Personal Finance

There are a number of different reasons as to why a person should learn about personal finance, but it is perhaps understandable that most people can not see these reasons for themselves. Personal finance is a difficult topic to learn about and for that reason a person just naturally tends to shy away from it, making excuses in an attempt to avoid having to learn about it. Well, personal finance is extremely important and here are some reasons why.

Money Flow

If you understand personal finance, then you will understand your money flow a lot better. There are a number of people that muddle through life paying their bills and their mortgage payment with the money that they have and then spending the rest of it or maybe letting it sit in their bank account. These are people that have no idea how personal finance works, so even if they end up making the right decisions they are doing it through luck.

While there is nothing inherently wrong with this particular approach, don’t you think that you would feel much better if you knew exactly what was going on with your money flow? The old saying is that knowledge is power and if you know about your money flow, you arguably have the most important individual power that exists in the world today.

Uncertainty and Fear

Human beings as a species have an irrational fear of uncertainty. In this respect, we are no different from any of the other mammalian species walking the planet, because all of them have been conditioned through thousands of generations of being eaten and killed to be afraid of what they don’t know. Uncertainty and fear therefore go hand in hand and when they do this in relation to something as important to your basic survival as money, the paralyzing effect that fear can have on you is something that is not even pleasant to think about.

Compare this situation however to a situation where somebody knows about how their money flow works and understands their entire personal finance situation. This person is not a person that is likely to be afraid, since there is no uncertainty involved with their financial situation. It is a lot easier to be afraid when you have no idea where your money is coming from and where it is going.

Utilization

If you truly understand personal finance, then another thing that you definitely should understand is utilization. A person that does not understand or appreciate personal finance is a person that is unlikely to save a lot of money, instead spending whatever they happen to have left after monthly expenses on entertainment and impulse purchasing. While there is nothing wrong with being a consumer on this level, it is something that might hamper you later on in life when your income begins to dry up and you realize you have no prospects on the horizon.

If the person does not spend a lot and does not understand personal finance, the same thing could happen. While the money in your bank account is available to you instead of having been spent on something impulsive, it is still not being utilized to its fullest extent.

Only a person with an understanding of personal finance would know that money being saved should at the very minimum be placed in a high interest savings account and later on should also probably be invested in things that yield a much higher interest rate. This difference in understanding and ultimately in utilization comes specifically from an understanding in personal finance.

Many personal finance articles have been written on the issue of money. Can’t say I have been moved to action by many. First I’d like to say it is ok that you feel down about the current situation about your personal finances. I give you permission to feel your feeling for the next 24 hours and then pull yourself by your boot straps and let’s what we can do.

There exist many a definition, I want to share with you my personal finance definition:

Financial freedom is not an event, it is a skill.

I bet right now with the current economic situation you are saying to yourself, “I just wish I could the lotto!” Boy don’t we all and yet statistics and personal finance facts show that the majority of people who win the lottery, end up broke and worse off before their winnings! Imagine that. You among the many seeking wealth, riches, fame few people realize that money isn’t the solution to their problems; the way you think about money is the problem and the solution.

I can almost see you going oh yeah, give me the money and I’ll show you change in mindset! My favorite entrepreneur of all times, Henry Ford was once asked, “What if you lost everything you own?” He responded without missing a beat: “I’d have it all back and more within 5 years.”

Being a master of your own personal finance is not about what is in the bank; it’s about the ability to acquire the skill that will show you how to produce new streams of income and wealth based on your knowledge and experience.

So before we go any further on this issue let us tackle the real problem here that is impeding your personal finance for good! Why you might ask? Well without the mastery of these 5 steps, your desire for your goal for financial success and financial freedom is highly unlikely! This is why big players in any industry have coaches, Oprah has a life coach, football players and basketball players have coaches and mentors. Tiger woods after every bad game will go in for coaching and training. Why? Those who achieve great financial success do not go it alone. They always have a team. Those who achieve great poverty have the do it yourself mentality!

Why is it important to plan personal finances? As you have figured out by now, the cliche is true, when you fail to plan, you are planning to fail!

5 Personal Finance Guidelines That Will Guarantee You Become Master Your Personal Finances

1. How do you think about money? Say you come up with an idea to do something. Do you think that will never work? Are you afraid to follow through? Are you scared of loosing money or do you see every dollar spent as an investment?

2. How do you manage and invest your time? The average man has at his disposal 6 discretionary hours. This is time they can do whatever they want. No work, no chores etc. Many will watch T.V., attend pricey sports events, spend money on meals at a restaurant and movies, see where I am going with this? Do you do personal finance budgeting?

3. How do you leverage the talents and life experiences you ALREADY POSSESS?
Most people see their experiences as failures. They only talk of how they tried to do something as failed. Thomas Edison failed more than I care to count, and yet he persisted to light the whole world. Many of life’s failures are people who did not realize how close they were to success when they gave up. Thomas A. Edison

4. Do you have a mentor and coach with a proven personal finance curriculum? This is the true measure of your desire for financial freedom. This is where you literally put your money where your mouth is, can’t afford a mentor you say? Well what was the last book you read? Gossip magazines do not count as literature sorry!

5. What do you think is “risky,” and what do you think is “safe and secure”? Most people never break into the realm of the 5% wealthy group who own 95% of the worlds resources because they want to play it safe. They want the money, the fame, the accolades but they feel they should not have to go through the process of creating this wealth. No wonder the internet and other places are full of scams and get rich quick opportunities. Remember this success does not happen overnight, but one night success does happen. Someone once said to me, it takes 3 years to be an overnight success!