Executive Summary – It is said ‘Ignorance is bliss.’ I do not think that is applicable to personal finance. If you ignore your finances, you will either be happy with money in your hand on a monthly basis or be miserable that you are not earning enough. You will only know where your finances are if you understand personal finance. Learning about personal finance will help you make smarter choices; have better saving and spending habits and have more freedom.
Personal Finance is an important aspect of our lives. Our parents ask us to study well when we are young so that we become successful and an important part of that yearning for success is finance. We aspire for good jobs or run a successful business so that among other things, the most important aspect is that we earn money. But we never really spend time studying personal finance. Money is an important aspect of life and the better we know to manage it, the smoother our lives will be. If you know personal finance well –
1) You can make smarter choices in your financial management – If you know personal finance, you will start investing when you are young as you will know the concept of compounding. You will set up a financial plan and plan your retirement goals and work towards them.
2) You will have more freedom – You will know how much money you have. You will know the choices that you can make and will be armed with enough knowledge to make an informed choice. Freedom of choice is liberating and you know you can spend ‘X’ amount of money and save ‘Y’ amount of money. You will know how much to invest and when you can splurge on luxuries.
3) You will lead a lifestyle will be as per your income- If you live from one salary to another, you will never really know how much money you have or how much you need to save. You will be happy that you have enough money to spend or feel miserable thinking that you don’t have enough and might live life as a miser. But unless you understand finances and plan your finances, you will never have the true picture for you to live as per your means. You will set financial goals and work towards achieving them.
4) You will have better money habits – If you learn about personal finance, you will have good personal finance habits like
1) You can make smarter choices in your financial management – If you know personal finance, you will start investing when you are young as you will know the concept of compounding. You will set up a financial plan and plan your retirement goals and work towards them.
2) You will have more freedom – You will know how much money you have. You will know the choices that you can make and will be armed with enough knowledge to make an informed choice. Freedom of choice is liberating and you know you can spend ‘X’ amount of money and save ‘Y’ amount of money. You will know how much to invest and when you can splurge on luxuries.
3) You will lead a lifestyle will be as per your income- If you live from one salary to another, you will never really know how much money you have or how much you need to save. You will be happy that you have enough money to spend or feel miserable thinking that you don’t have enough and might live life as a miser. But unless you understand finances and plan your finances, you will never have the true picture for you to live as per your means. You will set financial goals and work towards achieving them.
4) You will have better money habits – If you learn about personal finance, you will have good personal finance habits like
- Filing income tax returns on time and filing it effectively maximising your investments and minimising your taxes.
- Building an emergency fund for emergencies or entrepreneurship dreams.
- Investing in a diversified portfolio to maximise returns and reduce risks.
- Having good saving and spending habits.
- Being aware of how much money you have and where are you with respect to your financial goals.
As you can see, it is necessary for us to be knowledgeable about personal finance. It is never too late to start. You can read up on personal finance on our blog. Here are some websites that provide good basic personal finance knowledge – Investopedia , moneycontrol
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