I think you either heard the term personal finance or want to know in detail about “what is personal finance”. If you are here for any of these reasons, so you are on the right page. From this page, you will get a direction from basic knowledge about personal finance to advanced and detailed knowledge.

Finance is a non-detachable part of your life in every aspect. When it comes to your integral part it’s called personal finance. Personal Finance is an important life skill that everyone should understand and learn. 

Now in this article, I will discuss about three topics –

1. What is personal finance?
2. The importance of personal finance.
3. Types of personal finance.

What is personal finance?

Basically, personal finance is the term. If you break the term, get personal and finance. Where personal deals with personal matters and finance deals with managing money. So, now that you can understand the term personal finance. It deals with managing your money like saving, investing, credit, future goals and emergencies. Also, it includes managing their family members’ finances.

Managing individual finances is taking responsibility for his/her current and future financial condition. you set your financial goals as needed and do the financial tasks to achieve your financial goals. Also, plan for unknown emergencies to protect your wealth and your family.

There is an entire industry based on personal finance, which provides financial services to individuals and advises them about managing their finances.

Now you can say personal finance is managing your money for different purposes. 

The importance of personal finance.

In 2024 where money is the key element to survive, money management skills everyone should know. Here personal finance plays a key role, and everyone should become financially literate to manage their money most efficiently. Financial literacy helps you to understand good and bad advice and make the right decision for your finance and financial goals. 

Now I hope you can understand the importance of personal finance is how much. Every person should start their financial learning process at an early age through their parents and schools. Despite this much importance, very few schools offer courses on managing your money and your Indian parents’ culture is not familiar with financial learning.

That is why now every parent should learn personal finance and encourage their children toward financial literacy.

A person can learn the basics of finance through free online articles, books, courses, blogs, videos or podcasts.

A person with good financial knowledge can make strategies that include budgeting, creating an emergency fund, paying off debt, using credit cards wisely, saving for retirement, and more, and live life more smartly than others.

Also, you can be a smart person with financial literacy.

The areas or types of personal finance.

Personal finance has different types of areas for managing your money. Here I listed below the basic types of personal finance areas for an individual.

• Income – It is the starting point of personal finance where the entire amount of cash inflows through your active and passive income sources.
• Spending – It is the outflow of your most of income. Usually, it considers the cost of living or fixed bills.
• budgeting – It is the planning and recording of spending to manage according to your income.
• Savings – It is the rest of the income after covering all spending.
• Emergency planning – It is planning a fund or method to cover the expense of unexpected events.
• Banking – It is managing the records of accounts and transactions.
• Loans & credits – It is the records of your borrowing from the market to support your needs.
• Tax planning – It is the process of planning or analysing your financials to pay the lowest tax possible.
• Inflation – It is the rate of increased pricing over time.
• Taxation – It is a method by which a tax authority or government body imposes a tax on its citizens.
• Future goals planning – It is a method of planning your future goals based on reality and time.
• Investments – It is a method of money allocation in assets as per risk appetite, with the expectation of generating more money over time.

Conclusion –

I hope now you can understand learning personal finance in this one article is not possible. But as I promised at the start of this article I will discuss – what is personal finance, its importance and its types. I think you have clear information at the end of this article.

One thing you should remember my friend the journey of learning and understanding personal finance begins here.

In the next article, I will discuss about the key areas of personal finance in detail.

So, we will meet again in the next article, 

Till then,

Happy learning, keep exploring.

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