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Principles of Personal Finance

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Tellakos | There is a trait that both ants and humans have in common. Both of them have the quality of worrying about the future so they love to stock up on their resources as much as they can. While ants are always busy during the summer, collecting whatever they can, big or small, humans have another trait, which is desire, which prevents them from stocking what they can but are interested in stocking up the best possible of the resources.

As humans with the desire to live the next day with the best possible resources we can find for ourselves, we are always worried about our days to come and therefore are obliged to plan them. To earn or gather our resources, we work at various jobs so that we can fulfill our desires. Fulfilling our desires does not come easy and that is why we should always consider investing. It is important to stock up on commodities that can be stored and be of use in times of need.

To do so, we have to be mindful of our expenses of the present day and save more so that we can accumulate enough resources for the future. Sometimes there are times when we are faced with some unforeseen expenses which can be huge as compared to our regular expenses. Or we might meet with some kind of unfortunate accident, of which the expenses need to be dealt with immediately. For those times too, we must have enough finances or resources to deal with them.

Ways to Manage Your Finances:

There are some ways in which finances can be managed wisely.

  1. Investment – One of the most important factors that contribute to financing management and later to your accumulated resources is, a wise investment. Most of us are salaried individuals, and our finances majorly come from investing in stocks or businesses. To know what a stock is, and how it works, it is advisable to get educated first. Even investing in foreign exchange is a good idea.
  2. Retirement Account – You should set up a retirement account as soon as possible if you have not. To manage your acquired wealth, setting up a retirement account is the best way. If you are employed, then you can take part in your employer’s 401(k) plan or you can set up an Individual Retirement Account (IRA). You can put a section of your income in your account every month, once you are through with the setup.
  3.  Budgeting – It is a good idea to budget your finances even when you are amassing your wealth. In this way, you will know all the areas where your money is being spent and all the places where it is coming from. A budget shows where you need to cut off your expenses so that there are no unnecessary expenses. Planning a budget is for the sole purpose of managing your wealth so that you can achieve the goals you have set for yourself.
  4. Net Worth – After your debts are deducted from your total income, net worth is the total of all your assets. To know how much you need to earn to reach your goal, your net worth shows how much you have accumulated so far. There a low times when your pocket can take a huge hit and it is advisable to keep track to keep in check that your wealth is not just shrinking away.

Invest Your Finances:

It is important to invest your finances so that there are enough resources needed to freely indulge in your wants and desires. It is also important to finance any unforeseen situations that you could face at any point. The most important need for financing is to achieve the required financial goals.

There are many ways in which you can invest your finances. Some of how you can invest your finances are:

  • Mutual Funds
  • Bonds
  • Fixed Deposits
  • Stocks
  • Gold/ Silver
  • Precious Stone
  • Equities
  • Real Estate

We should invest our finances because that way we can indulge in our wants and desires without worrying about any unforeseen expenses or accidents.

When we invest our finances, it makes our future secure in case of unforeseen expenses or emergencies.

By investing in our finances, we learn to control our expenditure and discipline ourselves when it comes to saving and expenditure.

While investing, we all take steps to make sure that we are not facing any major risks. Personal finance helps an individual to grow his finances by keeping them updated on all the risks that could be incurred by them on a global level.

An individual must invest in the best platform so that they can reap the best returns on their investment so that they can achieve their financial goals. It is also helpful for the growth of a family as a whole.

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