Personal Finance

Personal finance refers to the management of an individual's or family's money, covering all aspects of financial decision-making. It involves taking charge of your current financial situation and planning for the future by setting financial goals, such as saving for retirement, buying a home, or funding education.

It also includes managing day-to-day financial tasks like budgeting, tracking expenses, and paying bills. A crucial part of personal finance is saving for emergencies, ensuring that unexpected situations—like medical costs or job loss—don’t derail your financial stability.

Personal finance is a term that covers managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, retirement, tax, and estate planning. The term often refers to the entire industry that provides financial services to individuals and households and advises them about financial and investment opportunities. Individual goals and desires—and a plan to fulfill those needs within your financial constraints—also impact how you approach the above items. To make the most of your income and savings, becoming financially savvy is essential—it will help you distinguish between good and bad advice and make intelligent financial decisions.

Overall, personal finance is about making informed decisions that help you achieve financial security and build wealth over time.

Personal finance is crucial because it helps ensure you are prepared for unexpected situations that could disrupt your financial stability. Without proper management of your finances, you may be vulnerable when crises arise—whether it’s due to an illness, sudden job loss, or the passing of the primary income earner in the family.

Planning for emergencies is a key component of personal finance because it allows you to handle life’s uncertainties without falling into financial hardship. It’s about being proactive, so you're not left scrambling when unexpected challenges arise.

Strategies for Personal Finances

It's best to begin financial planning as soon as possible, but it's never too late to set financial objectives that will provide you and your family with financial stability and independence. Here are some personal finance best practices and advice.

Recognize Your Earnings
If you don't know how much you make after bills and withholding, it's all for nothing. Therefore, make sure you are aware of your exact take-home salary before making any decisions.

Devise a Budget A budget

is essential to living within your means and saving enough to meet your long-term goals. The 50/30/20 budgeting method offers a great framework. It breaks down like this: Fifty percent of your take-home pay or net income, goes toward living essentials, such as rent, utilities, groceries, and transport. Thirty percent is allocated to discretionary expenses, such as dining out and shopping for clothes. Giving to charity can go here as well. Twenty percent goes toward the future—paying down debt and saving for retirement and emergencies. It’s never been easier to manage money, thanks to a growing number of smartphone personal budgeting apps that put day-to-day finances in the palm of your hand.

"Pay yourself first"

is a personal finance strategy that encourages you to prioritize saving before spending. The idea is to set aside a portion of your income for savings or investments as soon as you receive it, ensuring you have a safety net for emergencies and future goals.

By saving first, you're making sure you’re financially prepared for unexpected costs, like medical bills, car repairs, or covering expenses if you lose your job. Ideally, you should aim to save enough to cover three to 12 months of living expenses to give yourself peace of mind in case of an emergency.

Financial experts often recommend saving 20% of each paycheck every month. Once you’ve built your emergency fund, don’t stop saving. You can redirect that 20% to achieve other important financial goals, like contributing to a retirement account or saving for a down payment on a home. This way, you're continuously improving your financial security and working toward long-term financial stability.

"Limit and reduce debt"

means being mindful of how much you borrow and ensuring you don’t spend more than you earn. This helps prevent debt from spiraling out of control. While the goal is to avoid excessive borrowing, it's important to acknowledge that debt can sometimes be necessary or beneficial. For instance, taking out a mortgage to buy a house is a common and often smart way to acquire property, as it allows you to own an asset while paying off the loan over time.

However, debt should be used wisely. In some cases, it may be more cost-effective to lease or rent rather than buy. For example, renting a home or leasing a car may be cheaper than owning them outright, depending on your financial situation and needs. Similarly, subscribing to software on a lease or subscription basis can sometimes be more economical than purchasing a full license. The key is to evaluate each situation carefully and choose the option that aligns with your financial goals and prevents you from accumulating unnecessary debt.

Only Borrow What You Can Repay

Debit cards can be significant debt traps, but it’s ridiculous not to hold any in the contemporary world. They can also be used for purposes other than purchasing goods. They play an important role in determining your credit score and are an excellent tool for monitoring your spending, which can greatly help with budgeting.

Plan for Your Future
To protect your assets and ensure your wishes are honored after you pass, it's important to create a will and, depending on your circumstances, consider setting up one or more trusts. Additionally, you should review your—auto, home, life, and disability and explore ways to reduce premiums where possible. Regularly check your policies to ensure they meet your family's needs as life changes.

Other essential documents include a living will and a healthcare power of attorney. While these may not affect you directly, they can save your loved one significant time and costs if you become ill or incapacitated.

Although retirement may feel far off, it tends to come up faster than anticipated. Experts recommend that most people will need about 80% of their current income in retirement. Starting early allows you to take advantage of compounding interest—the process where small investments grow significantly over time.

With e-Barcs regular, planning for your future isn't just a goal—it's something you can achieve.

e-Barcs regular offers an impressive interest rate of over 8% per annum on savings alone, helping you grow your money more quickly. In addition, you get free mobile internet access and unlimited savings incentives, making it easier to manage your finances and earn rewards.

e-Barcs regular provides a simple way to prepare for unexpected emergencies while offering the peace of mind that comes with keeping your money in a safe, customer-friendly bank.

What are you waiting for? Download the e-Barcs app on both Google Play and the Apple App Store, and visit our website at www.e-barcsmfb.com to learn more and get started.