Personal Finance

Personal financial planning consists of three general activities:


-Controlling your day-to-day finances to enable you to do the things that bring you satisfaction and enjoyment.

-Choosing and following a course toward long-term financial goals such as buying a house, sending your kids to college, or retiring comfortably.

-Building a financial safety net to prevent financial disasters caused by catastrophic illnesses or other personal tragedies.

The first and most important aspect of personal financial planning is budgeting.


Why Should I Budget?

Controlling your financial affairs requires a budget. For many people, the word "budget" has a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a means to achieve financial success.

Whether you make thousands of dollars a year or hundreds of thousands of dollars a year, a budget is the first and most important step you can take towards putting your money to work for you instead of being controlled by it and forever falling short of your financial goals.

To those of you who think you know where your money goes without keeping detailed records, I issue this challenge: keep track of every cent you spend for one month. I promise you'll be surprised and perhaps shocked by how much some of your "small" expenditures add up to.

For an eye-opening illustration, try the American Express Saving or Spending Big Calculator. Enter the cost and frequency of a habit or indulgence and how many years you expect it to continue. Click a button and see not only how much you'll spend over the specified time period, but how much that same amount would grow to if you invested it at various rates of return. Mind-boggling!

Budgeting and tracking your expenses gives you a strong sense of where your money goes and can help you reach your financial goals, whether they are saving for a down payment on a house, starting a college fund for your kids, buying a new car, planning for retirement, paying off the credit cards, or saving for that trip to Aruba.

Since financial matters are one of the leading causes of marital discord and divorce, getting a handle on your spending, implementing a budget, and saving for the future can also have positive effects on your relationship with your spouse or partner.

Thirst for Success

Success does not come to everybody but to only those that yearn and work for it. However, the way and manner at which we classify success differ. To some, success is measured by how money they have in your bank account while to others, success is the degree of accomplishment they attain on personal and/or organisational pedestal.