21 Mar Managing Personal Finance and Debts!
Personal finance is the account of all the expenses and savings you have done so far. This includes all the credits and debts along with the property you own. Personal Finance can also be evaluated by calculating the net worth. The net worth of a person is all the property he owns, be it a car, house, artifact or anything valuable minus all the loans, debts, credit card bills, or other expenses. The Net worth shows, how much you own and what is your exact value.
Knowing your net worth is very important. It helps you to evaluate all the debts you owe and give you an alarm about managing it. Personal Finance also includes the investments in the stock market, retirement plans, investment in the insurance policies, the amount deposited in the FDs and permanent funds. It is wise to invest in such systems, they increase your net worth and is beneficial for the future.
You must always take an account for saving for the emergencies. You might owe loans and planning the EMI to pay them all back, but you must consider all other options before finalizing it. You must agree into paying the amount which is feasible for you to pay and hence must give it a thought even before applying for the loan. Paying back the mortgage is a hump you have to carry all the while you pay it back. If you agree to pay huge installments every month, you would not be able to save, which is an invitation to the doors of another loan! You must always follow a thumb rule, where you must pay the installment of twenty to twenty-five percent of your monthly income.
You must also start saving for the retirement plans from the initial stage. Retirement is a huge process and is a lot more than just finance. It is all your life you have to plan after you would no longer be serving any company, would not have any regular source of income! You must know, where would you be living after retirement, how will you be paying all the bills and expenses. With the departure, you know you are at a stage where there can be a medical emergency anytime. The medical sirens can be for anyone, but either for you or your spouse and hence you must be capable enough to pay all the expenses then! If you start managing your finances from the beginning, the future would not seem difficult.