Fundamental Principle in Personal Finance Management ...

Aug
29
2011

When a person first attains the age of majority, they will be on their way to taking responsibility for their personal finance portfolio. Whereas the parents will do their duty in providing for the child until that age, they cannot be legally responsible for any mistakes that that child makes in their personal finance history.

The art of managing the personal finance portfolio can be taught through structured learning or it might be an innate quality within the mindset of the person concerned. They have to work out strategies for ensuring that every decision that they make in terms of personal finance is backed up by real experiences and a desire to better their prospects in the long run.

Few people can genuinely claim to have a perfect record when it comes to personal finance because mistake is so commonplace. What is amazing is that people walk into the same traps that their predecessors have experienced as if they had learn nothing throughout the process. It is a unique feature of personal finance that one might have the opportunity to improve on their past conduct.

If there is a problem with the personal finance of an individual they can come back to it later in life and ensure that they are back on the straight and narrow. There are not many issues in life that can offer this kind of comeback opportunity. Some people get into very serious problems with their personal finances such that bankruptcy even becomes a viable option. Others have a relatively easier time because of inherited wealth.

However the most basic principle that will determine the personal finances of people is their ability to control income and expenditure. These two variables must be roughly equal in order to stay out of travel. The idea situation is whereby the income is greater than the expenditure and the person can begin to make some savings which can be invested at a later stage. Most people who fall into the problems of personal finance are usually spending more than they are earning. To make matters worse they might decide to borrow money in order to cover the shortfalls that have occurred in their personal budget. Therefore a poor income stream combines with crippling debt to completely entrap the person.
personal finance
Debt is one of the key problems for personal finance management. Because they can charge very high interest rates, there is a multitude of companies that will offer the public debt programs all the time with ostensibly easy payment terms. The problem is that they can vary these terms and get the person in all sorts of problems that will be very difficult to overcome.

The management of personal finance is one of those areas that need concentration and discipline to overcome. The alternative is a debt burden that is unsustainable. Some people say that the problems of personal finance can never be resolved and that it is far better to simply enjoy life and hope for the best.

Source: http://www.thexpression.net/?p=2084

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