Personal finance is the financial management that a person or a family unit uses to budget, save, and spend money over time while considering various financial risks and future life events.

ET MONEY

Key Aspects Of Personal Finance :

1.Saving

2. Investing

3. Financial protection

4.Tax planning

5.Retirement planning

Switching directly to the Investing it is growing money with the help of purchasing assets like Gold,stock, bond, mutual funds etc.It is one of the source of creating money with money along with a certain risk involvement. It is a simple way of creating wealth with wealth. Although it is done for long,short or medium terms with a goal. Goals may be like establishing business, purchasing properties or something else.

Financial Protection We may weave multiple fantasies in our lives and devise investing strategies to make those fantasies a reality. However, unless we safeguard them with a safety net, the same might become a burden. Insurance is the safety we generally use for our financial protections.

#4 kinds of insurance we all need:

1.Term insurance It is a life insurance that ensures that your family or dependents do not have to go through financial hardship if you die early. It gives them a financial support for further.

2.Health insurance and Critical Illness insurance ensures that you do not have to pay from your pocket in case you or any of your family members have taken ill. It covers pre-hospitalization expenses along with several chronic illnesses. It prevents from any type of sudden financial burdens due to health issues.

3.Mortgage Protection insurance pays off your mortgage if you die during the term of the mortgage.

4.Personal Accidental insurance in case you meet with an accident and get seriously injured, or become partially or fully injured, the insurance company will pay the sum assured to cover the expenses for treatment and also loss of income.

GROWW.IN

Tax planning The examination of a financial position or plan to ensure that all aspects work together to allow you to pay the least amount of taxes necessary is known as tax planning. Tax efficient planning is defined as a strategy that reduces the amount of money you pay in taxes. Individual investors' financial plans should include tax planning as a key component.

Retirement planning The process of defining retirement income objectives, as well as the actions and decisions required to meet those goals, is known as retirement planning. Identifying sources of income, estimating costs, putting in place a savings strategy, and managing assets and risk are all part of retirement planning.

In different cases different strategies are made to Save Invest and spend some of them are as follows:

●70-20-10

●50-30-20

Basically the are percentage breakdown in spending,needs, saving, spending and wants.

1. 70-20-10 : Spend 70% of income (including EMI, Insurance, Investments etc)

Save 20% of income (Saving,FD, Emergency Funds )

Donate 10% of income (Charities)

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2. 50-30-20: 50% of income to Basic needs

30% of income to wants (Luxuries and other expenses of that type)

20%of your income on Investment (Future goals or Expanding business )

☝☝Note to expenditure on luxuries :

Don't buy any Luxuries with a cash payment to which you cannot buy twice

Illustration to this : If you saved for a good cost ₹1,00,000 and you have ₹1,20,000 with you don't buy it until you have ₹2,00,000 of your saved money.

Article by-

Sidharth Shankar

sidharthshankar441@gmail.com