Personal Statement : Personal Finance

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Personal Finance Personal finance decision is a very important decision as it involves management of day-to-day finances of an individual or his family. Personal finance includes not only obtaining, budgeting, saving, and spending monetary resources over time but also taking into account various financial risks and future life events. It includes all activities which an individual is concerned about like investment, insurance, tax, debt servicing, mortgages etc. Financial planning involves analysing your current financial position and predicting your short-term and long-term needs. For example personal finance would include monitoring your expenditure, budgeting for an emergency fund, and paying down debt. The key component of personal…show more content…
Also in India financial planning is not done by professional financial planners like CFP but are done by share brokers who do not understand the concept of financial management in terms of life stages of an individual. In India people do not analyse their insurance amount which leaves them either under insured or over insured in which case they are paying high premiums. There is no retirement planning or estate planning which are of prime importance to any individual. Also people do not try to understand good investment options and always tend to invest heavily in less risky assets like fixed deposits or gold or they invest heavily in more risky asset like equity. However the scenario is changing to some extent now. People are gaining literacy of financial concepts and basic risk-return analysis which is a positive sign. They are also looking to have a more balanced portfolio like mutual funds and invest in a more disciplined way like Systematic Investment Plans (SIPs). Thus we have more and more financial products coming in India which helps in diversifying their portfolios. As mentioned earlier, personal finance involves financial planning. The first step in this is analysing income sources and flow of income in the house. The income is generated usually in the form of wages or salary from a job, business profit, interest earned from investments and also wealth
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