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What is Personal Finance?

Personal finance is an umbrella term that encompasses everything related to money management for an individual – including but not limited to budgeting, banking, debts, mortgages, investments, retirement planning, education planning, taxation, asset management, etc. It also includes financial services provided in the industry to individuals as well as households as a family unit. The core idea of personal finance is to meet personal financial goals, whether it is to fulfill short-term financial needs such as buying a new smartphone, or long-term retirement planning, or perhaps long-term family asset management. A lot of it depends on personal income, expenses, living standards and individual goals and desires – it is important to devise a plan that takes all these factors into consideration and provides space for emergency situations as well. A strategic approach to these issues along with informed decision-making is what we call as Personal Finance.

Where can I begin?

A good way to begin is to become financially literate, so that one need can identify opportunities and threats and make smart decisions. Smart personal finance can include developing strategies to include short-term budgeting practices, creating an emergency fund for unforeseeable situations, using credit wisely and paying off debt in time, buying insurance policies, saving-up for children’s education and creating a retirement fund early on. To further understand these practices and identify financial products best suitable to needs, one must conduct online research and consult financial advisors if need be. Furthermore, it is important to keep track of the instruments one decides to use to manage personal wealth. It is a constant process of informed decisions and identifying opportunities in the finance sector that may lead to making the most of Personal Finance.

Income Generation

Another key aspect of Personal Finance is income generation and investment of available funds. Is it wise to allow all the funds that are available to us to sit in a bank account, or should one invest in various financial products such as debt and equity mutual funds, or the share-market? Having a concrete plan to not just manage available funds but to use it wisely to generate further income will result in efficient allocation of resources. As Warren Buffet aptly put it, “If you don’t find a way to make money while you sleep, you will work until you die.”


Being disciplined is key to all these practices because any careless extravagance may eventually lead to shortages of funds. Having said that, it is also important to know when one can be generous and spend on present requirements rather than saving it all up for the future. A balanced approach to spending and saving along with strategic management of funds is what we call Personal Finance.


Kenton, W., Boyle, M., & Courage, A. (2021). Personal Finance. Retrieved from: