What Is Personal Finance?
As the name suggests, personal finance refers to managing your finances. It can include saving, investing, budgeting, loan planning, retirement planning, etc. However, it is vital to understand the importance of personal finance as it can help individuals live a financially secure life without running out of funds.
Importance of Personal Finance
The importance of personal finance in everyday life is not just growing, it is now indispensable. Here are 5 reasons why personal finance is important:
- Provides security: Personal financial planning offers financial protection and long-term security. With sound personal finance planning, individuals can save for all future requirements while being prepared for any unseen need that may arise without prior notice.
- Prepares you for emergencies: Maintaining an emergency fund is integral to personal finance management. An emergency fund helps you prepare and be financially ready for any emergency, so you do not have to compromise on your current or future lifestyle.
- Let you control your money: The importance of personal financial planning also lies in the fact that it gives you the power to control your money and not the other way around. Personal finance planning enables you to take charge of your income in the present, so you always have adequate funds to cover your expenses.
- Helps you achieve your financial goals: Personal finance enables you to achieve varied goals. With strategic financial planning and debt like personal loan finance, you can steadily fulfil your objectives.
- Aids in retirement planning: A financially comfortable and safe retirement requires long years of planning and execution. The importance of personal finance in retirement planning is indisputable as it can help you build a sizable retirement corpus that can safeguard you in your old age
How to Create a Successful Financial Plan?
Now that you know and understand the importance of personal finance, here are some steps to create a successful financial plan:
Set financial goals: Start by identifying and setting your goals. You can then categorise them as short-, mid-, and long-term goals.
Gather financial data: Collect relevant information on the types of investments and saving instruments available in the market. This can help you understand the pros and cons of each. Invest according to your risk appetite and goals.
Create an emergency fund: An emergency fund ideally comprises at least six to eight months of your living expenses. Such a fund can be used in urgent needs like hospitalisation, home renovation, etc. However, if you cannot create a suitable large corpus as an emergency fund, you can also use a personal loan to cover any emergency.
Find different investment options: Based on your goals and the gathered financial data, you can find different personal finance investing options and accordingly invest your money.
Create short-term and long-term plans: Breaking your goals into short-term and long-term financial plans can help you track your progress and chase your objectives in a more streamlined manner.
Analyse your plans: Revisit and revise your plans occasionally and make any changes required, thus ensuring that you are on the right track.
Personal finance can help you create a financially secure future. Understanding personal finance will help individuals in their retirement and keep track of their financial health. One thing to note is that debt in personal loans does form an integral and strategic part of personal finance. While executing your finance strategies, unforeseen situations may arise when requiring urgent access to funds.
Conclusion
This is where personal loans can help without requiring you to dip into savings or break your investments. Individuals can avail of quick and easy personal loans for wedding finance, travel, medical emergencies or any such reason through Finnable. All borrowers would need is their Aadhar card, PAN card, bank statement and salary slip. Finnable disburses personal loan finance to clients within 6 hours of document verification at attractive and affordable interest rates.
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