Personal Finance Meaning
To discover a deep personal finance meaning, you need not look any further than your own life. Good or bad, your personal finances permeate every aspect of your life. If your personal finances are in good shape, you probably don’t realize the underlying integral importance of having control over the money in your life. The fact is, most people with good personal financial skills often take money for granted. They might not ever know what it’s like to be a slave to money. People with poor personal finances, however, never forget how important money is. Every moment of every day, they are never able to forget, even for an instant, the incessant horror and immense, endless stress of living life without enough money. That’s what personal finance means.
The Meaning of Personal Finance
Personal finance meanings all agree that the basics of personal finance include an ability to astutely manage your money through three main activities: budgeting, saving and investing. As we dive deeper into personal finance meanings, we gain an appreciation for the knowledge and self-control required to successfully manage personal finances. Without core financial competencies, individuals will not be able to meet financial goals such as saving for retirement. It is shocking that such a critical skill is largely neglected by the public education system.
Financial Organizations Define Personal Finance Meaning
“Possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family and global community goals” (National Financial Educator’s Council).
“All financial decisions and activities of an individual, this could include budgeting, insurance, savings, investing, debt servicing, mortgages and more” (Investopedia).
“Personal finance is defined as the management of money and financial decisions for a person or family including budgeting, investments, retirement planning and investments” (YourDictionary.com).
“Personal finance refers to how you manage your money, including your income, expenses and savings” (Quicken).
Personal Finance Knowledge Lacks Meaning Without Behavioral Change
Knowing how to budget, save and invest is a lot different than actually doing it. The difference lies in the results one will get. One person can confer no advantages in financial wellness while another will directly make progress toward financial milestones. Although it is true that the actual job of implementing financial expertise is up to the individual, financial educators can take certain steps to increase the probability that a participant will choose to apply their knowledge to their life. Some best practices for teaching personal finance are outlined below.
The Citi Foundation indicates that information gleaned from research, pilot programs, and other evaluations should be shared other stakeholders in the field so as to maximize efficiency. Repeating the same experiment or conducting similar research due to a lack of correspondence between two programs hurts the overall financial literacy movement (Citigroup). https://www.citigroup.com
The Australian government encourages national educators to form partnerships and coordinate with similar financial education programs in an effort to share best practices (Moneysmart.gov.au). https://files.MoneySmart.gov.au
“Being promoted to a top position in your organization, or even being elected to public office, does not suddenly endow you with financial literacy, if you did not acquire and develop it, earlier in your life.” – Strive Masiyiwa, founder of Econet Wireless
Adults of All Ages Don’t Know the Meaning of Good Personal Finance
More than 20% of renters aged 18-24 overspent their income by $100 per month (Time). http://business.time.com
More than one in four (27%) U.S. adults admit to not paying their bills on time (National Foundation for Credit Counseling). https://www.nfcc.org
Nearly two in ten adults roll over $2,500 or more in credit card debt each month (National Foundation for Credit Counseling). https://www.nfcc.org
Only 23% of kids surveyed indicated that they talk to their parents frequently about money (Money Confident Kids). http://www.moneyconfidentkids.com
A mere 31% of young Americans thought that their high school education adequately taught them good financial habits (Bank of America). https://about.bankofamerica.com
“Academic qualifications are important and so is financial education. They’re both important and schools are forgetting one of them.” – Robert Kiyosaki, founder of the Rich Dad Company
Take Personal Finance into Your Own Hands
Personal finance meanings paint just a brief picture of the skills that are required to intelligently manage personal capital in a manner that aligns the behavior of an individual with his or her financial goals. It is important to remember that although personal finance meanings abstract away many of the nuances associated with personal finance, an individual dedicated to improving his or her financial health has the ability to learn good personal financial habits.
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