Money is one of the most controversial issues across race and era. Just as the old adage goes, “money makes the world go round”, no wonder why handling it is very crucial not just to multibillion dollar institutions but to each individual as well.
Personal finance is the system by which an individual or a group of individuals who share monetary resources manage their income to allocate their spending and savings to different aspects, may it to be to daily sustenance, entertainment, payment of bills, and emergency funds. Personal finance is not just limited to what you allocate your financial resources to, it also includes how much you allocate, how many are willing and able to allocate, to how many people and how many will benefit from the allocation.
Vital to personal finance is the planning aspect for individuals to be able to take into consideration various factors such as importance of expenditure, urgency of spending, and the financial resources available, to name a few. In this article, five component processes of planning will be discussed:
Assessment: Before you start thinking of the expenses you plan to make, it is fundamental that you gauge your capabilities first – you must know what is on your backyard. Factor in what you have (assets), your income, and expenses to see if they are at par or if you could live within your means
Objective: Now that you have an idea of what you have and what you should or you can do with what you have, it is time to ask yourself what you want to achieve with all of those. It is important to have an objective, both long and short terms so that you would have a purpose that will guide you with your personal finance
Game plan: Yes, you now believe that your finances are going somewhere worthwhile, but just like any goal, there is not short cut from the starting line to the finish line. You should get through several courses to reach the goal. Therefore, in this process, you should learn to strategize the steps you are going to make to reach your goal with the least casualties as possible
Execution: In personal finance, abstract is not acceptable, there must be concrete and specific actions to be taken to achieve the goal/s you have set for yourself or your household. For instance, you want to achieve a family vacation abroad next year, then you must change something on your current expenditure to be able to achieve that, given that ceteris paribus
Evaluation and Reconstruction: After the journey, you must look back and see if what you did was effective. Were you able to reach your goal/s? Were your needs not compromised in exchange of your wants? Do more people benefit? Did your actions improve your personal finance? Most importantly, what can you do to improve it?
Reading the processes, it may seem that personal finance is a grueling one, but just a disclaimer, the term speaks of itself: Personal finance. This means that nothing is set in stone. You can tweak the “steps” as you like especially if there you experience problems life financial crisis ask help at Tree house Loan. What is important is that you are able to incorporate your personal finance to your personal lifestyle.
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