Exactly What Is Personal Finance
Silly question? Not really ,this is a term we all know and hear daily from the news. We all know that it’s important to have a solid personal finance portfolio. What does that mean? Personal finance is broken down into four areas. If you master these things, you will achieve financial freedom for the rest of your life.
First is security. If you were severely injured tomorrow, would that be your financial ruin? Would the bills expend your savings and leave you destitute? To be financially secure you need to prepare for unlikely scenarios. Make sure that your life insurance is up to date and exactly what you need. Ensure that your savings are sufficient if disaster strikes. You should have an emergency cash fund as well, so that something like this won’t immediately ruin you.
Next is stability. This is as simple as living within your means. Don’t mortgage a million dollar estate when you’re barely making above minimum wage. Don’t rack up thousands of dollars in credit card debt if you can’t pay that off. Have a budget and stick with it. If you’re already in debt, lower your standard of living a tiny bit until you can get out from under it.
Third is growth. After stability it’s time to build your funds. Look into converting your savings account into a money market account and earn in interest. Look at investing some extra cash in the stock market. Don’t rely on your pension or Social Security to give you the retirement you want.
Finally, protect your assets. Make sure that your possessions are insured. Ensure that your funds are in secure account or not in any highly risky investments. If you have over $250,000 in cash, talk to a banker about a trust account. These are much more secure and are much easier when it comes to dispersing your assets when you pass on. Protections and security are much the same and should be treated that way. But with all of these things in place, your personal finance will be secure for decades to come.
Written by on June 18th, 2009 with
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