What is important in Personal Finance?
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What is important in personal finance? This is a topic that I want to write about long time ago. But before I start talking about the 5 important things that you must concentrate in personal finance, let me tell you what I think personal finance should be.
Personal finance, like the words indicated, it is about the very personal ways to manage your money, your finance. “Ourselves” is the greatest assets to all of us, don’t you agree? We can hurt anybody easily but not ourselves. This is the nature instinct of human. Personal finance also the same, we must do everything that is good, helpful and make us feel better in our finance, in our money. We do this for ourselves, our future. So what is important in personal finance? All of them should be able to give the best to our financial future.
Financial Literacy
Financial literacy is the ability to make the appropriate decisions in personal finance management. With the correct decisions, we will have a total different future. This is why how good we are in financial literacy will determine our wealth in future. This is also why I strongly encourage myself and people around me to pay attention on financial literacy.
However, in reality this is the literacy that most people forget about. Maybe this is because we seldom touch the topic of money or learn anything about it until we grow up. When we are young, people around never tell us their money stories and experiences. In family, parents never teach the appropriate ways to manage the money to their children. In fact, most parents don’t know how to handle their own money. In school, there are no subjects that can teach us how to manage money. When we grow up, we usually claim that we are too busy to read those finance information. This make us lack of financial literacy. We never realize the problem until we make those big financial mistakes such as misusing the money until get into the deep debts
Don’t worry, you still can learn the financial literacy now. Generally, in financial literacy, we must learn how to manage our money, how to invest our money and get ourselves familiar with those basic financial terms that we use in daily basic. Once you have all this knowledge, you will understand how the financial system works and hence build a plan for your future. At least with this knowledge, you will understand the market and make a good retirement plan for yourself.
You can get started by buying and reading financial books and magazines. You also can go to the internet and search the relevant information. There are plenty of sites talks about money management over the internet for free. All you have to do is set aside a few hours per day and read it in your spare time. After some time, you will feel the difference. 
Buy/Create Assets
I strongly agree with the definition from the book of Rich Dad Poor Dad where asset is something that put money into our pockets. I never take any course about accounting and I think that definition above is the easiest way for a layman like me to understand the terms of asset and liability.
Although the definition is simple but not everyone fully understands it and apply it. Many people around me spend most of their time thinking and working so hard just to buy liabilities, something that will take their money away. Their whole mind is just focusing on how to buy new gadgets, new cars, new toys or new houses. They never think about how they should buy some assets for their future.
Maybe they are weak in financial literacy and make them can’t draw a clear line between assets and liabilities. In fact, many people believe that everything they own is called assets. This belief is quite dangerous.
If they don’t know what is asset, then they will make the wrong decision and buy liabilities that they thought is assets. Guess what, the end results is they will end up in disaster in personal finance. Again this is also another point to support that financial literacy is very important and it is the ground for your financial empire.
Your Income should Increase with Your Age
I read a few articles and reports before about how most people believe that their expenses will drop after retirement. This is a ridiculous belief. I say so because:
- Living cost is increasing due to inflation.
- Medical expenses will increase and it will appear to be the most expensive expenses in our life after retirement.
- High possibilities that you will spend more money as you are free after retirement.
It is your job to think how to maintain your income growth in order to maintain the same level of living style you have now in future. They are a lot of ways to do so. For example, you can fight for the promotion and salary increase from your job and use the extra money to save up for your retirement. However, I would like to advise you not to put so much of hopes on your job. Your salary is depending on your health and this is a dangerous income as your body will get weaker along your age until one day when you can’t handle the job. So I will recommend you to either start a part time business or learn how to invest and buy assets to generate extra income for your retirement. Yes, maybe both business and investment will take a lot of time to get the results. Everyone of us want to get the results faster. However, both of them are definitely worth to pay your time and hard works on it.
From now on, you can save up part of your salary each month and get ready to buy assets for your future.
Mind Your Own Business
Business here means your personal finance and your money. You have to take care of your own personal finance. In fact there are no body in this world can take care your personal finance.
Mind your own business simply means that you have to take care of your balance sheet, your retirement, your investment, your cash flow and your assets. If you have a job right now, what you have to do is try your best to manage your income properly and build up your assets empire for future. Sometime we cannot count on others for our future. What if they fail? If they fail, your retirement will go into the mess.
In reality, I found that the main reason someone is rich is because he/she does something differently in their spare time. Can you imagine what your life will be different if you use your spare time to learn how to invest instead of sitting in front of the TV? This is also your own business.
In a nutshell, mind your own business means you have to figure out a way and a system to transform your income into assets that bring your passive income. This is the big business for your life which you should learn and manage it properly.
It never too late…
Maybe you feel overwhelmed with all the financial information. Maybe you think that it is too late to start manage your personal finance in the proper way. No, please don’t think like that. It is never too late to manage your money. It will be late if you start tomorrow and not now. So start from now, at this moment, you should promise to yourself that you will try your best to manage your money and build up a wealthy empire for your own future. Good luck.
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