As the countdown for the ensuing year begins, it’s about time you take a quick recap of the year that was. A sum-up of instances that were fruitful and those that generated losses also have to go in for financial accountability in workplaces too in the quick recap. It’s also about time one delves the do’s and dont’s for the financial year ahead while accounting for personal finances. But foremost, let’s take a quick look at what calls for personal finances. Is it some kind of accountability that an individual has for himself? So what is ‘personal finance’ all about? It is about money management that is done for personal gains and managing your own money with a sense of accountability. A term that covers managing money by saving and investing judiciously encloses in its purview budgeting, banking, insurance, mortgages, investments, retirement planning, tax, and estate planning.
Personal Finance Entails
The first three heads, budgeting, banking, and insurance are saving plans which individual earmarks for safeguarding his retirement plans. But there are also areas in personal financial management that need accountability. They are the individual’s loans that fall in the purview of personal financial management. They account for a home loan, credit card balance, student loan, unpaid taxes, and mortgages that could be outstanding and needs planning to repay. Therefore, personal finance also covers areas such as payoffs of loans, tax planning, your personal investment goal, accumulation of money through investment in bonds, gold, and mutual funds. Your estate planning and post-retirement plans, and more. To have a full grasp of personal finances, the net worth and household cash flow has to be constantly monitored at all times to find complete accuracy in personal savings. As these savings ultimately translate into economic freedom and make for peaceful times during retirement. Any financial planning helps you draw your short-term or long-term financial goals and creates a balanced plan to meet them. Tax plans, prudent spending, and cautious budgeting help you keep your hard-earned cash safely. And ultimately, an upsurge in cash flow can lead to an increase in capital. To have a better outflow of cash, there is a requirement called ‘personal financial statement’ that which the chartered accountant charts providing an individuals’ assets and liabilities for the year.
Personal Financial Statement Accounts
For a planned personal saving that reflects in your financial management, the personal financial statement needs to be segregated into assets and liabilities. And liabilities include individual loans that could account for his credit card balance, outstanding loans of any type that’s taken, unpaid taxes, mortgages, etc. A personal balance sheet when it accounts for the assets and liabilities ensures to use the market value of the items that an individual possesses. When creating a personal balance sheet, a few points that need to be kept in mind are the market value of investments in terms of bonds, stocks, CDs, mutual funds and real estate. A detail of these investments can be understood by following guidelines on investments available in brochures, handouts, journals that investors share. In case, students who find it challenging to understand personal finance investment from the start, assignment help available online, with experts, explains the nuances of investment in a manner that is easy to understand.
Role Of Net Worth in Personal Financing
So, when you plan your personal finance for the ensuing year, the financial statement helps you document your assets, liabilities, and personal net worth. Your net worth sum is derived by subtracting assets from liabilities, which derives the net worth of an individual. It counts for ownership of your items invested such as your home, car, gold, and other assets. The net worth of an individual allows a sense of security, the reason for a peaceful life. A good net worth improves self-worth, and ultimately, gives the reason for a peaceful existence that comes with systematic and long-term planning reached through a disciplined lifestyle and an investment mechanism created for optimising wealth.
A Quick Look at the ‘Dos And Dont’s
For improved personal finance for the ensuing year ahead, the tips and tricks that will be helpful are:
-Account your spending.
-Plan before spending.
-Curb your zeal for any impulse purchase.
-Saving should be cultivated as a habit.
-Never ignore the credit report from banks.
-Keep an account of workplace benefits.
A good personal financial planning has a spate of benefits that is evident as immediately as investments are made with a little judicious planning for the year ahead. If your liabilities have increased in the year-end, financial planning a few weeks with your chartered accountant will outline your goal for the ensuing year where the plan is chalked well in advance. A financial plan helps you budget your dream project for the next year. It also allows space to plan, budget and get out of last year’s debts, if any. Personal financial planning helps to plan a good retirement plan finally leading to peace of mind. And ultimately, ‘Peace Of Mind’ with personal financial planning helps you develop an abundance mindset.
The author, Jeremy Shaw, is a skilled writer and provides finance assignment help, an academic service designed by keeping in mind the challenges faced by students in the finance subject. She won the best performer of the year while working at My Assignment Services.