Tag personal finance for beginners

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.