personal finance

Personal finance is a term that refers to properly managing, saving, and investing your money. It also includes your tax planning, retirement planning, etc. 

Personal finance is necessary to meet your financial goals and to make sure that you cover all of your expenses on time instead of worrying at the time of payment. 

Having a proper plan can help you meet your financial goals, whether it’s about saving for your child’s education, your son or daughter’s wedding or planning an overseas trip for your family.

Two people earning the same income annually may be quite different from each other financially. One may spend carelessly whenever he/she wants to and not caring about saving or managing, and the other may have a proper plan on where to spend and how to spend.

It all comes down to being financially literate so that you use your money wisely and make good investment decisions to achieve your goals.

Personal Finance Strategies

1. Divide Your Money

Divide the income that you earn into various categories like essentials, lifestyle expenses, and long term expenses.

  • Essentials: Allocate most of your money for essentials as they are required for your survival. It includes your electricity bills, maintenance bills, grocery, transport, etc. Put around 50% of your total income to cover all your necessities.


  • Lifestyle Expenses: It’s equally important to put aside money for lifestyle expenses as this is what we enjoy. It includes going to a restaurant for dinner, shopping for clothes, etc. Put around 30% of the total income in this category.


  • Long-Term Goals: Finally, put the remaining of your income in this category. It’s very important and includes long term goals like being debt-free, going on a vacation, saving for your retirement or for emergency purposes. Put 20% of the money in this category.


Note: The above 50-30-20 allocation is to give you a fair idea about how to allocate your money. You can vary the numbers slightly depending on your personal and family goals.

2. Control Your Debt

It’s easy to get carried away when you own a credit card and using it for fancy purposes like shopping, buying expensive cars, etc.

It is easy to understand but is difficult to implement and avoid the temptation of buying expensive things. A credit card can prove to be a huge debt trap. They are quite useful if you use it wisely. 

You can buy cash flowing real estate properties using debt, which will prove to be good debt and not bad debt. 

Make sure to use as less debt as possible and to repay your debts on time.

3. Invest Your Money

It is necessary that you invest some portion of your total money in various instruments like stocks, bonds, fixed deposits, etc so that your money keeps working for you and grows. 

Keeping all your money in the bank account is a very bad idea as many banks offer interest rates quite less than the inflation rate. 

Suppose a bank offers you an interest rate of 4% and the inflation rate is 6%, then the effective interest rate on your money is -2%. This means that you are actually earning a negative interest rate and losing your money keeping it in the bank. 

Yes, it’s important to keep some of the more portions of your amount in the bank as it is safe. 

But, depending solely on banks to grow your money is not a good idea. There are many, many great instruments out there. 

You just have to have a right mindset and willingness to keep learning and then having discipline and patience.

4. Plan and Save (Early) for Your Retirement

If you are in your 20s or 30s, you may think that retirement is a long way and I don’t need to start worrying about it right now. 

But it’s not true. The sooner you start, the better and more the magic of compound interest will work in your favor. 

Set aside a small amount of money as early as you can and then see it grow when you retire.

5. Reward Yourself

In the end, budgeting and managing your money might be a challenging task for you. Reward yourself every month by going on a trip, going for dinner at your favorite restaurant, and just relax. 

It’s quite important to reward yourself and enjoy or else there will be such fun and soon you will start to find the process boring. 

Enjoy this short and beautiful life you have on this planet.


Start to think and take proper actions about your personal finances now. It’s never too late or never too early to start. 

Your future self will thank you for planning your personal finances now. Proper planning will also help you manage all your expenses well and at the same time help to grow your money. 

Start now so that you don’t regret it later!

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