Financial analyst (Mudra finance company) | Posted on | Share-Market-Finance
What’s the most important thing about personal finance that everyone must know?
Entrepreneur | Posted on
The meaning of personal finance changes with the changing age. For those who are in their early 20s, it’s about cutting back on their expenses. For those in their 30s, it’s about keeping the family happy but without burning the pockets. For 40s, it’s about thinking for the old age. And in 50s, it’s about living leisurely; holidays, cruises and all.
But, of course, all these are just my own opinion and perception. And you might not agree. But having gained enough experience from my personal and professional life, I strongly believe that there’s no one golden aspect or rule about personal finance. It’s something like a chair. Your financial health depends on NOT just one but multiple legs. And that with people’s changing age, their habits and life as a whole, so do the rules of personal finance.
But without boring you, here are 3 things that I think everyone must know about personal finance:
• Stay prepared for the healthcare emergency
You never know when you or someone in your family will fall sick. And at such time it’s incredibly important that you stay prepared financially. Meaning, you’ve got to save enough to afford medical emergencies in your family. That’s the first thing you must care about; saving for other things come next.
• You need more than one source of income
In this day and age, just having one job isn’t adequate; more so for professionals in selected industries like IT. You cannot rely on one source of income. You must have different avenues from where you’re getting a consistent flow of income. This could include anything from investment in storks and MF or doing freelancing work part-time.
• You will never be rich
Some people work incredibly hard 24/7 thinking that once they become rich, they would live comfortably. Sadly, the meaning of “rich” is subjective and progressive. You cannot have enough money to afford all that you wish. Once you have a big car, next thing you never know you might want a private jet. Point is, you never get very rich. So, instead of putting all your focus and energy into making money, focus on living a happy life. Take care of your finances; but only care about the money that you need. Don’t ask for too much. Your life can pass by making money and when you’re old, you will wonder when did you live!
These are 3 things about personal finance that everyone must know. Hope the answer is what you’re looking for!
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Blogger | Posted on
Plan - Planning is probably the most important phase of personal finance. Planning includes a roadmap of your short and long term aspirations and how much money you want to save for each. Allocate additional money for contingencies. This includes money for college, marriage or a trip around the world etc. Then plan how much you would have to save to achieve these.
Save Early, Invest Early - Compound interest is a very powerful tool in the long run. Early savings mean early capital to be invested. This translates to compounded returns over the lifetime of investments.
Invest long term - Most people think of making a quick buck through their investments. This is myopic and one should think about long term investments. This is in line with the power of compounding
Invest in what you understand - Just because your neighbour invests in Japanese bonds, doesn't mean you should. Invest in what you understand, don't follow the crowd.
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