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Personal finance management is the process of planning and managing money. Financial activities like budgeting, spending, banking, insurance, loans, savings, investments, tax planning and estates planning come under personal finance management. Better money management means reducing spending, improving ability to invest, and achieving financial goals.

Tracking Spending to Improve Finances 

It is important to track spending to improve our finances and better money management starts with spending awareness. Money management app like Money Track can be used to track spending across categories.

Creating a Realistic Monthly Budget

It is ideal to use monthly spending habits and monthly take home pay to set a budget. Budget is a better way to encourage better habits.

Building Up Savings

Creating an emergency fund is absolutely important and it can save us from risky situations. We should make general savings contributions to strengthen our financial security in case of job loss.

Paying Bills on Time Every Month

Paying bills on time is an easy way to manage money wisely and it comes with excellent benefits. A strong on time payment history is helpful in lifting credit score and improving interest rates.

Cutting Back on Recurring Charges

It is a good idea to review spending for charges like monthly subscriptions to streaming services and mobile apps.

Saving up Cash to Afford Big Purchases

Certain types of loans and debts are often helpful when making major purchases and cash is the safest and cheapest buying option for other big purchases.

Starting an Investment Strategy

Employees can find out whether their employer offers 401k matching and it is worth considering opening a retirement account or other investment account. The path to better financial management starts with changing our own habits and great money management skills will serve throughout our life. It is to be kept in mind that the foundation of good money management is a rock solid budget. Our hard earned money should be saved, invested and spent judiciously. Money can be saved through effective money management.

A vital aspect of money management is keeping a track of expenses and reviewing them periodically. Making a budget is the first and foremost step of money management. Creating a budget has been used for centuries and saving first and spending later is important. It should be ensured that we are prepared for future contingency and the chances of overspending or exceeding budget should be eliminated. Having a financial goal allows individuals to stay focused and avoid overspending.

It is an elegant idea to start investing in financial products in order to achieve long term financial goals like dream house, child’s education, retirement and much more. Saving should be started as early  possible and it should be started from our first pay cheque. Wealth creation plans are best for long term savings and financial protection is the striking feature of wealth creation plans. Equity funds, balance funds, and debt funds are better options. Taking on multiple loans affect credit scores and it is important to limit debt as much as possible. Being dependent on credit cards and taking too much debt can adversely affect budget. It is better to stay financially prepared for any kind of uncertainties in life.

It is a well known fact that personal finance is a process of planning and managing personal financial affairs. Personal finance deals with saving, investing, spending, banking, insurance, mortgages, investments, retirement planning, estate planning and tax. Understanding the essentials of personal finance is necessary for making smart decisions with money. Personal finance for beginners is a roadmap to financial security and freedom in the contemporary age. It helps us to prepare for life’s unexpected events like job loss, illness or disability.

Income, spending, saving, investing and protection are the vital aspects of personal finance. There is no one size fits all solution for personal finance and the best way to manage personal finance is dependent upon individual circumstances. We should make sure that our income never exceeds our spending and it is important to save as much money as possible after paying for essential expenses like mortgage, rent, insurance, and utilities. It is an elegant idea to invest in well established and low cost mutual funds.

The Importance of Mutual Fund Investments

Mutual funds are investment vehicles that raise money from investors and invest it in the stock market or bond market. Diversifying assets form the basics of personal finance for beginners in the post Covid world and enrolling in 401K and 403B are excellent options. There are three types of different mutual funds: growth funds, income funds and hybrid funds. The selection of mutual fund depends on individual needs as well as goals and it has been pointed out that a growth fund only invests in stocks. Investing in growth fund for a lengthy timeframe is recommended and growth funds will return lucrative benefits compared to income funds and hybrid funds.

Income fund invests in bonds and dividend paying stocks and they are less risky than growth funds and hybrid funds. They pay interest and dividends once a month or every three months. Hybrid funds are mutual funds with features of both growth funds and income funds. They are less volatile than growth funds and more volatile than income funds. The basics of personal finance include the power of compounding money and the most common types of insurance include automobile insurance, homeowner’s insurance, umbrella insurance, disability insurance and life insurance. A typical automobile policy plan covers bodily injury, liability for property damage, bodily injury caused by uninsured motorists, property damage caused by uninsured motorists and medical expense benefits.

Buying an Umbrella Insurance

Homeowner’s insurance policy coverage includes home construction supplies, personal properties, loss of use, and personal liability for each incident. Buying an umbrella insurance policy will be beneficial if a person has numerous assets and it is also known as additional liability insurance. Disability insurance benefits can be paid for work related illnesses or injuries in special situations that are outlined by law.  In a nutshell, personal finance is the financial planning that an individual or a family undertakes to earn, save and spend money. Having a clear knowledge of concepts in personal finance like setting financial goals, budgeting, investing, saving, retirement planning and insurance planning help an investor to make sound financial decisions. Investors should ensure that they have an emergency fund to cover unexpected expenses and investing money wisely is important.