What is Personal Finance? | First Bank (2024)

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What is Personal Finance? | First Bank? ›

According to Investopedia, “Personal finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings and retirement planning.” Understanding these terms can help you better control your funds and prepare for future financial success.

Smart personal finance involves developing strategies that include budgeting, creating an emergency fund, paying off debt, using credit cards wisely, saving for retirement, and much more. Being disciplined is important, but it's also good to know when you shouldn't adhere to the guidelines.

Personal finance is about knowing the best ways to manage your finances and becoming more financially disciplined, so you're able to meet the financial goals you set for yourself—from saving for retirement to paying off credit card and student loan debt.

Students would learn about paying for college, online banking, taxes, budgeting, credit, retirement accounts, loans, how the stock market works and other topics.

In the Personal Finance program, you'll learn to design financial products and craft polices to meet people's needs, preparing you for employment in a variety of growing fields.

Personal financing means that you can borrow a fixed amount of money from financial institutions for various purposes and return it with interest on agreed repayment terms.

Examples include paying bills, rent, mortgage, paying for a round of drinks with friends, shopping, filling our cars, buying presents, and making donations to charity. Our credit card and tax payments also come under the term spending. We either spend with money we have or money we borrow, i.e., credit.

The Takeaway: Personal finance beginners should start with the basics of earning, saving, spending, investing, and insuring their assets. There's a literacy problem in this country, and it goes beyond reading and writing.

Financial goals can be short-, medium- or long-term. These goals can help you succeed in your personal and professional life and save for retirement. Examples of financial goals include creating an emergency savings account, building a retirement fund, paying off debt and finding a higher-paying job.

Importance of Personal Finance Education

As you gain more knowledge and awareness of how the financial system works, you can make informed decisions about budgeting, saving, and investing, which paves the way for financial success. Personal finance goes beyond having sufficient or surplus money to cover your needs.

What is personal finance in layman's terms? ›

Personal finance, as a term, covers the concepts of managing your money, saving, and investing. It also includes banking, budgeting, mortgages, investments, insurance, retirement planning, and tax planning.

Universities offer free online courses on a myriad of financial topics. A subscription to a publication like The Wall Street Journal or Barron's, conversations with financial services professionals, and taking courses at the CFA Institute can all further your education.

Personal finance basics include budgeting, saving, investing, managing debt, and understanding credit. Budgeting involves tracking income and expenses, setting financial goals, and making informed spending decisions. Saving is important for emergencies, future goals, and retirement.

Personal financial advisors meet with clients to discuss their financial goals. Personal financial advisors provide advice on investments, insurance, mortgages, estate planning, taxes, and retirement to help individuals manage their finances.

A Personal Loan is money you borrow and pay back with low interest or high interest over multiple years. However Personal Finance is a Shari'a Compliant contract based product, where the bank sells an asset at a profit, as Islamic Banks are prohibited from charging interest. So this product is Riba free.

Students who are required to take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards, according to a study by Christiana Stoddard and Carly Urban for the National ...

What Are the Five Areas of Personal Finance? Though there are several aspects to personal finance, they easily fit into one of five categories: income, spending, savings, investing and protection. These five areas are critical to shaping your personal financial planning.

A financial plan helps you realise that you need a retirement investment plan to lead a happy, independent, and comfortable life in your golden years. It does not let you compromise your lifestyle and ask your dependents for monetary support. It nudges you to act in the present to secure your future.

A financial plan acts as a guide as you go through life's journey. Essentially, it helps you be in control of your income, expenses and investments such that you can manage your money and achieve your goals.