Essay Example on Personal Finance as the name describes it is the Management

Personal Finance as the name describes it is the management of personal financial needs Financial management relating to an individual or a family falls under the preview of personal finance There are two sources of acquiring finance in the real world i e internal resources and external resources In the context of financial requirements relating to a person or family it can be managed internally from the earnings and accumulated savings External resources include the loan products available in different types of personal loans credit cards and insurance claims etc Personal finance involves all the decision relating to the unforeseen expenses and safety reserve funds to meet the emergency situations Personal finance also involves the investment decisions for future planning to encounter the expected future expenses e g future requirements of a separate house personal car and university educational expenses of children etc Budget preparing is the routine task of almost every individual and family for analyzing the routine expenses and ascertaining the possible savings or loan requirements The requirement of personal finance management is essential especially for the unpredicted or surprising expenses as compared to the routine or predictable expenses 

The framework of the budgeting assists in developing the strategy for pursuing the future needs and keeping in mind the pattern of income expenses and savings With the help of budgeting tool one can bifurcate the earning to meet present household needs and for save the money for future expected expenses Bank and insurance companies are also playing a very important role in personal finance and deemed to be a segment of this personal finance by offering saving accounts and Profit Loss sharing accounts Introduction of the saving account in the banking sector helps in promoting the saving trends among the individuals It is wise to put the spare funds in a saving account rather than to put them in a personal locker at home because the deposited funds earned interest and thus increase the net worth of the individuals On other hand insurance companies offered different dedicated insurance policies to meet the foreseeable future needs of the personal finance relating to an individual or family 

The only thing is to realize at this point to analyze the requirements whether it is necessary to enter these types of loan agreements by keeping in view the necessity of the situation and avoiding from the situation of debt lock To avoid the debt lock situation sensible use of the credit facility is very necessary For example wise use of credit card facility allows an individual to use the money of the lender from 45 to 50 days without paying a single penny of interest if the full payment made by the user on the due date It can be done in this way suppose your credit card bill generated on 15th date of each month and the due date of credit card bill payment is 5th of next month If you made credit card transaction on the 16th date its bill will be generated on the 15th date of the next month and the due date would be the 5th of the 2nd month of the buying On the due date if full payment of the transaction paid by the person to the bank no interest would be charged on this transaction In this way one can use the money of the bank without paying any interest on the loan amount