Managing Income & Cash Flow

The first three points listed above fall under the same basic umbrella: having a thorough and detailed system by which you can track and understand your income and expenses allows you to get the most out of what you make, and ultimately gain capital that can be used to address other concerns and set you up for a financially stable future

But how specifically should you track your finances?

It’s not the most sophisticated financial planning advice you’ll find, but for some it truly is as simple as keeping detailed records.

For example, by working out how much money you make each day (or week, or month if you prefer), as well as how much you spend in that same period – not just on daily expenses but in rent, on subscriptions, for insurance, etc. – you can very quickly paint a picture of what sort of financial trajectory you’re on.

You can then adjust accordingly, perhaps cutting back expenses where possible to increase the amount of income that you actually get to keep (that is, that doesn’t go immediately toward expenses).

Truthfully, this can all be done in a well-managed Excel sheet or something similar, but as is true of many personal productivity tasks these days, there are also apps and programs that can simplify the process.

As deliberated earlier Personal finance is an umbrella term that includes concepts like money management, saving and investing, tax planning, retirement planning, and much more. It also includes budgeting, mortgages, insurance, and other banking practices. Essentially, you can boil down the personal finance meaning to include products and services that empower you to make informed personal financial decisions to meet your goals.

Personal Finance Planning Execution

To execute successful financial planning, you should determine your monetary objectives. To this end, you must define your short and long-term financial goals. For instance, you might require funds for the short term to make a large purchase or plan a wedding. You also need to arrange for long-term prospects like buying a house or saving for retirement. To make plans for financial management, you need to know your goals along with your income, expenses, and constraints. Once you consider these factors, you can build a strategy that will help your sort out your personal finance.

Why is Personal Finance Important? 

Personal finance helps you become financially literate. Financial literacy is a set of skills that can help you distinguish between good and bad financial advice and assist you in making better decisions. Yet, since your school and college syllabus does not cover money management, you can learn the basics through free online courses, read up articles, watch financial education videos and more.

Further, personal finance also helps you prepare for the contingencies that lie ahead in life. While no approach can be foolproof, with personal finance-based planning, you are more prepared to meet any challenges in the future.