personal finance essay papers

personal finance essay papers

Personal Finance Management

1. Introduction to Personal Finance

With today’s complex financial marketplace, a college education may not seem to provide enough financial education. However, ignoring personal finance until it becomes a problem is a sure way to experience a negative event that may cause long-term pain. Formal education regarding personal finance is the best way to make a serious commitment to managing your finances responsibly. When completed, you may have an easier understanding of complex issues such as the tax code, contracts and legal documents, banking and credit management, healthcare, automobile, unemployment, and homeowner’s insurance. Once you understand these issues, you may be more confident in using the knowledge to make the most informed and sustainable decisions.

Everyone has to make important decisions about their income and financial plan on a daily basis. The question becomes, do you have the correct tools that allow you to make confident decisions? Knowing how to value the work that goes into securing your income, managing debt, analyzing investments, assessing risk, and protecting what is most important to you are a broad range of tools that are critical. Personal financial planning focuses on the individual or family unit and integrates planning components including credit and debt management, emergency funds, risk management, retirement planning, and estate planning. These components may help an individual become more financially independent. The individual should also consider investing and preserving wealth.

2. Importance of Budgeting

Simply put, a personal budget is a spending plan for your money. Personal finance management has never been so simple. Developing and sticking to a budget helps you avoid a personal financial crisis. Effective money management will define a set of goals to help you measure success so you can handle your finances better. Plus, budget planning will help you plan pauses. It allows for a carefully planned maintenance program that will manage today’s crisis. Give your finances room to breathe. It’s prudent to work with a professional financial advisor to build your plan. But once the plan is in place, you can manage the risks to meet your goals. Refresh and tweak your money management as the economy recovers so that your plan is becoming an effective savings habit.

If you have a budget in place, you’re already on your way to fulfilling your financial goals. You are controlling your money, the result is peace of mind, security, and a feeling of financial capability. A budget alone can’t, of course, guarantee you those things. But a budget can be the tool that makes those things happen. So whether you’re a budgeting veteran or a novice, or a budget-phobe looking for a reason to start, remember the rewards and check below. Now is the time to make your budget still more effective than it is today. No matter how much practice you’ve had, take it to the next level.

3. Strategies for Saving and Investing

Budgeting does not mean that you have to spend less. It means that you have to spend differently in order to put away as much as possible. A budget allows you to see that you have enough to cover your expenses and gradually save money. Always remember, when you save money, you’re planning for your future. Any strategies for saving money should involve creative, fun ways of learning to maximize resources through tools such as brochures, apps, smartphones, computers, and the effective use of time. Think of money as a tool, and by learning how to use and invest it wisely, you can grow additional income. Select the savings format that works best for you!

Financial planners suggest you put away 10% of every paycheck. Can’t swing it? Start small – put away $20 from a $200 paycheck. If you receive money as a gift or in a tax refund, put that cash in a savings account too. Consider enrolling in an employer-sponsored retirement plan and/or setting up an individual retirement account (IRA). Whether you’re planning for college, retirement, or another financial goal, regular automatic transfers from your checking account to a savings or investment account can make your money grow over time.

Are you a savvy saver? Are you putting money aside for the future? Saving money means you’re not spending it. It may take a little work, but it’s a step towards getting what you want. It is important to be wise about spending and saving.

The Importance of Saving Money

4. Managing Debt and Credit

Rules to consider on credit and credit card use: Be a smart user of credit and credit cards. Keep a record of all card costs. You should be able to repay the full balance of your account each time to manage your finances in your favor. Pay off your card in full each month unless you know you can save a large amount of money by making low or zero introductory phase for balance transfers or initiate a large discharge with a new purchase credit card. Pay the full balance by the deadline each month. Pay at least the minimum payment to your creditor. Make payments promptly. (If you have many cards, use an automatic payment rather than forget, it will make your payments on time). By paying the minimum or more, almost always, the interest on your card is guaranteed. Don’t charge on items that you can’t afford. Post-money items that have a long-term effect. If you carry a balance, it is probably not the best time to make new purchases. Take control of your purchases, instead of letting them control you. If the timing is important, use a low-interest card to calculate the balance. Praise the help in cleaning the allergic card debt and follow it every month to determine if it needs a pluck to pay. The importance of responsible card use lies in a fundamental financial principle. Each source of credit, such as a credit card account, provides a loan with a higher cost. It is important to track the cost of borrowing. The total cost of using credit is affected by the amount borrowed, the interest rate, and the term of the loan. The loan term is the number of payments into which the loan is structured. The higher the interest rate and the longer the loan term, the higher the cost of borrowing. Avoid the temptation to pay only minimum payments. To pay your credit card balances less fall into the debt trap. Select affordable cards, which offer competitive interest rates and make payments in full each month.

The wise use of credit can help you obtain goals that otherwise would not be possible. New ways of using credit are constantly being developed. As a result, credit is used more today than ever before. The responsible use of credit is essential for maintaining financial health.

5. Planning for Retirement

The money that you will have accumulated until the time you retire will be used to cover your living expenses. You retire because of certain financial reasons, because you cannot work anymore and therefore you cannot earn money. The money you have accumulated as retirement savings will help you cover your basic expenses, including housing, meals, clothing, and anything else related to your livelihood. In case you are not able to work anymore, you should have some kind of safety financial net.

Retirement is the end of your working life, so you should think about it in advance. It cannot be postponed for an indefinite period of time. Therefore, retirement planning is an integral part of personal finance management. The earlier you start planning for retirement, the better off you will be. Early retirement planning will help you have time to analyze and understand what your retirement desires are and how the different financial aspects will lead you to fulfill them. It is very important to save money for your retirement. These savings should be financial vehicles such as 401(k) plans and individual retirement accounts that can help you build the necessary working capital for a long-term period. It is advisable to start retirement planning at an early age when you still have plenty of time and the ability to increase your savings and the power of compounding return. When you start working and retire sooner, the corpus of your retirement fund grows and you can contribute a little bit at a place. That is why you should make the maximum of continuous investment to save a retirement fund that will boost your future.

When people think of their old age, they rarely think about the fact that they are going to retire from their jobs. They usually think that they are finally going to have some rest and will not have work anymore. However, it is also important to remember that during the time you worked, you basically made your living and supported your families. That is why retirement should be properly thought out.