Personal finance is a process of managing funds i.e. budgeting, saving and spending money over a period of time, taking into consideration various financial risks and future life events. Personal fund management varies from individual to individual, as it takes into account the lifestyle of the person, their needs and necessities, use of banking products, insurance subscription etc.
To be good at personal finance, the first thing an individual has to ensure is learning self-control. Self-control is the biggest determinant of a person’s personal finance status. For instance, one can easily purchase a product, be it a watch or a pair of shoes using a credit card, any time they like. Though, it is wiser to actually save the money prior to making the purchase. By doing so, not only does the person curb the use of credit cards, but also starts inculcating the habit of saving. Credit cards are majorly considered to be a detrimental product, which negatively affects personal finance habits.
It is also important to fathom that personal finance is one’s own responsibility. The earlier in life one can learn to manage their funds, the easier it will be for them later in life. It is suggested that individuals should discuss financial products with family and friends in order to understand what kind of benefits can be out of these instruments. Apart from discussions, individuals should conduct an extensive research regarding the financial product they want to invest in, in order to understand the pros and cons of the investment.
Early starters are successful
It is universally observed that early starters are always good at personal finance. The sooner one learns to manage, save and invest their money, it gives them a head start for a better future. Successful investors always preach the lesson of focusing on personal finance early in life as it gives you enough time to recover from mistakes made. Personal finance is unfortunately a topic that is not covered in any curriculum, but one only learns it with time and experience.
Plan thy expense
In order to be successful at personal finance, one has to be good at planning their expenses i.e. budgeting. Budgeting is an important process as it takes into consideration the money earned and allows planning of expense accordingly, so that a certain amount of money can be saved each month. Once an individual starts focusing on making a budget, they get a better idea of where they are spending the most, and also the avenues where they reduce their expenses.
Personal finance is ultimately a self-taught art and with practice and commitment, one can gain expertise in managing their personal funds.