Personal Finance

Personal finance summary:

• Budgeting, saving, investing, and spending wisely are all part of your personal finances. 

• Keeping track of your finances is the first step in achieving your financial goals. 

• Making intentional decisions is a hallmark of an individual with strong personal finance habits. 

Personal finance definition and meaning

The term personal finance refers to all the factors that go into building a stable financial life. Those factors include everyday concerns like budgeting, banking, debt management, saving, investing, buying sufficient levels of insurance, and retirement planning. 

Key concept: Everything you do in your everyday life to meet your financial obligations and reach your goals is considered personal finance. 

More about personal finance

No one is born understanding personal finance. Most of us learn how to manage our finances a little at a time. The more you make intentional decisions about your finances, the more success you're likely to experience. And with each success comes a shot of confidence. The great thing about newfound confidence is the way it inspires you to learn and do more. 

Everyone learns about personal finance differently, depending on their situation. Here are some common personal finance tactics that help build confidence:

• Budgeting. Once you've learned to allocate a portion of your income to paying bills, a portion to savings, and a portion to investing, you've nearly mastered the basics of budgeting. 

• Saving. Learning to save money regularly (no matter how little) is one of the kindest things you can do for yourself.  Putting money away for an emergency could help you avoid counting on credit cards to cover emergency expenses. 

• Managing debt. Americans carry debt. In some cases, debt causes stress and holds us back from financial progress. Making an intentional decision to pay down debt frees up money and may also help you rest easier at night. 

• Insurance. It's easy to overlook insurance's critical role in personal finance until you need the coverage. Insurance could save you from facing an overwhelming expense. 

• Investments and retirement planning. Both investments and retirement planning are ways to look out for your future self. The way to a more secure financial future is by methodically building a portfolio that can weather market volatility  and leave you with a nest egg that allows you to maintain your standard of living. 

Personal finance: a comprehensive breakdown

Learning to manage your personal finances intentionally and carefully could help you build a solid financial future and reduce stress. None of us is born knowing all the ins and outs of money. These six steps are a good place to begin: 

1. Budget. Create a budget to help remind you when you're veering off track. It doesn't have to be perfect. You can always adjust it as needed. It’s easier when you use a free budgeting app.

2. Prepare for rainy days by building an emergency fund. Your goal is to eventually have enough put away to cover three to six months' worth of expenses. It could take a while to get there, so don’t give up. Regularly deposit what you can in an easily accessible account. 

3. Automate savings. Set up automatic transfers from your paycheck to a savings account, no matter how much or little you can afford to save each month. 

4. Automate bill pay. Nearly every bill is now eligible for auto-pay. Take advantage of it. Not only will you save time, you also reduce the chance of paying late. 

5. Set financial goals. Goals help you stay on track when you're tempted to spend money on something you want but can live without. 

6. Know where to find help. Whether you want someone to tailor your investments or someone to help you climb out of debt, there are trained professionals available. 

It's easy to listen to someone discuss personal finances and think they have some special insider knowledge you don't. It's simply not true. Even experts gain knowledge gradually over time, just as you can. 

Achieve is a leader in digital personal finance, here to help people move toward a better financial future.