Personal Finance - Definition, What is Personal Finance, Advantages of Personal Finance, and Latest News - ClearTax (2024)

FAQs

Personal Finance - Definition, What is Personal Finance, Advantages of Personal Finance, and Latest News - ClearTax? ›

Personal finance, as a term, covers the concepts of managing your money, saving, and investing. It also includes banking, budgeting, mortgages, investments, insurance, retirement planning, and tax planning.

According to Investopedia, “Personal finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings and retirement planning.” Understanding these terms can help you better control your funds and prepare for future financial success.

Personal Finances. The practice of determining AND managing a person's financial needs and goals for the future. Consumer.

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.

The key benefits of effective and efficient personal financial planning include reduced stress and anxiety, financial security, the ability to reach financial goals, improved decision-making, and increased confidence and control.

A personal financial plan is your map to actualising your financial goals in the future. It comprises a budget, an emergency corpus, wealth-building investments, retirement savings, and a healthy savings corpus.

Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more.

A personal financial statement is a spreadsheet that details the assets and liabilities of an individual, couple, or business at a specific point in time. Typically, the spreadsheet consists of two columns, with assets listed on the left and liabilities on the right.

Depending on the context, the expression term can mean a couple of things in finance. It can refer to the lifespan assigned to an asset or a liability, over which the value of the asset/liability is expected to either grow or shrink, depending on its nature.

Money and Making a Plan - Income and Expenses

Income is money that you make and an expense is the money that you spend.

What is the #1 rule of personal finance? ›

#1 Don't Spend More Than You Make

When your bank balance is looking healthy after payday, it's easy to overspend and not be as careful. However, there are several issues at play that result in people relying on borrowing money, racking up debt and living way beyond their means.

And it can create a host of tricky situations: the partner who earns more versus the partner who has to do more domestically (or the partner who does both); a welcomed feeling of financial independence after divorce; family members at odds over an inheritance; friendships or romantic relationships that feel out of ...

The rule of 25X is the thumb rule when it comes to retirement savings, where you need to save 25 times your annual expenses. This rule says that an individual can think about retirement when they have funds worth 25 times their annual expenses.

What is Personal Finance? Personal finance is the process of planning and managing personal financial activities such as income generation, spending, saving, investing, and protection. The process of managing one's personal finances can be summarized in a budget or financial plan.

Finance can be a catalyst for growth, when you're starting a new business, you'll need capital to launch. After a couple of years, you might need to expand and even the most established businesses will rely on finance to purchase equipment or vehicles, or fund refurbishments and new locations.

Personal finance is more than just a way to track your spending; it's a tool for securing your financial future. Understanding and managing your finances allows you to make smarter choices with your money, leading to greater financial stability and independence.

Examples include paying bills, rent, mortgage, paying for a round of drinks with friends, shopping, filling our cars, buying presents, and making donations to charity. Our credit card and tax payments also come under the term spending. We either spend with money we have or money we borrow, i.e., credit.

Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government.

Personal finance is a term that covers managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, and retirement, tax, and estate planning.