is not that good, they you should definitely aim for the medical insurance or the medical cover for your complete family.

It very important for everyone, the earlier you realize its potential the better it is for you and your family members.The subject you all should master as quickly as possible.

Financial growth

It takes time and experience to master but you can start by taking small steps at a time because every small step is counted, when you are on the journey. You will make mistakes initially but with time you will learn and you will grow as a result.

Start your personal finance journey by just following these small steps as mentioned above. These small steps are sufficient for you at the starting of your career. It is a very deep subject and require deep study to it, as all us can’t go so deep and analyze it.

You have heard that many big people hire team of financial expert, this team do their financial planning looking at the market, and many other options. These people are expert in financial planning and they do plan for the company or the individuals.

 If you grow big in your domain, they always opt for the financial experts who can manager your assets and help you to grow and take your organization to the next level. Always understand the power of compounding, and use it to the best.

Conclusion

Personal finance is the key lesson that every individual should learn, implement and teach other. It is the things whose fundamentals remains the same but it keeps on evolving .

Whenever you start realizing it’s potential, start implementing things according. You will start seeing results as soon as you implement things.

FAQ’s

1. When should you start implementing personal finance.

It should be managed from the starting of your career.

2. Where to learn personal finance.

Family members, financial consultant.

3. Is personal finance vary from person to person.

Yes, totally varies from person to person.

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