Personal Finance

Reviewed by Apoorva | Updated on Sep 25, 2022

Introduction

Personal finance, as a term, covers the concepts of managing your money, saving, and investing. It also includes banking, budgeting, mortgages, investments, insurance, retirement planning, and tax planning. One can consider that personal finance comprises the entire industry that provides financial services to individuals and advises them about financial and investment opportunities.

Personal finance, as a term, covers the concepts of managing your money, saving, and investing. It also includes banking, budgeting, mortgages, investments, insurance, retirement planning, and tax planning. One can consider that personal finance comprises the entire industry that provides financial services to individuals and advises them about financial and investment opportunities.

What is Personal Finance?

Personal finance is mostly about realising personal financial goals, whether it's saving enough for short-term financial needs, planning for retirement, or saving for your child's college education. Mostly, it depends on your income, expenses, living requirements, and individual goals, and the plan you make to fulfill those goals within your financial constraints.

Why is Personal Finance important?

It's very important to become financially literate in order to make the most of your income and savings. Financial literacy helps you distinguish between good and bad financial advice and make savvy decisions.

Few schools offer courses on managing your money, so it is important to learn the basics through free online articles, courses, blogs, podcasts, or at the library.

The new concept, smart personal finance involves developing strategies that include budgeting, creating an emergency fund, paying off debt, using credit cards wisely, saving for retirement, and more.

Tips and tricks for gaining maximum benefits

  1. *Security: *Keeping all your money at home may not be safe as burglars may break into your house when you expect it the least. All your efforts and hard work may go in vain in the case of disasters such as floods and fire. Therefore, the most secure place to put your money is a bank account. As long as you choose a genuine, legitimate bank, the idea of protecting your money is sorted. There are banks that provide guarantee for your money even at the times of financial crisis.
  2. Convenience: Money kept in a bank account can be accessed from anywhere at any time with the many possible options such as bank branch, ATM, debit card, online banking, and others. Money can be instantly transferred to anyone through numerous ways.
  3. Savings and Investments: Banking offers you a variety of ways to save and invest to grow wealth. There are valuable options that cater to all your needs beyond just the savings and current accounts. Savings can help keep you afloat at the times of financial crisis or sudden unemployment. On the other hand, investments in mutual funds can help you grow wealth exponentially over time.

Related Terms

  • Permanent Account Number – PAN

    Permanent Account Number abbreviated as PAN is a unique 10-digit alphanumeric number issued by the Income Tax Department to Indian taxpayers.  


  • Merchant Banking

    Merchant banking is a professional service provided by the merchant banks to their customers considering their financial needs, for adequate consideration in the form of fee.  


  • Telegraphic Transfer (TT)

    There should be a system in place to transfer funds between two parties.  


  • Credit Reference

    Credit references can be treated as a credit report, or a written letter from a previous lender, or personal/business acquaintance.  


  • Country Club Billing

    Country club billing is a billing system which was previously used by credit card companies.  


  • Debit Balance

    In a margin account, the debit balance is the total amount of money that the customer owes to a broker or other moneylenders for funds needed to buy securities.  


Recent Terms

  • White Collar Crime

    It is defined as an illegal act committed by a person of the higher socio-economic class of a society during the course of his or her profession or occupational activities.  


  • Tenancy by the Entirety

    For certain states, Tenants by Entirety (TBE) is a system by which married couples may hold the title to a house.  


  • ECS,Electronic Clearance Service

    Going cashless is somewhat the motto of digital India and in a way also of the digital world wherein we make most of our payments through electronic means, be it card, UPI or any other mode of transfer.  


  • Sequence Risk

    It is the risk that the timing of withdrawals via a pension account will cause a negative impact on an investor's overall rate of return.  


  • Sales Draft

    Sales draft is an agreement which is generated at the end of the successful transaction made by a cardholder to indicate that the given purchase was completed.  


  • Ponzi Scheme

    Ponzi schemes are investment schemes that are intended to cheat people.