Financial planning and management should be the duty of any individual to save themselves in days of crisis. The process by which it is managed and updated is called personal finance. The process of personal finance includes various factors like to strike a balance between spending and saving the monetary resources over a period. The factors, which control this balance, are the life events of future and the financial risks. Personal finance is often taken care by banking products, investments along with insurance. These acts also give an individual various benefits like tax savings, retirement plans and social security.
The personal financial planning can be broadly categorized in six categories:
•Financial position: It determines the input and output of the assets and liabilities. This decides on the goals that one might be able to achieve.
•Adequate Protection: It determines to save a household from risks that are unforeseen. To counter them, the best possible way is insurance.
•Tax Planning: The largest form of expense is tax. So planning it properly is a must.
•Accumulation and Investment: This helps to decide one’s money for purchase on a huge scale like real estate, etc.
•Retirements: One should have a plan on running the household post retirement. Easy and calculated savings forms the foundation of this plan.
•Estate Planning: It forms the will and management of assets after the death of an individual. It also includes the distribution of the wealth and asset.
Personal Finance does not only secure the future of an individual but also helps one to enjoy the present.