Updated: Jun 8, 2021
What is Personal Finance?
Basically, Personal Finance covers all financial related aspects of your life. Personal Finance covers budgeting, cash flows monitoring, banking, insurances, mortgages, other loans, investments, retirement planning, tax implications and estate planning.
Let us dig in the importance of Personal Finance in today's world:
1. Money is unfortunately the number two reason for divorce:
In today's world, when our living standards are rising, people are working harder to be able to live better lives and provide a better life for the one/s they love. Marriage can be sustainable based on three important factors, firstly it is love and attraction, secondly, it is respect and communication. And the third is money. We all need money to feel secure and know that we will be able to live comfortably in the long-term future.
If you and your partner both do not manage your family's finances well, it is highly likely that your marriage is under threat. Whether you admit it or not, you should start learning from now on.
2. Money gives you a sense of security (in a quantitative way):
One of the important elements in any person's needs. In this context, we will not discuss the other important elements such as feelings, love.
Money gives you the sense that you do not have to worry about starving, homeless, jobless, or not being able to raise your children well etc. Over the long term of being worried about whether you can pay the bills, or having enough money to pay the mortgage, you might get sick of lacking a sense of security. That is definitely not the life that you want. You will want to have a comfortable life with a sense of security, knowing your plan and working toward your financial freedom in the future.
3. Personal Finance is not taught at school:
Despite the importance of Personal Finance, it is not a topic that is taught at school. Statistics show that people with good personal finance skills have often learnt this from parents, relatives or from their family or friends. And each person has their own way to manage their finances which will lead to different outcomes in their future finances.
Nowadays, kids have more opportunities to learn about money than in the past thanks to the digital era. However, the importance of learning to manage finance from a young age is crucial to ensure they have a proper understanding about the value of money and how they should manage their own money.
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