Personal Finance Help
Personal Finance Help. Personal finance article on the crucial personal finance basics and important personal finance tips for success.
What is Personal Finance
Personal finance refers to the management of your money (or that of your family’s). The processes involved is well summarized by the phrase “make it, spend it, keep it, grow it”.
These represent the four quadrants involved – or as Robert Kiyosaki suggests, the four main quadrants are Income, Expenses, Assets and Liabilities. While the difference between income and expenses would build your net savings, the difference between assets and liabilities would build your networth.
Importance of Personal Finance
As life becomes more complex and less stable, jobs can no longer be taken for granted. There are no more “iron rice bowls” that guarantee a fixed monthly income. Ironically, if you seek financial freedom instead of job security, you will get greater financial security.
Living costs are rising rapidly, as the cost of homes, cars and college education increase rapidly. Financial markets are now less predictable, and government welfare benefits are now gradually declining.
The nutshell? Income and expenses are now increasingly volatile and unpredictable. The best way to ensure a comfortable retirement nest is to take personal finance into your own hands – do not rely on anyone else, take matters into your own hands.
Personal Finance Tips
In order to manage your personal finances successfully, you need to have discipline and commitment.
Discipline – Growing your net worth, or at least eliminating debt, involves a significant degree of discipline on your part. You need to be willing to delay gratification – that is the only way wealth can be accumulated. If you were to spend all that you earn every month, you would get immediate gratification – but your net worth remains close to zero.
Commitment – Success is not a one-time-off endeavor. Wealth accumulation depends on your sustained commitment to managing your own money well. There are many stories of people who had it all, then lost it all quickly. Imprudent financial management can easily lead to financial ruin.
As Thomas Stanley and William Danko found out in their research of many American millionaires, those who accumulated wealth successfully were those who were highly consistent in their management of wealth. They did not spend lavishly, and consistently saved a portion of their income in order to grow their wealth further. Discipline and commitment are key to financial success.
Personal Finance Help
The best form of personal finance help you can obtain is that from yourself. Find some time – perhaps an entire weekend – to sit down and work out your financial goals and what you will do to achieve them.