Personal Financial Management
There are only a few personal development activities that we really must take care of - managing our personal finance is one of them.
Managing something means to conduct, control, and direct it in a skilful and efficient manner. Managing also means to look after something and make decisions about it, for our day-to-day needs or, indeed, towards a desired result.
For us to thrive financially, all of the above needs to be applied to our own money matters.
Financial management is about money, the money mechanisms and the things that are worth money.
About money . . .
We take money for granted, but what is money and what is the function of money?
Money is a medium of exchange – to facilitate the exchange of goods and services.
Money serves as a unit of account – providing a consistent way value said goods and services.
Money serves as a store of value – because it is a recognised medium of exchange.
A few interesting things about money…
- there are, or have been, a few types of money: commodity money, fiat money, receipt money, fractional money and fiduciary money
- the characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability
Money mechanisms . . .
There are quite a few ways, or mechanisms, of dealing with money. These mechanisms help keep our hard earned money safe, help us track & account for it, help it retain its value, and even make it work for us. Some examples of these mechanisms are…
- budgeting, banking, insurance, mortgages, retirement planning, tax
We can use these mechanisms to retain and build wealth. A goal many of us have.
Things that are worth money . . .
With our own money, we can exchange the value of that money into a range of things that are also worth money, that are intended to help us retain and build wealth. Such as…
- savings, assets, investments, stocks, and bonds
The purpose of managing our personal finance
The reality is, money has a huge impact on how we live – on how much of a healthy, happy, safe and fulfilling life we live. So to aid this, we need to have the personal finance skills to ensure we use the money we do have, to lead the best possible healthy, happy, safe and fulfilling life.
That is the purpose of managing our personal finance.
In this channel we will discuss the many elements of personal finance and how to best manage the money you have.
Begin your learning with this very good course from the Khan Academy ->