What is Personal Finance?

If you’ve been anxiously waiting for the newest iPhone or gadget, but don’t have the money to buy it, you know that you’re going to have to change how you manage your money to have enough money by the time the newest iPhone or gadget comes out. As much as we’d like, money doesn’t grow on trees. Wouldn’t that be nice?! So how do you manage your money to have enough to buy what you want? You can apply personal finance principles!

What is personal finance?

Personal finance is the management of your money.  It involves saving and investing your money to make it grow.  The common areas of personal finance include banking, investing, budgeting, retirement planning, and mortgages.

Back to the matter at hand, how are you going to come up with the money to buy the iPhone or newest gadget?

  1. Start saving money:
    • you’re going to have to stop spending on things that are not necessary.  For example, instead of going to Starbucks every day, you could cut down to going once a week.
    • You can work a second job or work extra small jobs for people you know.
  1. Stick to a budget:
    • When you get paid, tell your money where to go and do not deviate from it. For example, if you decide you’re going to set aside $150/month for gas, $150/month for groceries, and $150/month for dining out, make sure you do not spend more than this.  Make sure the budget you’re creating also includes a savings category where you can set your goal to save a specific amount per month.  For example, if you set your intention to save $100 per month, in a year, you’ll have $1,200 saved!  That’s enough to buy yourself the newest iPhone!
  1. Invest your money:
    • You can buy mutual funds, stocks, or other investment options to make your money grow.
  1. Place your current savings in a high-yield savings bank account that pays you a decent interest rate to make extra cash.

If you start making some of these changes, you’ll be applying personal finance principles that will help you get that iPhone or gadget soon enough!  You just have to be patient, continue working towards your goal, and be persistent.  Just think about how awesome it’s going to be watching your favorite Netflix show on your new phone!

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