“Money is a terrible master but an excellent servant.” — P.T Barnum.
Personal finance is the branch of finance concerned with the finance of the individual. It deals with how you earn, spend, invest, and manage your debt, especially for the pursuit of your financial freedom.
“Beware of little expenses. A small leak will sink a great ship,” Benjamin Franklin once said. Thus, at the core of personal finance is budgeting, that is, the art of financial planning.
Personal Finance. Picture by PR Image Factory on Canva
When people talk about personal finance, they talk about the important areas — earning, spending, saving, and investing — in which they need to manage money. They talk about how, as P.T Barnum echoed, they can make money their servant and not their master.
Here, we will shortly discuss exactly that.
The starting point is earning. Earning provides the income, the cash inflow that you spend, save, and invest. As a matter of fact, without it, there is no personal finance, no financial planning, and definitely no budgeting. After all, you can only plan on what comes in for you.
Earning comes in the forms of salaries, wages, allowances, pension, or any other income type. Often, to earn, you have to produce.