Working on personal finances.
Personal finance is defined as the management of money and financial decisions for a person or family including budgeting, investments, retirement planning and investments.
Components to Personal Financial Planning
- Financial position: Your net worth (your household assets minus your household liabilities) and your household cash flow (your expected yearly income minus your expected yearly expenses).
- Adequate Protection: An understanding of how a household can be protected in event of an emergency such as natural disasters and death.
- Tax Planning: Lowering tax costs through tax reduction programs.
- Investment and Accumulation Goals: Planning and investing for financial goals, whether it is for a new house or to have a certain amount of profit from stocks.
- Retirement Planning: Planning for your or your families’ retirement, knowing that you are going to be financially secure enough to retire at the time that you want to do so.
- Estate Planning: Planning for what will happen when you die, and planning for the tax due to the government at that time.
- An example of personal finance is knowing how to budget, balance a checkbook, obtain funds for major purchases, save for retirement, plan for taxes, purchase insurance and make investments.
- An example of personal finance is if you sit down with your spouse and plan out your spending for the mortage or the kids’ college tuitions.
- An example of personal finance is debating whether or not to save five dollars or to spend it on a cup of coffee.
personal finance – Investment & Finance Definition
The industry that is concerned with advising individuals on financial and investment opportunities. Personal finance consultants give advice on life insurance, retirement savings, and investing in stocks and bonds, among other things. It is distinguished from corporate finance, which advises companies on raising money, and public finance, which helps governments raise funds.