Tuesday, May 24, 2011

Personal Finance

According to www.en.wikipedia.org, personal finance is the application of the principles of finance to the monetary decision of an individual or family unit. It addresses the way in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

Components of personal finance might include checking and saving accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and tax management.

Personal finance also refers to family 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 herself, they may solicit the help of a "personal financial planner" or "personal financial advisor" to assist.

Although some people use strategic financial planning 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 finance. Personal financial planning, based on www.woopidoo.com, usually consists of five general steps:
  1. Assessing current financial status to determine income and debts as well as personal assets such as homes, cars, or other property.
  2. Setting financial goals for short and long term benefits.
  3. Planning the execution of these goals in detail in order to achieve them. This usually consists of small monthly or yearly steps.
  4. Executing the goals and achievements and making necessary adjustment.

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