A lot of people roll their eyes when they hear the words “personal finance.” We get it – you have a lot of things on your mind. But personal finance isn’t something you can ignore, like the pile of laundry in the corner.
If you’re not saving, budgeting and investing (some cornerstones of personal finance), you’re leaving your financial future up to chance.
Why is Personal Finance So Important?
Why should you care about personal finance? If you’re living paycheck to paycheck, you may not think it matters. If you’re swimming in cash, you may not care. Or maybe you have advisers doing the hard work for you.
No matter where you stand, personal finance is your path to financial freedom. It helps you plan for the future (hello, retirement), and it helps you meet your money needs today.
It’s what responsible people do or should do.
When you understand the basics of personal finance, you can:
- Strategically budget, spend and save
- Manage your income based on your personal goals
- Increase your cash flow by managing your expenses
- Help secure your family’s financial future
- Understand your financial health
- Grow your assets
- You know where you stand financially
If you understand where you stand financially, how to budget, how to save and how to cut back on your expenses, you can take control of your future and build your credit. Want to buy a new car? Is it your dream to buy a house? You need to understand the basics of personal finance to achieve these goals.
Today, apps make it easy to automatically track your income and spending, making budgeting as easy as grabbing a latte at Starbucks.
Some of the most popular personal finance apps include:
While these apps are useful, they won’t cover your personal finances 100%. Please keep your eyes peeled for Qore, a personal finance app we’re developing that’s actually useful.
What We Get Wrong About Personal Finance
Like anything else related to money, there are many things that we get wrong when it comes to personal finance.
Here are some common misconceptions:
- You must be wealthy to invest, save and grow your net wort. Anyone can invest, and you don’t need a lot of money to do it. Robo advisors like Wealthfront, M1Finance and Betterment make it easy for anyone to start investing.
- Debt is a good thing. Yes, credit cards can help you build credit, but you don’t have to carry a balance month after month for this to happen.
- You should have six months of cash in an emergency fund. This is the general rule of thumb financial experts spew for emergency savings. But everyone’s financial situation is different. If you have a lot of credit card debt, saving six months of expenses may seem like an impossible hill to climb.
Personal finance is a basic thing that we all should understand. Otherwise, you’re just taking a gamble with your financial future and retirement.