PERSONAL FINANCE 1.0|| What is Personal Finance and why is it important?? by @olyorji

Hellooo Fellow Steemians, hope we are having a great weekend?

Today I want to share an important information with you on Personal Finance.

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Personal finance simply put, is all round proper management of your money, saving, spending and also investing.

Personal finance is about meeting personal financial goals, whether it’s having enough for short-term financial needs or long-term financial needs, planning for retirement, or saving for your child’s college education. It all depends on your income, spending, lifestyle and individual goals and aspirations and creating a plan to fulfill those needs within your financial means. To get the best out of your income and savings, it’s important to become financially knowledgeable, so you can differentiate between good and bad advice and make smart financial decisions. source

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The importance of proper management of personal finance can not be over emphasized. It is innate for man to want all the beautiful things of life and to live in affluent and luxury. It takes a strong willed character and self-discipline to over come the pressures and temptations of the demands of the society when one can not afford this things. Proper management of money is very important if we must achieve our long-term goals, be successful and happy.
Controlling your personal finance is a life skill that most people learn over time out of necessity, acquiring this skill will help create opportunities, promote good health and cut down stress and uncertainties .

Areas of personal finance include the following
• Income
• Saving
• Spending
• Investing
• Protection

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1. Income This are earnings that a person gets and uses to support themselves and their family. This is the first stage of personal finance planing/management, money generated here can be used for savings, spending or investment. Examples of income sources are wages, salaries, profits/gains, pensions etc.

2. Savings This is the extra money retained from income. It can be used for future investment or expenditure. Proper management of savings is a very crucial part of personal finance. On the other hand, having too much savings could be unideal since it brings in little or no interest compared to investments. Examples of types of savings are physical cash, bank savings account etc.

3. Spending This is the expenses a person encounters as a result of their day to day living activities relating to purchase of goods and services. Most part of a person’s income is allotted to spending and as such reduces the amount the person has for savings or investment. Management of spending is as important as generating income because if expenses surpasses the income the person has a deficit. Proper management of spending is another crucial part of personal finance. Examples of spending sources are food, rent, taxes, travels, entertainment etc.

4. Investing This is the acquisition of assets both hard and liquid, here a person invests with the hope that at a stipulated time they will generate a particular rate of return. It is also the part of personal finance that carries a high risk and people are advised to seek proper financial advise because not all investments yield a positive return at the end. Examples of types of investments are Real estate, mutual funds, commodities, stocks, bonds etc

5. Protection This is the area of personal finance that deals with safeguarding against unforeseen circumstances and adverse events. It is also important to seek financial advise here. Examples of protection products are life insurance, health insurance etc.

I hope you find this post very enlightening and educative. If you have any questions or input feel free to drop it in the comment section.

Thank you for taking out time to read this post, see you in the next one!!