Personal Finance
refers to financial planning relative to the individual. In general, the term relates to analyzing an individual's current financial status, budgeting, and planning for the future. Although each individual can perform these tasks for himself or her self, they may solicit the help of a personal financial planner or personal financial advisor to assist.Although some people use strategic financial palnning in order to save up for specific events or opportunities such as retirement or college, individuals may incorporate personal finance into their lives simply to gain control over their finances.
Personal financial planning usually consists of five general steps:
- Assessing current financial status to determine income and debt as well as personal assets such as homes, cars, or other property.
- Setting financial goals for short and long term benefits.
- Planning the execution of these goals in detail in order to achieve them. This usually consists of small, monthly or yearly steps.
- Executing the goals and monitoring progress.
- Reassessing the goals and achievements and making necessary adjustments.
Personal finance revolve around:
- How much money is needed by a person (or a family), and when?
- Where will this money come, and how?
- How to protect against unforeseen personal events, as well as in the external economy?
- How can family assets be best transferred across generations (requests and inheritance)?
- How does the tax policy (tax subsidies or penalties) affect personal financial decisisons?
- How does affect the individual financial capacity?
- How can you for a secure financial future in an environment of economic instability?