What are the must know topics for personal accounting?

What are the 5 most important aspects of personal finance?

Though there are several aspects to personal finance, they easily fit into one of five categories: income, spending, savings, investing and protection. These five areas are critical to shaping your personal financial planning.

What is the most important aspect of personal finance?

Cash Flow Management
One of the most important (and obvious) aspects of personal finance is cash flow management. This is all about how much money is going in, and where that money goes. Getting your cash flow under control is vital before you can do anything else with your money.

What are the six key areas of personal financial planning?

Six Areas of Financial Planning

• Cash reserve levels.
• Cash reserve strategies.
• Debt management.
• Cash flow management.
• Net worth.
• Discretionary income.
• Expected large inflow/outflow.
• Lines of credit.

What are the five steps in the personal financial process?

Financial Planning Process: 5 Simple Steps

• Step One: Know Where You Stand. The first step to creating your financial plan is to understand your current financial situation. …
• Step Two: Set Your Goals. …
• Step Three: Plan for the Future. …
• Step Four: Managing Money. …
• Step Five: Review Your Plan.

What are the most common financial questions?

The Most-Asked Financial Questions, Answered

• How Do I Save More Money?
• How Do I Improve My Credit Score?
• How Much Do I Need to Save for Retirement?
• How Do I Choose a Bank for My Savings Account?
• Are Online Banks Safe?
• How Much Do I Need to Save for College?
• How Do I Save for a House?

What high school students need to know about finances?

High school students need to understand how to stay out of the most expensive forms of debt: long-term student loans, depreciating car loans, high-interest credit cards, etc. But they also need to understand when to use debt and how to manage it wisely.

What are the 7 components of financial planning?

A good financial plan contains seven key components:

• Budgeting and taxes.
• Managing liquidity, or ready access to cash.
• Financing large purchases.
• Managing your risk.
• Investing your money.
• Planning for retirement and the transfer of your wealth.
• Communication and record keeping.

What is called budget?

A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.

What two personal financial statements are most important to personal financial planning?

The two types of personal financial statements are the personal cash flow statement and the personal balance sheet. The personal cash flow statement measures your cash inflows (money you earn) and your cash outflows (money you spend) to determine if you have a positive or negative net cash flow.

What is the 1st step in personal financial planning process?

Top 5 – Key Steps in Personal Financial Planning Process

1. Establish your Goals and Objectives. First step towards financial planning process is to set the financial goal. …
2. Develop a Strategy to Meet your Goals. …
3. Gather and Analyze Information. …
4. Draft and Implement your Plan. …
5. Review your Goals and Market Situation.

What are the smart guidelines for personal financial goals?

Here’s what it means to create a SMART goal:

• Specific – State exactly what is to be done with the money involved.
• Measureable – Write the exact dollar amount needed to achieve the goal.
• Attainable – Determine how it can be reached based on your budget.
• Realistic – Do not set a goal that is unattainable or unrealistic.

How do I plan my finances?

Table of contents

1. Manage your Money.
2. Regulate your expenses wisely.
3. Maintain a personal balance sheet.
4. Dealing with surplus cash judiciously.
5. Create your personal investment Portfolio.
6. Planning for Retirement.
7. Manage your Debt wisely.
8. Get your risks covered.

What is the 50 20 30 budget rule?

The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.

What is the 70 20 10 Rule money?

70% is for monthly expenses (anything you spend money on). 20% goes into savings, unless you have pressing debt (see below for my definition), in which case it goes toward debt first. 10% goes to donation/tithing, or investments, retirement, saving for college, etc.

How can I be good at personal finance?

7 Money Management Tips to Improve Your Finances

1. Track your spending to improve your finances. …
2. Create a realistic monthly budget. …
3. Build up your savings—even if it takes time. …
4. Pay your bills on time every month. …
5. Cut back on recurring charges. …
6. Save up cash to afford big purchases. …
7. Start an investment strategy.

What are the 5 principles of money management?

The five principles are consistency, timeliness, justification, documentation, and certification.

What are the five foundations?

The Five Foundations: The five steps to financial success: (1) A $500 emergency fund; (2) Get out of debt; (3) Pay cash for a car; (4) Pay Cash for College; (5) Build wealth and give. 16. Sinking Fund: Saving money over time for a large purchase.

What are the four phases of personal financial life cycle?

There are four stages to an individual’s financial life cycle. There is the accumulation of wealth, growing or managing wealth, preserving and protecting wealth, and transferring wealth. Each phase of the cycle overlaps and needs to be managed using a comprehensive approach.

What are the 4 financial needs?

The HFN identifies financial parallels to physiological needs (income), safety (insurance), love and belonging (credit), esteem (savings), and self-actualization (investments): INCOME: The most basic financial need is income to cover basic living expenses, such as food, housing, and utilities.

What are money priorities?

Some personal financial goals might include: Saving three to six months worth of expenses. Saving $300 per month for a year to fund your next trip. Paying off high-interest debt. Getting your student loan balance under $50,000.