Top 7 Important Personal Finance Skills
Life is so complicated to manage. Sometime it may appears as rock solid and some time like a melting cream. Money also have similar nature. We sometime surprise by seeing how easily people managing their money! WE may think how they got such skills? Go through this article, ‘Top 7 Important Personal Finance Skills‘, to find the answer and build your skills!
Situations force people to manage money independently i.e. getting first job, before and after marriage, moved to a new home etc. There would be hard times if do not have required knowledge on personal finance! It is better to assess and improve skills at the early stage to avoid such issues.
Top 7 important personal finance skills everyone should have
1. Knowledge of budgeting
2. Knowledge of debt management
3. Knowledge of personal financial planning
4. Knowledge of money saving
5. Knowledge of insurance
6. Knowledge of investing
7. Knowledge of child investments
These skills have equal importance in financial life. Read about each skills below and assess your self to make necessary changes.
1. Knowledge of budgeting finances
Budgeting is the heart of financial planning. Through budgeting, an individual able to control income and expenses. Budgeting gives sufficient control over inflow and outflow of money.
Major advantages of budgeting money
There are several advantages of having budgeting knowledge. Budgeting helps to get a perfect clutch on income against expenses, able to identify and control unnecessary spending, proper allocation of money for rotating expenses, allocating money to control debts, well idea about current savings and improvements etc. All over the above, financial life become more structured and controlled.
2. Knowledge of debt management
Debt Management is not a profession. It is an art. Debt management is easy and difficult too depends on the debt management skills.
Major advantages of debt management planning
Acquiring knowledge on debt management gives control over debts. Plan and prioritize debts, prepare elimination plans, proper allocation of money for each debt considering priority, total control over the money allocated to pay-off debts, monitor status and debt free later.
3. Knowledge of personal financial planning
All other 6 sections are under the umbrella of Personal Financial Planning. Personal financial planning is the root of all. having knowledge on other 6 areas, one would become a master in personal financial planning.
Major advantages of personal financial planning skills
planning and execution of budget for life, controlling and managing debts, taking necessary steps to get protected from consequences happening to self and family members, identifying all available possibilities to save money, able to face emergencies boldly, secure future of self, family and children by saving and investing. Here is an article on various phases of financial planning.
4. Knowledge of money saving
Knowledge on money saving have multiple advantages. Money saving needs to be practiced with daily activities!
Major advantages of money saving knowledge
Will be able to differentiate ‘needs’ and ‘wants’ to spend money wisely. Become structured on spending, identify loopholes causing unnecessary money loss, increase monthly savings through controlling spending, increase utilization power of items to its maximum, become knowledgeable on the required areas to save money from renting labors. More over that, can mentor kids, family members and others by sharing money saving tips and ideas.
5. Knowledge of insurance
Through acquiring necessary skills on insurance, an individual get knowledge on protecting self and family from every possible financial issues.
Major advantages of insurance planning skills
With insurance knowledge, once can easily assess and define required protection including financial future, control over medical expenses, protect assets from various crisis etc. All over the above, can live peacefully.
6. Knowledge of investing
Acquiring knowledge on investing have huge advantages to the financial life. It is not only a must have skill, but a necessity to plan the future successfully. Thus, investing activities known as the heart of actions to achieve future financial goals.
Major advantages of investing skills
Through having excellent investing skills, a person can assess and understand risk taking capacity, set investing goals, identify right instruments to create investment portfolio, understand the advantages and disadvantages of various investing instruments, having better idea on risks and returns of each investment products, add right mix of investment products to create portfolio for each goal, identify the best product and time to invest, monitor and balance portfolio based on age and risks etc..
7. Knowledge of child investments
Knowledge on investments for child is the final area in ‘Top 7 Important Personal Finance Skills‘. Whether it is higher education, marriage or any, to secure the future of kids, parents should have required skills on investing for the future of their children.
Major advantageous of investing for kids
Through having this skill, parents can identify the future financial needs of their kids and plan accordingly. Able to build structured saving and investing habits, analyze and identify best product bundles to create portfolio, monitor, balance and confirm the investments meet the goals etc.
Conclusion
List of excellent books available on personal finance covering each and every points. I recommend the popular book “The Total Money Makeover” from Dave Ramsey along with the workbook, would be a best one to start with!
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