Personal Finance Planning is about the management of Personal Money/Funds for fulfilling one’s needs. It helps individuals in managing their finances and thus achieving smooth savings Vs. expenditure. Personal Finance Management can be learned by developing Know-How about personal financial sources management, and by taking up new free online courses available for that matter.


Let’s Study in brief what is Personal Finance Planning and how it can be practiced for long-term benefits.


Personal Finance Planning is a self-driven plan for managing your own money; how it can be optimized for personal financial growth in the long run.


Let’s watch this video to learn the importance of personal finance planning.



Primary Sources of Personal Finance Planning:

  • Earnings
  • Savings

Types of Personal Finance:


  • Small Investment Plans
  • Mutual funds
  • Retire/Pension Plan schemes
  • Short-term Investment in Banks with high returns

As mentioned, your earning is the primary source of Personal Finance, start planning from the beginning, and start adopting personal finance planning.


The key steps in personal finance planning:


  • Analyze current finance status about the availability of Funds
  • Set prioritized personal finance Goal
  • Find channels and means of smart investment
  • Monitor, set plans, and Optimize

Methodology to achieve Successful Personal Finance Planning:


  • Mandatory savings of 20%-30% from earned Income
  • Minimizing unnecessary lavish expenditure
  • Thinking wisely and cautiously before spending
  • Avoiding unnecessary expenditure such as buying extra Gadgets/luxury items which are not really required for the day to day functioning
  • If required, plan, accumulate funds and then buy from accumulated Personal Funds.

Possible Obstacles for Personal Finance Process:


  • Healthcare expenditure
  • Credit card interest
  • Rising Livelihood expenditure due to market conditions

Case Study: Ramesh, a factory worker who spent his post-retirement life like a king.


Ramesh, a middle-class individual, joins a manufacturing company at the age of 20 Years for a salary of 10000 per month. Being the smart individual, he managed his finances efficiently by investing a larger share of personal money in Sort-Term deposits in Banks and Money-back Guarantee schemes, which are legal and authorized.
He got retired at the age of 55, and by that time, he owned a car, house, and had savings deposit to manage an average better lifestyle. So, how he managed to do these things?


Let’s list down few things which contributed him for this Personal Finance Management:


  • Leading calculative life by minimizing lavish expenditure which will decrease Personal Finance Saving Potential
  • Personal finance goals and easily achievable chunks of plan
  • Investment in retirement scheme, insurance schemes, and Mutual funds
  • Managing Income Vs. Spending by making money checklist for spendings and necessary buyings
  • Buying necessary assets by saved money in periodic intervals
  • Increasing saving potential based on the inflow of Personal Finance

If Ramesh can, why can’t you do it?


Lets study in brief about Personal finance Budget /Personal Finance Planning and Important tips to save More Money.


Personal finance budgeting is a crucial phase in Personal Finance Planning. It starts with stating Personal Finance Statement and a committed continual approach in increasing savings and limiting unnecessary spendings.


How personal finance budgeting is done? Let’s go through the following points:


  • The budget should contain Income Details, Type of Necessary Debts & factors indirectly affecting saving potential
  • Should define channels of Personal Finance investing & necessary details like inception date & maturity date & investment company name with contact numbers
  • A brief on Fixed /Variable expense details & type so that control the ongoing spends
  • List regular/Irregular income sources & prepare Personal Finance Plan accordingly
  • Have Strategy for unplanned expenses

Once, a personal budget is made, the next step is actual Personal Finance Planning.


The 50-20-30 Rule:


Hey! Are you confused about how much to save and spend each month?
Here’s how to get started here.
It’s the 50-20-30 Rule. The 50 percent of your income should go towards living/livelihood expenses, i.e., household expenses like Rent, including Food items/groceries; 20 percent towards savings for your short-term, medium, long-term goals; and 30 percent towards spendings including going outing/trips/recreation activities, food and travel. The idea is to create outflow buckets for better control. Individuals may change percentage accordingly but should target maximum savings.


personal financial management

Personal Finance Planning:


Personal financial planning is a terminology that covers the management of your earned money, savings, and investment. It encompasses personal finance budgeting, banking, insurance, mortgages, investments, retirement plans for future life, and tax management.


Following are Steps in Personal Finance Planning:

  • Analyze & understand the current financial situation before planning & budgeting
  • Determine personal finance goal
  • Write down a detailed plan of action for achieving long-term saving & short- term saving
  • Determine a plan of action for unplanned expenditures & measure to control unnecessary Spend
  • In a nutshell, Personal finance management is smartly managing Funds by wise saving plans & investment in retrial benefit plans, Insurances, investment return schemes

Tips on Personal Finance Management:


personal finance planning

We should keep in mind that for expenditures you have to earn and earned money should not be spent without any specific motto. Following Tips would help to manage personal finance:


  • Set clear achievable personal finance goals by referring your finance inflow
  • Decision making should be accurate & should not overburden & cross Limits
  • Defining smart personal investment plans by doing proper research online
  • Plan a smarter way of clearing current outstanding dues
  • Invest in short-term investment plans which yield good returns
  • Personal finance plan should be made by keeping a time frame in mind
  • Always target to save more than you spend

To gain a more appropriate basic understanding of all that is entailed in setting yourself up for financial success, I’d point you toward this article on Blue Shore Financial, which addresses 10 reasons why personal finance planning is essential:


  • Income Analysis: Analyzing your income to know how much you’ll be able to put toward necessary expenses, taxes, etc.
  • Cash Flow Management: Managing spending and Personal Finance planning to make the most of your acquired income.
  • Wealth Management: Protecting & Managing inherited Property if any & oversee earning options
  • Family Safety Measures: Understanding the need to address providing for and safeguarding your family (through insurance and other means).
  • Investment Overlook: Making a plan to help your personal Finance grow over periodic time.
  • Standard of Living: Guaranteeing the possible comfort due to prudent personal financial planning.
  • Financial Understanding: Making use of your own decisions and results to understand better what works in your financial management plan.
  • Assets Acquisition: Acquisition of valuable assets (Vehicles or investments in Deposit schemes, buying Mutual Funds) with low risk and limited liability.
  • Personal Savings: It is having emergency cash in hand to manage Crisis
  • Advice: Establishing a relationship with financial planning professionals to set yourself up for healthy decision-making in Personal Finance Investments.

Some of these ideas involve the same specific types of financial management strategies. However, understanding each of these points’ significance can help you get a grasp of the full complexity of a sound financial blueprint.

Check out the Top 6 Financial Skills for Non-Finance Managers in 2020!


Below are 15 handpicked Personal Finance courses for your knowledge enlightenment and growth:



1 ] Complete Personal Finance Course:


Course Outline: Learn how to easily Record your Expenses, Determine your Budget, Follow up and Monitor Expenses, and Set a Plan.


Course duration: 45 minutes


Created by Saad Merie.


You can access the course here.


Learnings from the Course:

  • Be Able To Determine Your Budget
  • Follow Up and Monitor Your Expenses
  • Put an Expenses Plan for Next 12 Months

2 ] Introduction to Financial Literacy to Teens:


Course outline: A Beginners Guide to Financial Knowledge and Literacy


Course duration: 1 Hour 8 Minutes


Created by Olufemi Akinpetide.


You can access the course here.


Learnings from the Course:


  • What are checking accounts and benefits of having one?
  • What are credit cards and how interest works?
  • How to write a check?
  • Direct Deposit Feature
  • What is a debit card and how to use one?
  • Introduction to financial decision making
  • Understanding overdraft fees and late payment penalty
  • How to use an Automated Teller Machine?

3] The Ultimate Guide to Financial Freedom:


In this course, you can study and Master personal finance with this complete guide to budgeting, credit, student loans, investing, and retirement saving.


Course duration: 27 minutes


Created by BMpowered University by BankMobile


You can access the course here.


Learnings from the Course:


  • Identify your money personality and what that means for your personal finance
  • How to make a budget and set your personal financial goals?
  • The basics of banking and what kind of bank accounts you should have
  • The basics of credit and types of inquiries
  • All about student loans and payment plans
  • Strategies for investing
  • How to plan for your retirement?

4] Personal Finance for the Employed Budget Save & Spend:


In this course, you learn How to Stop Struggling to Save Money, Save to Start a Business or Invest.


Course duration: 2 hours


Created by Tish Henderson


You can access the course here.


Learning from the Course:


You will learn how to save money in faster ways and how to set and fund your financial goals into your savings plan.



5] Personal Finance 101: Everything you need to know:


Everything you need to know about personal finance is presented through concise, engaging, and animated videos.


Course Duration: 2 hours 59 min


Created by MoneyCoach.io.


You can access the course here.


Learnings from the Course:


At the end of this course, Learner will be able to-


  • Build excellent credit
  • Manage debt, including student loans
  • Invest wisely and effortlessly
  • File a tax return
  • Get a great bank account
  • Understand credit cards
  • Understand and get six types of insurance
  • Make a spending plan
  • Buy a car
  • Find a great apartment
  • Buy a house
  • Get a jump start on retirement.

6] Making sense of your personal Finances:


Course outline: Learn to set S.M.A.R.T. financial goals and work out how much you need for your goals.


Course duration: 22 Minutes


Created by Ferris Wee, Peggy Chan, Institute for Financial Literacy


You can access the course here.


Learnings from the Course:


  • Understand and set financial goals
  • Prepare a budget
  • Save effectively
  • Manage your debt

7] Managing Your Personal Finances:


Course Outline: A short course on how to excel at personal finance planning


Course Duration: 41 Minutes


Created by Institute for Financial Literacy


You can access the course here.


Learnings from the Course:


  • Learn more about saving and budgeting
  • Learn more about managing debt
  • Learn more about insurance planning
  • Learn more about investing wisely
  • Learn more about retirement planning

8] Personal Finance:


Course Outline: Manage your money more effectively by learning practical solutions to essential investment, credit, insurance, and retirement questions.


Course Duration: Approximately 3-4 hours per week for 5 Weeks


Created by Purduex


You can access the course here.


Learnings from the Course:


  • How to manage your finances and make better financial decisions?
  • The time value of money
  • Basics of stock markets and investments
  • The proper role of credit and how to use it judiciously
  • How does insurance work?


9] Finance for Everyone


Course details: Introduction to finance course from Michigan learn to apply frameworks and smart tools for understanding and making everyday financial decisions.


Course Duration: 6 weeks


Created by Michigan x


You can access the course here.


Learnings from the course:


  • Why finance is everywhere and how it affects all of us?
  • An understanding of the financial world, and an appreciation for the beauty and power of finance
  • Gain the fundamental knowledge, skills, and tools of finance and apply them everywhere, in personal and professional situations.

10] Personal Finance investing yourself:


Course Details: How to apply basic economic and financial principles (net present value, internal rate of return, compounding) to personal financial decisions.


Course Duration: 7 weeks


Created by: Wellesley


You can access the course here.


Learnings from the course:

  • How to apply basic economic and financial principles (net present value, internal rate of return, compounding) to personal financial decisions?
  • How to model personal financial decisions using spreadsheets?

11] Finance for Non-Finance Professionals:


Course Outline: This short course surveys all the major topics covered in a full semester MBA level finance course, but with a more intuitive approach on a very high conceptual level. The goal here is to give you a roadmap and framework for how financial professionals make decisions.


Course Duration: 14 Hours


Created by: James Weston Rice University


You can access the course here.


Learnings from the course:


At the end of the course, you will develop an understanding of the major conceptual levers that push and pull on financial decision-making and how they relate to other business areas. The course should also serve as a roadmap for further your finance education. It would be an excellent introduction of any students contemplating an MBA or Finance concentration, but who has little background in the area.


12] ‘Bonds & Stocks’ by Coursera:


Course outline: This course is an introduction to bonds and stocks


Course Duration: 10 Hours


Created by: University of Michigan


You can access the course here.


Learnings from the course:


This course is an introduction to bonds and stocks and how they are valued using the principles of the time value of money (TVM) commonly in the two preceding courses in this specialization. You’ll learn how money is raised by businesses to support their operations. Since individuals and households typically lend money to governments and companies, this course will help you make personal financial decision-making. This course is part of a specialization titled “Foundational Finance for Strategic Decision Making”. It is helpful if you are interested in applying to an MBA degree program or learning the foundations of finance to be more effective in your career.


13] Managing My Money


Course outline: A course in personal financial management. It covers personal financial planning, budgeting, debt management, investments, housing, pension planning, and insurance.


Course Duration: 2 hours


Created by: The Open university


You can access the course here.


Learnings from the Course:


  • Understand how to undertake Personal financial planning, including drawing up a budget and a household balance sheet
  • Apply a systematic approach to making key financial decision
  • Understand loans, mortgages and other debt products and their costs
  • Understand the main categories of personal investments, their characteristics and the returns they provide to investors
  • Understand pension products and how to undertake pension planning
  • Understand insurance products and how they are priced.

14] Financial Literacy


Course Duration: 6 Hours


Created by: Advance learning


You can access the course here.


Learnings from the course:


This free online Financial Literacy course will teach you a range of tricks and techniques you can use to help manage your finances better. Did you know that 40% of credit card holders do not pay all their debt each month and get punished for it? Poor personal finance management can severely money your life and credit rating. This course will teach you about saving money, budgeting, dealing with debt, insurance, and retirement planning.


15] Introduction to Life Insurance & Retirement Savings


Course outline: Give you an in-depth look at life insurance and its different types, as well as Traditional Individual Retirement Accounts (IRAs) and Roth IRAs.


Course duration: 1-2 Hours


Created by: khan Academy


You can access the course here.


Learnings from the course:

This free online course will give you an in-depth look at life insurance and its different types, as well as Traditional Individual Retirement Accounts (IRAs) and Roth IRAs. Life insurance is a contract between an insurer and a policyholder whereby the insurer pays a guaranteed sum to the named beneficiaries upon the death of the insured. It is considered one of the pillars of personal finance that needs to be considered by every household.


Conclusion:



Personal finance planning is managing your money & investing in better financial schemes which will give good returns. Few key components of personal finance are income, taxes, debts, insurance, savings, retirement schemes, investments, etc. These terms talk about adequately planning personal financial management. Essential components of Personal Finance plan could be Goal Setting, Income Tax Planning, preparing checklist for managing Personal Finance, Sources of Cash flow, Investment Plans & Insurance buying, Management of debts.


Benefits of Personal Finance:


Personal finance planning benefits include the ability to effectively manage the budget for Planned/Unplanned costs, aim for higher savings for retirement, and make smart investment choices that will assist the individual in reaching his or her financial goals.

Must Visit: Personal Financial Planning


Go out and Invest!


FAQs:


What is Personal Finance planning, and how is it important?

Personal finance planning is a method of managing earned money. It is the art of managing your own earned money. It helps in maintaining financial health by minimizing the debt.


What are the components of Personal Finance Planning & How Personal Finance is Managed?

Few critical components of personal finance are Income, Taxes, Debt, Insurance, Savings, Retirement schemes, Investments & Personal finance is managed by investment & saving.

What are the critical steps for personal financial planning?

Write down your financial goals/Objectives. it will help you monitor your ways to achieve financial goals.
Investment in a liquid fund to manage any uncertainty.
Repayment of Loans in time & parameters to minimize lavish spending.
Make a plan to invest by doing continuous research.
Search out the right insurance.
Make Plan for Retirement and invest in the best Retirement scheme.
Plan for tax Payments and saving.

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