Personal Finance – Spending, Saving and Investment

Posted on

Personal Finance

A person earns his/her money and manages it by saving or investing. This management is personal finance management where one manages his/her own money and uses it at the places where they find worthy. Personal finance or its management is done by an individual or its family unit. It is financial management by the person or his/her family unit to use or effectively manage the earned money. Monitoring the expenses and evolving the spent money toughly can lead to better management of the money. Keeping an eye on the expenses and controlling them when not much needed helps in saving a good part of earnings.

Thus, personal finance is a term where we can manage our own money or finance.

For better understanding, let’s divide this Personal Finance and its management into four Parts.

These are:- Income, Spending, saving, and Investment.

1. Spending.

Income is our earned money. The money which we earned from any source is called our income.

It includes the total amount of money that we get from all the work done by an Individual or a unit to earn the currency. All the source of earning, no matter if it’s main or side, comes under the Income.

We spend money in many ways. some are essential while some are not. For example spending on livelihood, that is essential food, clothing, and a roof overhead are some expenses which we have to spend. Also, the tax and bills come under this category. There are many taxes imposed on a citizen of a country that he/she has to pay. We have to pay the Bills for the kinds of stuff which we use daily. Electricity, gas, etc. are some basic bills. The tuition fee of a child is a must which as a parent a person has to pay. There are some other expenses too which are not that essential but we still do in our daily life.

2. Saving.

Saving money from unnecessary expenses helps in keeping safe a part of our earnings. It is a strong point when it comes to financing management. Cutting the non-essential expenses in our daily life can help in managing our finance easily. Saving wisely can help to maintain and stable the financial position.

4 Investment.

Personal finance is not all about saving the earned currency or keeping an eye on spending money. Investing the money where we get a good or positive result is a big part of personal finance management. A person earns money, keeps a watch on expenses, uses his hands tightly while spending it, and thus saves some amount of his earned money. Now, it’s a wise decision to invest some part of our earned money to get a return. Investing money is one of the strong pillars of personal finance management. Investing money wisely is a key to making more money or keeping our money where we can have positive or at least stable growth in our money.

There are many ways to invest money. As for personal investment or like we can say for small units, spending in big stocks or shares is not possible. Personal finance management’s main goal is to manage our earned money to stabilize the financial position which can help a person in his/her odd times. Investing in not so big way works for a normal person who earns up to an average digit. There are many ways by which we can invest our earned money. Market situations play a vital role in this. The common way to invest money is gold or silver, land piece owning or investing in flats, etc. Vehicles that can be used for the transportation of goods or travel-friendly vehicles are also an effective way to invest money where we can make money from our invests one. Investing in pieces of stuff that give us surety of a positive return not only saves our money but grows it too. By investing we use our money in a safe place which can help us in preventing extra unnecessary expenses. when we are spending or investing our saved money, The most usual thing which haunts us is security. Insurance plays a huge role in the security of our invested money. Insurance is of many types. It can be of vehicle, property, etc.

Even life insurance is also there. Avoiding Insurance by thinking of it as a waste of money is directly proportional to the avoidance of security. The future is unpredictable. We climb the stairs of success that doesn’t mean there is no risk of sliding or falling. To avoid such loss Insurance is necessary. The above-described content helps us in easy understand the algorithm of personal finance and its management. In the modern world, it’s a need to manage our finance which helps in leading a stable life.

The key point of personal finance management is to keep the balance between income, expenses, savings, and investments. This can help in achieving the financial goals set by any Individual or unit. It includes short and long-term planning. By managing our finances, we not only give stability to our financial life but we can also secure our future, that is life after retirement. Its main goal is to make an entity financially stable and help in making it independent.

Thus we can say that Personal finance plays a huge part in our daily life to keep our financial position on track. Not just keeping it on track but giving it speed as well.

Leave a Reply

Your email address will not be published. Required fields are marked *