Income, investment, spending, saving, and protection are the 5 basics of personal finance.
Personal Finance refers to the management of finance for future needs, which includes one’s financial resources, income, spending, saving, investment, and debt management.
Character, Collateral, Capacity, Capital, and Condition are the five C’s of Personal Finance, which are used by lenders to evaluate borrowers' creditworthiness to determine the term of the loan.
50/30/20 is the popular rule of personal finance, which means dividing income into three categories: 50% for needs, 30% for wants, and 20% for saving or debt repayment.
Personal Finance is important to manage your monthly income and have savings to invest in your future needs. Managing money for the future opens the door to a stress-free life, as all the possible expenses have been preplanned accordingly.
The main objective of personal finance is to meet future financial goals, which include marriage, higher education, retirement planning, medical expenses, and any other unknown expenses.
Knowledge of finance is important to utilize income in an organized way to grow financially.
The 5 principles of finance are-
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