Hello, beautiful people from across the lands! I realize I’ve talked about my money journey and some concepts learned along the way but never discussed what exactly is personal finance. When I first heard the term it was foreign to me and I automatically thought it was associated with Accounting. I have never been a fan of numbers and easily avoided it because of the term alone. In this post, I discuss the basic understanding anyone can learn about Personal Finance.
Definition
Personal Finance is defined as money management and decisions governed by a person or family unit including budgeting, saving, investing, and retirement planning.
Focus Areas
Budgeting
If you have not noticed by now I am a huge advocate for budgeting. It has literally changed my finances and money habits. I highly recommend starting out with a written budget first before using any of those fancy apps. Click here to download my free budget template to get you on the right track.
Saving
63% of Americans do not have enough saved to address a $500 emergency. I started out with emergency fund savings of $1,000 with the impact of the pandemic that has completely changed. The goal now is to have at least 3-6 months worth of expenses saved. Savings is the beginning stage of building some level of financial security. Developing a budget helps tremendously in this process. If you do not know where your money is going it’s even more difficult to know how much you are able to save. In this post, I talked about easy ways to save money fast to get you on the right path. With saving it’s better to get started with what you have than nothing at all.
Investing
Investing is one of the financial freedom pillars when learning about personal finance. It allows your money to begin to work for itself and grow. I am currently in the beginning stages of my investing journey by contributing my retirement plan through my job. There are other ways to invest beyond that and begin to build a life of financial independence which should be the end goal for us all.
I love Our Rich Journey YouTube channel as they go into depth about different investing strategies. This couple has reached F.I.R.E (financial independence retire early) in their 30’s! What I love best about their channel is that they break the information in such a tangible way that you walk away well informed and ready to act. Definitely check them out. Tell them I sent you!
Conclusion
Remember personal finance relates to the principles of money management for you and your family unit. What works for one may not work for the next and that’s ok. Regardless your personal finances should cover these three fundamentals.
Budgeting allows you to know what’s coming in and what is going out. Having a budget in place allows you to build the foundation to being accessing financial stability
Saving helps create financial stability and helps eliminate financial stress which is the number 1 stress in America FYI. I recommend starting with a written budget to build discipline. Download my free budget template to get to a solid start
Investing helps change your family tree. When you begin to invest it allows the money to work for itself. Building an understanding of different investing strategies is key and is not as intimidating as one may think.
Where are you on understanding personal finance? Any concepts or strategies your currently mastering?
Regardless of where you are, keep going.
Until next time dream, believe, achieve.
