A Comprehensive Guide to Personal Finance: Mastering Your Money

Table of Contents

• What Is Personal Finance? Definition and Real Life Meaning
• The Importance of Personal Finance: An Indian Perspective
• Aspects Of Personal Finance
• Personal Finance Services Offered By InfyFin
• A Step-By-Step Guide to Managing Your Personal Finance (Financial Planning)
• Personal Finance Education (Financial Literacy)

Aspects Of Personal Finance

The five aspects of personal finance are income, saving, spending, investing, and protection.

Income: The Starting Point

Income forms the basis of your financial plan. It includes any money earned from salaries, bonuses, dividends, or other revenue sources. Understanding your income allows you to set realistic budgets, save effectively, and allocate resources for investments.

You can join our franchise program to start new income source. Click here to join our Franchise Program.

Spending: Crucial Part of Budgeting

Budgeting is essential for keeping spending in check and ensuring you live within your means. A well-crafted budget helps you prioritize necessary expenses like housing, utilities, groceries, and debt payments while leaving room for discretionary spending. Many find success using the 50/30/20 rule:

• 50% for essentials (rent, utilities, groceries)
• 30% for discretionary expenses (entertainment, hobbies)
• 20% for savings, debt repayment, retirement planning and emergency fund

By tracking your expenses, you can identify areas where you can cut back and allocate more towards your savings or investments.

Saving: Building a Financial Cushion

Savings = Income – Spending

Savings act as a safety net for unexpected expenses. Financial experts recommend having an emergency fund with enough money to cover three to six months of living expenses. This fund should be kept in a highly liquid account, such as a high-yield savings account, for easy access in times of need.

Investing: Growing Wealth

Investing is a powerful tool for building wealth over time. It involves purchasing assets like stocks, bonds, real estate, or mutual funds, which can grow in value and provide returns. Investing is typically long-term, so patience and regular contributions are essential. By diversifying your portfolio, you can reduce risk and improve the potential for positive returns. Many beginners start with index funds or exchange-traded funds (ETFs) for their simplicity and diversification.

Read our detailed blog on Investments. Click here to get Financial Advisory.

Protection: Tools to Survive

Protection means tools people use to protect their financial stability from uncertain, unexpected, accidentals events like Medical Expenses, Accidental Expenses etc. Tools like Insurance, Retirement Planning, Emergency Fund and Investments can help to plan protection.

Personal Finance Services Offered By InfyFin

1. Wealth Management
2. Budgeting
3. Investments
4. Insurance
5. Debt Management (Loans, Credit Card & Other Debts)
6. Tax Management
7. Retirement Planning
8. Property Management
9. Will Management

Click here to avail our Financial Advisory service.

A Step-By-Step Guide to Managing Your Personal Finance (Financial Planning)

Financial planning is an essential task for every person to stay peaceful. Starting financial planning at an early age is an excellent idea. Many of you have not started yet and messed up your financial situation, but don’t worry—it’s never too late to start. Financial planning includes many steps, and here, we will guide you step-by-step, in our detailed blog. Click here to read it. Here is an outline of this detailed blog.

1. Identify Your Current Financial Position.

It’s mandatory to evaluate and accept our current position. We can not start planning without knowing our current financial position. You can use our “Financial Health Tool” to know your current financial position and steps to get success.

2. Your Income Sources.

Write down all your monthly and yearly income. Increasing ways of income is the best idea to get early success.

3. Create Your Budget.

Identify your spending and categorize it into 3 categories.
1. Essentials (rent, utilities, groceries, and fuel etc.)
2. Discretionary Expenses (entertainment, hobbies)
3. Savings, Debt Repayment, Retirement Planning and Emergency Fund
You can use our given template to make the budget.

4. Repay Your Debt.

Make a list of all kinds of debts taken and arrange all debts in higher to lower interest rates. Calculate your monthly EMI amount and adjust it with your budget. Try to get rid of high-interest debts as soon as possible.
Read our detailed blog on Debt Management for more clarity. Get our Debt Management service if you needed.

5. Get and Maintain Your Credit Score.

It’s important to maintain your healthy credit score to get loans. So let’s understand about credit score in India. In India, there are four credit information companies licensed by the Reserve Bank of India.
1. Transunion CIBIL (Most Popular)
2. Experian
3. Equifax
4. CRIF High Mark

A CIBIL credit score is a three-digit numeric summary of your credit history. It ranges between 300-900. Credit score ranges vary by creditor and score type, but generally fall into the following categories:
– Exceptional: 800–850
– Very good: 740–799
– Good: 670–739
– Fair: 580–669
– Poor: Under 580
You can avail of our Credit Score service if you needed.

6. Create an Emergency Fund.

An emergency fund is a protection fund for future trouble and/or unexpected expenses. There is no exact standard for creating emergency funds but generally, you should save six months of living expenses.

7. Buy Essential Insurance.

Insurance provides a safety net by protecting you and your loved ones from financial loss due to unforeseen events. Insurance is an important part of a comprehensive financial plan, as it ensures you’re protected from significant financial setbacks. Every individual should buy the essential insurance mentioned below.
1. Term Insurance
2. Health Insurance
3. Vehicle Insurance
We can help you to purchase perfect insurance for you. Contact us now.

8. Plan & Minimize Your Tax.

Tax planning helps you legally reduce your tax liability, leaving more of your income for savings or investing. Understanding the deductions, credits, and tax benefits you’re eligible for can save you money.
You can avail of our Tax Advisory service if you needed.

9. Plan Your Retirement.

You should identify the exact amount needed at the time of your retirement as per your budget, your future wishes and inflation. Now you have to plan wise investments to get this retirement amount.
We can help you to plan your retirement. Contact us now.

Personal Finance Education (Financial Literacy)

Financial literacy is key to making informed decisions. Stay updated on market trends, changes in tax laws, and evolving financial products. Regularly reading personal finance blogs, attending webinars, or consulting with financial advisors can provide insights and strategies to help you make the most of your finances.

We should learn some basic things to keep ourselves financially healthy.

1. Stay disciplined in spending your money.
2. No one can achieve financial goals in a short time. Be wise to invest your money. Your greed can feed investment scammers and hurt your financial health badly.
3. Never share your banking credentials with anyone.
4. Loans are tools to fulfil essentials, not for your entertainment. Keep your debt in control.
5. Everyone is not an expert. Appoint your Financial Advisor and Consult frequently.

---