Having a CA doesn’t make you financially sorted. Unless you’re a monk, learning the bare minimum of personal finance is a non-negotiable life skill in today’s India. Once a wise person said, the best way to waste your money is to show off your money.
I still think and regret why I did not understand the importance of savings, investing, and personal finance management and start doing the same in my early 20s, if I start the same in my early 20s, I might possess better knowledge and have more experience than I have right now, nevertheless better to start late than never to start. If someone asks me what is your financial goals? I would not say to buy an iPhone or to buy a car or to buy any other thing, I would rather answer this as to get retire between the age of 35-40 and let allow my money to make money for myself. Further, for me, financial freedom means living my life on my own terms and not worrying about being dependent on anybody else. For me, it’s the freedom to build a life that I am proud of.
To define personal financial planning in very easy terms, we need to understand that what we mean by the term Personal Finance. In very basic terms, Personal Finance means a decision that covers the management of your own money which includes earning your money, Savings done from your earnings, and investing the same savings to get a good return for a lifetime. It encompasses budgeting, banking, insurance, mortgages, investments, retirement planning, and tax and estate planning. So, to achieve our own financial goals, one must need to plan their finances in such a way that we can able to achieve them by that age. Financial planning is important even if you have good wealth.
Personal Finance planning is not about living in penury to save and invest for an uncertain future. You can and you must live a good life now that will not cost you the good life later. For any purchase that you cannot pay out of your monthly income, do not borrow, save for it. Don’t buy depreciating assets by getting compounding liabilities against them.
“It is not your salary that makes you rich, it is your spending habits”- By Charles A. Jaffe
Now the question is why personal finance planning is important. Following are some of the reasons which make personal finance planning extremely important, Walk with me through this simple and interesting journey of understanding why personal financial planning is an important skill that a person should adopt in his life:
Here are the things to know about personal finance:
5 must-read personal finance books for those interested in understanding their finances:
Inside the Investor’s Brain: The Power of Mind Over Money
By Richard L. Peterson, M.D.
It connects the dots between psychology and investment mistakes that we’ve all made.
Investor Behaviour: The Psychology of Financial Planning and Investing
By H. Kent Baker and Victor R.
This book is a compilation of various studies and models on investor behaviour. It is a great read for aspiring fund managers and financial planners.
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money
By Carl Richards
This is one of the most relevant and my personal favourite when it comes to uncomplicating the financial jargon and understanding its practical use in the real world.
The Richest Man in Babylon
By George S. Clason
The oldest rule book for wealth creation that I know of, in which everything we know today about wealth creation is somewhere a derivative or refined version of this 140-year-old classic, which discusses the 5,000-year-old financial wisdom of one man.
Why Didn’t They Teach Me This in School?
By Cary Siegel
This is a book with clear and specific financial habits that one can follow to achieve financial freedom. An ideal read for young people who want to avoid making obvious mistakes early in life.
On the end note- “People who live below their means enjoy the freedom, which people busy upgrading their lifestyle can’t even fathom!” – Naval Ravikant