Have you ever sat back and asked yourself why personal finance is so important?
Do you even know what it’s all about?
Lets talk about your money.
What is personal finance?
Before we discuss why you need to understand personal finance and it’s importantance, you need to know what personal finance is. Anything related to your personal money including budgeting, mortgages, banking, insurance, retirement planning, and tax estate are all examples of personal finance.
3 benefits of personal finance
Personal finance helps you manage your money
Understanding your finances enables you to manage every cent of money that you earn. It ensures that you meet all your money needs. Being able to manage your money, you will know which expenses to pay first and which ones you can put off for later. You will also be able to know how much is necessary for tax payments, savings, or clear your monthly bills. Managing your money will ensure that you do not lose your hard-earned money to unnecessary expenses. You can use a tool like personal capital to manage your money more efficiently.
Knowing your finances can help you save money
- Creating a monthly budget and sticking to it.
- Managing your service providers-You can save your money by managing your service providers by searching for cheaper services. For instance, you can search for internet services and water bills that are cheaper.
- Cut off entertainments that are not so necessary to you.
- Manage your transportation cost and holiday expenses.
Personal finance can help you make money
Having good finances will enable you to make a lot of money. You can make money through having a lot of investments portfolio. Invest your saving into projects that are more profitable for a better future. Investment can help you reach your goals and be a part of your long-term retirement plan.
Other reasons why financal literacy is helpful
- Financial literacy helps you to distinguish between good and bad financial advice and make a well-informed decision
- Personal finance offers a better financial understanding to an individual- it helps an individual to achieve a better understanding of his/her finances when he/she put in place quantifiable goals. Also, know the effects of his/her decision as well as review the results of such. This gives individual new progress towards budgeting and offers better control over your money.
- It enables you to manage your debt –It keeps you off from unmanageable debts. Personal finances help you to understand which amount of mortgages you can borrow and afford to pay. It also enables you to maintain a good credit score rating. This enables you to bolster your wealth faster.
- Create an emergency fund –Personal finance enables you to create an emergency fund. These emergency funds include; medical bills and a big car repair.
- Offering family security- Personal finance helps you to protect your family by taking life insurance cover for them.