Today I want to share with you something about money. Money is a very important part of our lives and it’s a more important management of money. This money is all about finance. There are 3 types of finance :
1. Personal finance
2. Business finance and
3. Corporate finance.
Today my topic of discussion is personal finance. What is personal finance? Personal finance means all those money related to our personal life. It can be related to our earning, spending, saving, bank account, credit card, tuition fees, shopping bills, etc. Most of the country no one teaches money management. They think money is not the child’s thing so, you can understand after grown-up. Really this money matter is not so easy. But Technology is now touching those eras that people are using money management tools like personal capital, mint.com, acorns, YNAB, PocketGard, dollarbird, Mevelop, Wally and many much. This tools you can use a paid and free version also. But when this is about money, I don’t think the free version is any good idea which can be bad for security reasons. There can be a question that why we use these tools. Because it’s not really easy to exact calculations for us like you open a bank account, deposit some money after sometime cash out also but your calculations and bank calculations never showed the same amount. When your bank gives you clarification they will be always right. If you have a personal cashier who will work for you, does that sound good? These tools can make your financial plan easy as a personal cashier. Ok leave this matter, now I am going to describe to you about personal finance with more details. 5 pillars of personal finance.
1. Earn money: First of all, we have to earn money to start personal finance. Most people start finding a job after their graduation but it’s totally wrong. We should start earning from our student Life. It’s can be by tuition, part-time job, online work, some small business, etc. It makes your habit to earn. Obviously there is full life left for earning after student life. But it’s really very helpful for understanding the value of money and gain experience. It’s not like that who can’t earn he doesn’t participate in other steps but for me earning is the first step.
2. Save money: Most of the people are earning first then spend after then if something left then they do any saving. But it’s totally wrong. After having a salary does saving money. Senator Elizabeth Warren popularized the 50/20/30 budget rule in her book “All Your Worth: The Ultimate Lifetime Money Plan.” According to this budget rule, we should allocate 20% for saving. Money has a motto , if you save money today, the money will save you tomorrow. “Do not save what is left after spending, spend what is left after saving.” – Warren Buffett.
3. Invest money: After saving money you have to invest your money. You are saving your money and keeping it under your pillow, it’s not saving at all. Day by day your money will be decreased due to inflation. So invest your money where your money will be really safe. About investment Warren Buffett give the best suggestion that ” Don’t put all your eggs in a basket.” That means if you invest your all savings in one place or bank, the risk of loss will be in your full investment. So divided the savings and put them in different funds. It will help you to know who can give you the best service and you will never depend on one source.
4. Spend money: Now we can talk about spending money. Here we again come about 50/30/20 budget rule. The basic rule is to divide after-tax income, spending 50% on needs and 30% on wants while allocating 20% to savings. Whenever we get our salary this time we spend money fluently without controlling. Ultimately we don’t have much at the end of the month . Please make a difference between your need and want. Give importance in need. Make a list of what is your necessity. Control yours over excessive spending habits. 3 basic tips for spending :
*** Save first spend later
*** First Need than want
*** Follow the budget rule.
In this matter, Warren Buffett said, ” If you buy things you want, soon you won’t have money to buy things that you need.”
5. Protect money: In this matter, I personally thought that before money should be protected from others or thieves. But actually not, protect your money from yourself at first. Having the liquidity of money, we will spend too excessive way. Deposit it bank it’s quite not so easy to spend as cash. Invest in different funds, buy shares from share market or buy land, states, gold those are really hard for spending quickly and long term matter. This way your money will be safe from you.
I hope that after reading this post your personal finance will get some changes. Think before doing because all are important in your life.” It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” — Warren Buffet.