Personal financial management is necessary for initiating proper monetary decisions and financial decisions are necessary for individuals for achieving desired financial goals. It is important to understand personal finance situation for better personal money management.
Proper personal money management safeguards against unwanted debts. It may seem almost impossible to know the initial stages of financial management but once the application of basic principles are known, the money management become easier. Every person should have an insight about income and expenditures.
It is necessary to figure out where to start when dealing with personal finance issues. It is prudent to simply look at cash inflows and cash outflows. Money is an extremely useful social instrument and it largely contributes during wealth maximization.
Few essential components of personal finance are savings account, checking account, credit cards, consumer loans, stock market investments, social security benefits, insurance policies and income tax management.
Few essential steps of creating a personal financial budget:
Individuals should determine the disposable income
Listing of monthly fixed and variable asset is essential
Discretionary income should be measured and calculated
An individual should make a list of the short term and the long term goals
Some essential personal money management tools are as follows:
Budget worksheet: This is used for planning monthly finances and by using this, one is induced to save
Credit calculator: It is used to estimate the exact amount of money required to pay the unpaid balances
Insurance calculator: Insurance calculators basically help to identify the insurance price and the premium amounts
Many individuals depend on the financial counselors as these counselors can provide effective information about personal finance. In this era of electronic commerce, there are plenty of online articles and journals and these journals can be of immense help. It must be remembered that any wrong personal financial management can lead towards financial jeopardy.
Last Updated on : 1st August 2013