What is Personal Finance
Personal Finance means = Personal Money Management (Personal + Finance)
Yes, You know the meaning of personal, whatever is yours or is related to you, it is called Personal and talk about Finance, in the clear word Finance means your earned money which is in your bank account.
Personal finance means how you are managing your money, how you are saving and spending it. With the help of personal finance, you can get maximum returns on your money. There are three things you can learn through personal finance.
First: How to earn money
Second: how to spend money
Third: How to save money
Personal finance is an education that every young person should learn. If you learn all three terms of personal finance then you will never have to face financial problems in your life.
Why you need to learn Personal Finance.
Let’s say you have $50 now and with that $50 you can buy a Samsung mobile phone, but what if you deposit this $50 in your bank account for 10 years.
So now tell me, will you be able to buy the Samsung phone after 10 years with the same $50.
The Answer is NO
Because after 10 years that Samsung phone would have stopped selling in the market and at that time the mobile you want to buy will not be available in $ 50. Because after 10 years the inflation would have increased and the prices of all mobile phones would have also increased too and your $50 will remain $50 in your bank account even after 10 years.
Yes, We all know that banks give you interest on your money but it is very less and that’s why you need to learn Personal Finance, by learning which you can increase your money over time.
Types of Personal Finance.
There is no exact number for the type of personal finance. But we can divide Personal Finance into 5 parts.
- Income
- Spending
- Savings
- Investing
- Protection
1. Income
Income is the first part of Personal Finance. If you do not know, then let me tell you that the money earned by you is called income. Income is a source of earning money which every hard working person gets and then uses for his living and family upbringing.
Different types of income sources:
- Salary Income
- Rental Income
- Interest Income
- Bonuses
- Profit Income
- Hourly wages
- Royalty Income
- Pensions Income
- Online Earning Income
2. Spending
Spending includes many types of expenses which every person uses to live his life and fulfill his needs. for example:
Different types of spending:
- Food
- Rent
- Clothes
- Income Tax
- Petrol Bills
- House Rent
- Electricity Bills
- Tickets Fees
- Medical
3. Savings
Saving means, keeping your money safe and using it when needed in future is called Savings. Saving your money is an important part of personal finance.
Example of savings:
- Savings Bank Account
- Cut Some of Your Expenses
- Physical Cash
- Checking Bank Account
- Securities of Your Bank Account
4. Investing
Investing means growing your money over time. Because time does not stop for anyone and inflation also increases with time. So that is why you also have to increase your money over time and in investing, you can earn profit by putting your money in the right place.
There are many ways to invest. Like you can buy real estate, gold and cryptocurrency. Due to which the value of those assets will increase over time and your money will also grow.
Methods of investing:
- Gold
- Bonds
- Stocks
- Trading
- Real Estate
- Mutual Funds
- Cryptocurrency
- Buying Assets
- FD (Fixed Deposits)
5. Protection
Protection is very important in personal finance. By using Protection in Personal Finance, you can secure your own money from unforeseen events in the future. Because who saw yesterday and when what will happen, no one knows.
Methods of protection:
- Child Plans
- Life insurance
- Car Insurance
- Fire Insurance
- Motor Insurance
- Home Insurance
- Travel Insurance
- Health insurance
Hope you understand Personal Finance. On this website we upload content related to finance and online earning. Thank you for giving your valuable time.