During my first year and last year in Webster University where I studied a management major before I dropped out from the program, there is one time that my classmates and I went on the field trip observing the rugby apparels’ factory in Bangkok, the owner whose name is Eddy has presented us how the factory looked like and introducing his teammates. At the glance, the factory seemed doing well in business as Eddy showed us his home theater at the top floor of his building and his living room, which are located in the same location as the factory.
But later, when my classmates are doing their accounting project by taking Eddy’s company as a medium subject for a research. It turned out that he has no idea of accounting at all and he became confused about what’s happening with his money after he realized his agency problem. Finance is a very necessary task for us in everyday life by tracking our income and expenses in our adult lives as well as it’s a super important task to a fruitful business.
What is a Personal finance?
According to Investopedia, Personal finance is the science of handling money. It involves all financial decisions and activities of an individual or household – the practices of earning, saving, investing and spending.
Matters of personal finance include the purchasing of financial products, like credit cards, life and home insurance, mortgages and of course various investments and investment vehicles. Banking is also considered a part of personal finance, including checking and savings accounts and 21st century online or mobile payment services like PayPal.
Brief explanation of steps in Personal financial plan:
Why is it super-necessary to know how to make a personal finance?
Your finance does effect your living condition as it’s a part of your fortune to make your goal and your decision to your achievement and your well-life being that affects to your family too.
- Income: It’s possible to manage income more effectively through planning. Managing income helps you understand how much money you’ll need for tax payments, other monthly expenditures and savings.
- Cash Flow: Notice where your cash goes to and being attentive with your expenses.
- Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider investments to improve your overall financial well-being as well as providing for your family’s support, which may guide them to a wonderful opportunity.
- Investment: Finance is a great knowledge for you to plan your budget on how much you can invest and make the best out of yourself by your choice in the investment (whether you start your own business or put your money into a stock market.) with your own satisfy risking level.
- Standard of Living: The savings created from good planning can prove beneficial in difficult times in your life as well as it can help you planning on your assets within your growing fortune where you can enjoy your leisure activities without going over your limit.
I do guarantee that it gives you an healthier life direction since I have made my personal finance tracking in few months ago.
Before I was doing this habitually, I tend to spend my money excessively to ludicrous thing from expensive facial-care products to an upscale restaurant’s dishes so many times in a month. Then the moment later, I started to calculate my expenses and my income from my personal finance book; I realized that I did a terrible mistake by spurring on my money into a totally unnecessary thing. Finally I have noticed my spoiled habit, I become more frugal and aware of my expenses by making sure that I spend my money less than my income as it does also lead me making a better decision than the old me who was so spoiled and naive.