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Personal Finance

Personal finance encompasses the whole universe of managing individual and family finances, taking responsibility for your current and future financial situation, and setting financial goals. It also includes handling individual financial tasks and saving for emergencies.

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Frequently Asked Questions

What Is personal finance?

Personal finance is about meeting your financial goals and understanding all the routes to do this, from saving and investing, and keeping debt under control, to buying a home to planning for retirement—and coming up with a plan to accomplish these goals.It’s also the name of the industry that provides financial products to meet these goals.

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Personal Finance Definition

Why is personal finance important?

Not getting control of your personal finances can leave you unprotected when a crisis comes along–whether it’s an illness, an unexpected job loss, or the death of the family breadwinner. The pandemic that began in March 2020 showed all of these issues in sharp relief and showed the importance of planning for emergencies.

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The Special Economic Impact of Pandemics

Should I be managing my finances differently since COVID-19?

What the pandemic showed is that people are a lot more secure if they have an emergency fund, have learned to budget and have created a financial plan–one with a Plan B and Plan C. Those who haven’t done these things, should get busy doing them. It–and the war in Ukraine–are both wake-up calls that stock market crashes can happen abruptly in a crisis and that everyone needs a crisis investment plan.

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How much liability insurance do I need for my car?

For starters, you need to buy at least the minimum amount for your state. The two types of liability coverage for an auto accident are bodily injury liability (for injury to other people) and property damage liability (for property damage). Bodily injury liability specifies both a per-person liability and a total liability per accident. For any damage outside of that you will need to pay personally, unless you have an umbrella insurance policy to make up the difference.

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Do you need a smartphone to handle your money today?

It's certainly looking that way. Even Warren Buffett had to switch to one in 2020. Banking is increasingly done online, budgeting apps are more convenient to use with a phone than a desktop or laptop, and it’s easier to check on your investments. And at work and elsewhere, two-factor authentication pretty much requires having a phone. So goes getting an Uber or Lyft.

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Is Having a Smartphone a Requirement?

How do I wire money to someone?

If you need to move large amounts of money, a wire transfer–either bank to bank or via an agent such as Western Union–is the safest way to go. Expect to pay a fee and review the fine print before you agree to the transfer. It may take a few hours or days, depending on the details. Note that a wire transfer is different from an Automated Clearing House (ACH) transfer. Those are used to pay bills or move money between linked accounts.

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Personal Finance

Google Stack

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Personal Financial Statement

Ticket to Work Program

Personal Finance

Managing your money—including saving, investing, and setting financial goals—are all part of personal finance. So are areas like budgeting, retirement planning, and saving for your children’s college educations.

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Google Stack

This free document-scanning and filing app from Google photographs documents like bills and receipts, and stores them as pdfs. It’s only available for Android phones and tablets, not Apple products.

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Roadside Assistance Insurance

This is the plan you need when your car breaks down on the road. You can get this coverage from your auto insurance company, or from AAA or your credit card. Even your cellphone provider might offer it. Your vehicle’s age and mileage might be an issue on the coverage you can get, and there will likely be limits on how far you can be towed and how many service calls you get per year. Your car warranty may also cover assistance for a newer car.

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Personal Financial Statement

Your assets and liabilities–summarized on a document or spreadsheet–are what constitute a personal financial statement. Subtracting your liabilities. from your assets will yield your net worth. You will need a personal financial statement if you are applying for a mortgage or other loan. It will also let you track your personal worth over time. Interestingly, personal property like jewelry and antiques aren’t generally included in a personal financial statement.

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Ticket to Work Program

People with disabilities who hope to return to work often worry that they will lose their Medicare disability coverage. This government program allows them to keep their coverage for at least 8½ years. Ticket Holders can receive employment and other services from qualified service providers.

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Personal Finance 101: The complete guide to managing your money

onal Finance 101: The complete guide to managing your moneySkip NavigationMarketsPre-MarketsU.S. MarketsEurope MarketsChina MarketsAsia MarketsWorld MarketsCurrenciesCryptocurrencyFutures & CommoditiesBondsFunds & ETFsBusinessEconomyFinanceHealth & ScienceMediaReal EstateEnergyClimateTransportationIndustrialsRetailWealthSportsLifeSmall BusinessInvestingPersonal FinanceFintechFinancial AdvisorsOptions ActionETF StreetBuffett ArchiveEarningsTrader TalkTechCybersecurityEnterpriseInternetMediaMobileSocial MediaCNBC Disruptor 50Tech GuidePoliticsWhite HousePolicyDefenseCongressEquity and OpportunityEurope PoliticsChina PoliticsAsia PoliticsWorld PoliticsCNBC TVLive AudioLatest VideoTop VideoCEO InterviewsEurope TVAsia TVCNBC PodcastsDigital OriginalsWatchlistInvesting ClubTrust PortfolioAnalysisTrade AlertsMeeting VideosHomestretchJim's ColumnsEducationSubscribeSign InPROPro NewsPro LiveFull EpisodesStock ScreenerMarket ForecastOptions InvestingChart InvestingSubscribeSign InMenuMake ItselectALL SELECTCredit Cards Loans Banking Mortgages Insurance Credit Monitoring Personal Finance Small Business Taxes Help for Low Credit Scores Investing SELECTAll Credit CardsFind the Credit Card for YouBest Credit CardsBest Rewards Credit CardsBest Travel Credit CardsBest 0% APR Credit CardsBest Balance Transfer Credit CardsBest Cash Back Credit CardsBest Credit Card Welcome BonusesBest Credit Cards to Build CreditSELECTAll LoansFind the Best Personal Loan for YouBest Personal LoansBest Debt Consolidation LoansBest Loans to Refinance Credit Card DebtBest Loans with Fast FundingBest Small Personal LoansBest Large Personal LoansBest Personal Loans to Apply OnlineBest Student Loan RefinanceSELECTAll BankingFind the Savings Account for YouBest High Yield Savings AccountsBest Big Bank Savings AccountsBest Big Bank Checking AccountsBest No Fee Checking AccountsNo Overdraft Fee Checking AccountsBest Checking Account BonusesBest Money Market AccountsBest CDsBest Credit UnionsSELECTAll MortgagesBest MortgagesBest Mortgages for Small Down PaymentBest Mortgages for No Down PaymentBest Mortgages with No Origination FeeBest Mortgages for Average Credit ScoreAdjustable Rate MortgagesAffording a MortgageSELECTAll InsuranceBest Life InsuranceBest Homeowners InsuranceBest Renters InsuranceBest Car InsuranceTravel InsuranceSELECTAll Credit MonitoringBest Credit Monitoring ServicesBest Identity Theft ProtectionHow to Boost Your Credit ScoreCredit Repair ServicesSELECTAll Personal FinanceBest Budgeting AppsBest Expense Tracker AppsBest Money Transfer AppsBest Resale Apps and SitesBuy Now Pay Later (BNPL) AppsBest Debt ReliefSELECTAll Small BusinessBest Small Business Savings AccountsBest Small Business Checking AccountsBest Credit Cards for Small BusinessBest Small Business LoansBest Tax Software for Small BusinessSELECTAll TaxesFiling For FreeBest Tax SoftwareBest Tax Software for Small BusinessesTax RefundsTax BracketsTax TipsTax By StateTax Payment PlansSELECTAll Help for Low Credit ScoresBest Credit Cards for Bad CreditBest Personal Loans for Bad CreditBest Debt Consolidation Loans for Bad CreditPersonal Loans if You Don't Have CreditBest Credit Cards for Building CreditPersonal Loans for 580 Credit Score or LowerPersonal Loans for 670 Credit Score or LowerBest Mortgages for Bad CreditBest Hardship LoansHow to Boost Your Credit ScoreSELECTAll InvestingBest IRA AccountsBest Roth IRA AccountsBest Investing AppsBest Free Stock Trading PlatformsBest Robo-AdvisorsIndex FundsMutual FundsETFsBondsUSAINTLSearch quotes, news & videosWatchlistSIGN INMarketsBusinessInvestingTechPoliticsCNBC TVWatchlistInvesting ClubPROMenuPersonal FinancePersonal Finance 101: The complete guide to managing your moneyUpdated Tue, Jan 12 2021WATCH LIVEGood ForStudentsYoung InvestorsHome buyersRetirement Planners17 min readJosephine Flood | CNBCIntroductionCreating a financially secure life can feel like a daunting task that requires the skills of expert mapmaker and GPS programmer. You need to figure out where you are today and where you want to get to. As if that's not a big enough lift, you're then in charge of finding the best route to get from here to there without veering off into costly detours.Take a deep breath. Relax your shoulders. It's just seven steps, and that's doable.Some goals will take years — if not decades — to reach. That's part of the plan! But you also get an immediate payoff: a whole lot less stress starting the minute you dive into taking control of all the money stuff that's gnawing at you.According to a 2019 survey, 9 in 10 adults say nothing makes them happier or more confident than having their finances in order. This guide is your ticket to joining in.How to read this guideThis guide lays out the seven key steps to focus on to get you working toward long-term financial security. Follow along from start to finish, or jump to the section(s) you want to learn more about.Josephine Flood | CNBCSet short-term and long-term goalsBuilding financial security is an ongoing juggling act. Some of the money balls you have in the air are going to be goals you want to reach ASAP. Other goals might have an end date that is a decade, or decades, off but require starting sooner than later.Creating a master list of all your goals is a smart first step. It's always easier to plot a course of action when you are clear on what you're looking to achieve.It's up to you whether your list of short- and long-term goals is on a spreadsheet or pencil to paper. Just be sure to give yourself some quiet time to think it through. Here's a simple prompt: Money-wise, what would make you feel great? At its heart, that's what a financial plan delivers: the means to help you feel safe and secure, so you can focus on living, not worrying.Possibilities to consider:Short-term goals to reach in the next year or so: Build an emergency fund that can cover at least three months of living expenses. Keep new credit card charges limited to what you can pay off, in full, each month. Hint: Create and follow a budget. Pay off existing credit card balances.Longer-term goals: Start saving at least 10% of gross salary every year for your retirement. Save for a home down payment. Save for a child's (or grandchild's) education in a tax-advantaged 529 Plan.watch nowVIDEO2:2602:26How to make a budgetInvest in You: Ready. Set. Grow.Create a budgetNot exactly a sexy topic. Agreed. But creating a budget happens to be the one step that makes every other financial goal reachable.A budget is a line-item accounting of all your income — salary, maybe a side gig, perhaps income from an investment — and all your expenses. The whole purpose of a budget is to lay everything out in front of you so you can see where everything is going and make some tweaks if you're not currently on course to meet your goals.One way to analyze your current cash flow is to run it through the popular 50/30/20 budgeting framework.With this approach, the goal is to spend 50% of your after-tax income on essential costs (e.g., rent/mortgage, food, car payments) and 30% on other needed expenses (say, phone and streaming plans) or "nice to haves" such as dining out. The final 20% is for savings: building your emergency reserves, socking away money for retirement and saving up enough funds for a down payment on a house or your next car.Another framework is the 60% Solution, which divvies up spending and saving targets a bit differently — but with the same focus on making sure you don't shortchange saving for long-term goals.If your own pie charts look wildly different than either approach, that's your cue to spend some time considering how to adjust your spending or increase your income. (Hello, side gig! Or push for that promotion or raise already.) That will get you on a solid path that helps you meet short-term and long-term goals.You can fire up an Excel or Google Docs spreadsheet to help you create a budget and track your progress. There are also budgeting apps you can sync with bank accounts that can make it easier to track spending in real time. Zoom In IconArrows pointing outwardsChart displaying largest unexpected expense you or immediate family member faced. 29% say $5,000 or more.Bankrate.comBuild an emergency fundOkay, you likely need no convincing that having some money tucked away for life's endless stream of financial curveballs — pandemic layoff, the deductible for an MRI on the knee you wrenched, replacing whatever the mechanic tells you is the reason your car is acting up — is perhaps the ultimate money stress reducer.But how to create your safety cushion? You've got plenty of stressed-out company. A survey by Bankrate.com found that 60% of people say they don't have enough money saved to cover a $1,000 emergency bill. And just one grand isn't likely even enough. Bankrate said that, among survey participants who had an emergency in 2019, the average tab was $3,500.Building an emergency fund starts with setting a goal for how much protection you want to build. At a minimum, it's smart to have at least three months' worth of living expenses saved in an emergency account; six is even better. watch nowVIDEO1:3301:33How to create a financial cushionInvest in You: Ready. Set. Grow.Can't even imagine pulling that off? Stop focusing on the big end-goal. The trick with this is to create an automated system that adds money to your emergency fund each month.The best way to achieve this is to open a separate bank or credit union savings account that you designate as your emergency fund. (Keeping this money in your regular checking account introduces the temptation to use the money for non-emergencies.)Online savings banks typically pay the highest yields. You can open a high-yield online savings account and set up an automatic transfer from your checking account into it. For even less temptation to spend, decline the debit card the online bank might offer you.Josephine Flood | CNBCPay off costly credit card debtThe unofficial term for the interest rate charged on unpaid credit card balances is "insane." While it's common for banks to pay savers less than 1% interest these days on savings accounts, the average interest rate they charge credit card users with an unpaid balance is pushing 17%. Paying off high-rate debt is one of the best investment moves, and the average 17% interest rate charged on unpaid credit card balances is a big roadblock to building financial security If you have a solid credit score, you might consider checking if you can qualify for a balance transfer deal to a new card that will waive interest payments for an initial period. Not having to pay any interest for a year, or more, gives you a chunk of time to make a big dent in repayment without interest continuing to pile up.Learn MoreThe best balance transfer credit cardsIf a balance transfer isn't in the cards for you, there are two popular get-out-of-debt strategies you might consider.From a financial standpoint, the "avalanche" method makes the most sense. You pay the minimum due each month on all your credit cards, and then add more money to the card charging the highest interest rate. When the balance on your highest-rate card is paid off, you start shoveling the extra payments to the card with the next-highest interest rate. Rinse and repeat.Stymied as to where you can find the extra money to add to the highest-rate card? Time to scour that budget you've got running in the background. Maybe an expense gets totally chopped, or maybe you do some strategic nipping and tucking to reduce monthly outlays for some of your expenses.With the "snowball" strategy, on the other hand, you send your extra monthly payments to the card with the smallest unpaid balance. The allure of this pay-back method is that it provides a nice bit of psychological mojo: By focusing on the card with the smallest balance, you'll get it paid off faster. Seeing a card balance hit zero can be valuable motivation … if you need it. Otherwise, the avalanche system actually will save you more money.Learn MoreHow to pay off credit card debt.Zoom In IconArrows pointing outwardsVanguardSave for retirementEven if you have decades to go until retirement, the time to get started saving was yesterday. The longer you wait to get serious about this big honking goal, the more you will need to contribute to land in retirement in good shape.There's no one rule for how much you'll want (read: need) to save for retirement, but a solid guideline is to have a multiple of your salary set aside at different ages. As you can see below, having retirement account balances equal to two times your salary by age 35 sets you up for success. When you're 50, the aim is to have six times your salary in retirement account, and by your late 60s, having 10 times your salary saved up is recommended.watch nowVIDEO0:0000:00Here's how much money you should have saved nowMake ItThe best way to save for retirement is to use special accounts that give you valuable tax breaks. Many workplaces offer retirement accounts that you contribute to, such as 401(k) and 403(b) plans — the former by private employers, the latter by nonprofits and the government. And everyone with earned income can contribute to their own individual retirement account — or IRA, for short. Many brokerages offer IRAs.With both 401(k)/403(b) plans and IRAs, you may be able to choose between a "traditional" account or a "Roth" account. The difference is when you grab your tax break.With traditional 401(k) and 403(b) accounts, you get an upfront tax break: Your contribution reduces your taxable income for the year. Traditional IRA accounts may also qualify for this upfront tax break, depending on your income. When you eventually make withdrawals from traditional retirement accounts, you owe income tax on every dollar you withdraw.Roth 401(k) plans and IRAs deliver the tax break in retirement. The money you contribute today doesn't reduce your current income and your contribution is made with after-tax dollars. But when you make withdrawals in retirement, there will be no tax owed.There are lots of moving pieces to nailing saving for retirement. Here are some key steps to take at different life stages.In your 20s:Start saving at least 10% of your gross salary ASAP. Saving 15% is even better. If you wait until your 30s to get serious about this, you'll likely need to save 20% or more of your salary to reach your retirement target. If you can't get to 10% right out of the gate, commit to a plan to boost your contribution rate at least one percentage point a year.Don't pass up a workplace retirement saving bonus. If you have a workplace plan, chances are you were "auto-enrolled." So far, so good. But there's a trap, too: Lots of plans automatically set your initial contribution rate at a level that is too low to qualify for the maximum matching contribution they offer to all employees. Grrr! Check with human resources that you are contributing at least enough to get the maximum match.No workplace plan? Check out IRAs. If you are an independent contractor/perma-gig worker, you qualify for a SEP IRA, which allows savers to contribute more each year than regular IRAs. That said, SEP IRAs only come in the traditional format; there is no Roth version of a SEP IRA. By the way, officially, SEP IRA is a Simplified Employee Pension Individual Retirement Arrangement.Consider saving in a Roth. Chances are you've yet to hit peak earnings, right? That means you've also probably not hit your peak income-tax rate, either. When you are in a lower tax bracket, a Roth 401(k) or a Roth IRA can make a lot of sense, given there's not a big value in getting the upfront tax break from a traditional account. Anyone can contribute to a Roth 401(k) or 403(b) if the plan offers it, but there is an income cutoff (it's pretty high) to be eligible to save in Roth IRA.Learn MoreSolo entrepreneurs face a critical financial challenge: How to save for retirementHere’s how much it actually costs to attend the top 17 colleges in the USIn your 30s:Just getting started? Aim to contribute 15% of your gross salary.Don't cash out when you job-hop. If you have a workplace retirement plan, you are allowed to move the money when you leave the job. One option is to take the money as cash. This is a seriously bad move. Not only will you trigger a 10% IRS penalty, but you may also owe income tax. And most important: You've just stolen from your future self, who is going to need that money in retirement. Leave the money where it is, or consider a 401(k) rollover.Learn MoreWhat you need to know about 401 (k) rollovers.In your 40s:Fire up an online retirement calculator. Now's the time to see if you're in the ballpark of where you want to be in 20 or so years. If you're coming up short, start picking apart your budget (and lifestyle) to find ways to save more. By your 40s, most financial advisors recommend having two to three times your annual salary saved in retirement funds. Prioritize retirement over paying for college. Cold-hearted? Ruthless? Not if you work with your kid to focus on schools that are a good financial fit. Hint: It's all about the net price— that doesn't require you to raid your retirement account or slow down on your savings. That reduces the odds the kids will need to support you in retirement.Steer clear of lifestyle creep. Yep, you're making more now than in your 20s but, um, are you spending it all?Learn MoreSet a goal for how much of every raise you will commit to retirement saving.In your 50s:Here are some numbers to consider. By age 50, experts say to have six times your salary saved. By age 55, have seven times your salary saved. Get an estimate of your retirement income. There are online calculators that can help you hammer out a sense of how much monthly income you may be able to safely generate from your retirement savings, Social Security check and pension benefit — if you have one.Consider bringing in a pro to strategize. You may enjoy being a DIY retirement saver. But given all the moving parts in hatching a successful retirement income plan, you might consider consulting with a certified financial planner to work through your retirement income plan. There are many planners who charge a flat or hourly fee for a specific assignment. Or you might want to consider hiring a pro on an ongoing basis to help you manage your finances throughout your retirement.Take advantage of catch-up contributions. Once you cross the retirement savings Rubicon that is the half-century mark, the annual contribution limits for IRAs and 401(k)/403(b) plans rise. If a spin through an online retirement income calculator didn't deliver the numbers you'd like, stuff more money into your accounts now.Build tax diversification. If you've done most of your workplace retirement savings in traditional accounts, you might want to consider spending a few years saving in a Roth equivalent, if your plan offers one. Retirement planning experts recommend adding some Roth retirement savings as a way to create "tax diversification" that can help keep your IRS tab down once you retire.Learn MoreWhy now might be a good time to save in a Roth 401(k) or Roth IRA.In your 60s:Check if these numbers add up. By age 60, have eight times your salary saved. By age 67, have 10 times your salary saved.Consider waiting to claim Social Security. You can start collecting your retirement benefit at age 62. Every month you delay past 62 earns you a higher eventual payout. Wait until age 70 and your payout will be 76% higher than what you'd get if you claim eight years earlier.Earn just enough to avoid starting retirement account withdrawals. If you want (and can) continue to work full-time at a fast-paced job, that's great. But if you're ready to downshift or you were pushed out of your career, a practical strategy may be to work at a job that brings in enough to cover your living expenses, even if you can't afford to continue to add to your retirement savings. At this point, giving what you have already saved more time to compound before starting withdrawals is a smart move.Josephine Flood | CNBCInvest for retirement with a long-term focusWhat you manage to save for retirement is the biggest factor in how comfy you're going to be when it's time to step off the work treadmill. But how you invest the money in your retirement accounts plays a large role, too.Saving for retirement breaks down into how much you want to invest in stocks and how much in bonds. As if this needed pointing out now, stocks can be volatile at times, though over long periods (10 years or more) they have historically delivered higher returns than bonds.Bonds are more chill. They don't fall like stocks in rough times — in fact, they typically rise when stocks are cratering. However, they don't gain as much as stocks, either.A hidden risk to consider when you are deciding on your mix of stocks and bonds is inflation. That's the annoying fact that, over time, stuff costs more. Even at a benign 2% inflation rate, what costs $1,000 today will cost more than $1,600 in 25 years. Stocks over long stretches have produced the best inflation-beating gains.The right stock-bond mix depends on your personal goals, stomach for risk and time horizon — or number of years you expect to hold your investments. Jack Bogle, renowned founder of Vanguard and tireless advocate for individual investors, suggested this simple rule of thumb: Subtract your age from 110. That's how much, percentage-wise, you might want to keep in stocks.watch nowVIDEO1:0501:05Jack Bogle: A 'hero' to American investorsSave and InvestBorrow smartBig-ticket purchases typically involve taking out a loan. The house you want to buy. The cars you drive. Helping your kids pay for college.The key to building financial security is to only borrow what you truly need. And that can get tricky because right when you are looking to buy a house/car/college education, the lenders are focused on telling you the maximum you are allowed to borrow. No one is going to look you in the eye and suggest you borrow less. Lenders have no clue, or interest, in how the loan they are dangling in front of you impacts your ability to meet all your other goals.That's on you. Your goal should always be to borrow as little as possible to meet your goal. The less you borrow, the more money you have for other goals. You need a car? Okay, but do you need a new car tricked out with every premium package? Might your financial life benefit from considering a less expensive model? Buying a used car that has been on the road for three or so years means you're letting someone else pay for the 40% to 50% depreciation that is common in the early years after buying a new car.Learn MoreMillennial who saved $1 million: Buying a new car is 'one of the worst financial decisions you can make in your life'.Same goes with the house. A recent study found that the median price of a four-bedroom home was $100,000 more than a three-bedroom. Or consider a slightly longer commute, which can also be a big money saver.Borrowing as little as possible is how you free up hundreds of dollars in your budget to put toward other goals.Once you determine your maximum borrowing budget, doing some advance prep work to get your credit score as high as possible can help you qualify for the best deal.Personal Finance 101Table Of ContentsPersonal Finance 1011. Introduction2. Set short-term and long-term goals3. Create a budget4. Build an emergency fund5. Pay off costly credit card debt6. Save for retirement7. Invest for retirement with a long-term focus8. Borrow smartSubscribe to CNBC PROSubscribe to Investing ClubLicensing & ReprintsCNBC CouncilsSupply Chain ValuesCNBC on PeacockJoin the CNBC PanelDigital ProductsNews ReleasesClosed CaptioningCorrectionsAbout CNBCInternshipsSite MapAd ChoicesCareersHelpContactNews TipsGot a confidential news tip? 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Understanding money management and how needed funds are acquired

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Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments.

Essentially, finance represents money management and the process of acquiring needed funds. Finance also encompasses the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up financial systems.

Many of the basic concepts in finance originate from microeconomic and macroeconomic theories. One of the most fundamental theories is the time value of money, which states that a dollar today is worth more than a dollar in the future.

Key Takeaways

Finance encompasses banking, leverage or debt, credit, capital markets, money, investments, and the creation and oversight of financial systems.Basic financial concepts are based on microeconomic and macroeconomic theories. The finance field includes three main subcategories: personal finance, corporate finance, and public (government) finance.Consumers and businesses use financial services to acquire financial goods and achieve financial goals. The financial services sector is a primary driver of a nation’s economy.

Types of Finance

Individuals, businesses, and government entities all need funding to operate. Therefore, the finance field includes three main subcategories:

Personal financeCorporate financePublic (government) finance

1. Personal Finance

Personal finance is specific to an individual’s situation and activity. Therefore, related financial strategies depend largely on a person’s earnings, living requirements, goals, and desires. Financial planning involves analyzing the current financial position of individuals to formulate strategies for future needs within financial constraints.

For example, individuals must save for retirement. That requires saving or investing enough money during their working lives to fund their long-term plans. This type of financial management decision falls under personal finance.

Personal finance covers a range of activities, including using or purchasing financial products such as credit cards, insurance, mortgages, and various types of investments.

Banking is also considered a component of personal finance because individuals use checking and savings accounts as well as online or mobile payment services such as PayPal and Venmo.

2. Corporate Finance

Corporate finance refers to the financial activities related to running a corporation. A division or department usually is set up to oversee those financial activities.

For example, a large company may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help it market the securities.

Startups may receive capital from angel investors or venture capitalists in exchange for a percentage of ownership. If a company thrives and decides to go public, it will issue shares on a stock exchange through an initial public offering (IPO) to raise cash. In other cases, to budget its capital properly and effectively, a company with growth goals may need to decide which projects to finance and which to put on hold.

All of these types of decisions fall under corporate finance.

3. Public Finance

Public finance includes taxing, spending, budgeting, and debt-issuance policies that affect how a government pays for the services it provides to the public. It is a part of fiscal policy.

The federal and state governments help prevent market failure by overseeing the allocation of resources, the distribution of income, and economic stability. Regular funding is secured mostly through taxation. Borrowing from banks, insurance companies, and other nations also helps finance government spending.

In addition to managing money in day-to-day operations, a government body also has social and fiscal responsibilities. A government is expected to ensure adequate social programs for its taxpaying citizens. It must maintain a stable economy so that people can save and be assured that their money will be safe.

Financial services are not the same as financial goods. Financial goods are products, such as mortgages, stocks, bonds, and insurance policies. Financial services are services offered by financial entities. The investment advice and management a financial advisor provides for a client is one example of financial services.

Financial Services

Financial services are the services that allow consumers and businesses to acquire financial goods. One straightforward example is the financial service offered by a payment system provider when it accepts and transfers funds between payers and recipients. This includes accounts settled via checks, credit and debit cards, and electronic funds transfers.

The financial services sector is one of the most important segments of the economy. It helps drive a nation’s economy, providing the free flow of capital and liquidity in the marketplace.

The financial services sector is made up of a variety of financial firms, including banks, investment houses, finance companies, insurance companies, lenders, accounting services, and real estate brokers.

When this sector and a country’s economy are strong, consumer confidence and purchasing power rise. When the financial services sector fails, it can drag down the economy and lead to a recession.

What Are Financial Activities?

Financial activities are the initiatives and transactions that businesses, governments, and individuals undertake as they seek to further their economic goals.

They are activities that involve the inflow or outflow of money. Examples include buying and selling products (or assets), issuing stocks, initiating loans, and maintaining accounts.

When a company sells shares and makes debt repayments, it is engaging in financial activities. Similarly, individuals and governments are involved in financial activities when they take out loans and levy taxes, which further specific monetary objectives.

What Is Finance?

The term "finance" refers to financial activities that support the lives of individuals, businesses, and governments. Some of those activities include banking, borrowing, saving, and investing. Finance also refers to the study of money and financial tools that are part of a country's financial system.

Is the Financial Services Industry Important?

Yes. Companies that offer financial services have always been important because they help facilitate for individuals and businesses transactions that involve money. The financial services industry is also important for its role in the health of a country's economy. According to EIU research, the financial services industry represents around 20% of the global economy.

What Is Personal Finance?

Personal finance involves planning, implementing, and managing financial activities that impact individuals. These activities can include earning an income, spending money, saving and investing, and borrowing.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our

editorial policy.

Rice University via OpenStax. "Principles of Finance: 1.1 What Is Finance?"

Rice University via OpenStax. "Principles of Finance: 1.6 Microeconomic and Macroeconomic Matters."

Harvard Business School. "Business Insights: Time Value of Money (TVM): A Primer."

International Monetary Fund. "Financial Services: Getting the Goods."

Cybersecurity and Infrastructure Security Agency. "Financial Services Sector."

The Economist Intelligence Unit. "Financial Services Sector Analysis."

Finance vs. Economics: What's the Difference?

How the Financial Services Sector Differs From Banks

What Does Finance Mean? Its History, Types, and Importance Explained

What Is Personal Finance, and Why Is It Important?

Importance and Components of the Financial Services Sector

How to Change Careers to a Financial Sector Job

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Related Terms

What Does Finance Mean? Its History, Types, and Importance Explained

Finance is the study and management of money, investments, and other instruments. Learn about the basics of public, corporate, and personal finance.

What Is Personal Finance, and Why Is It Important?

Personal finance is about managing your budget and how best to put your money to work to realize your financial independence and goals.

What is a Financial Institution?

A financial institution (FI) is a company that focuses on dealing with financial transactions, such as investments, loans, and deposits.

Financial Services Forum: Definition, Mission, and Accomplishments

The Financial Services Forum is an organization representing the CEOs of the eight largest U.S. banks that advocates on financial and economic policy.

Combating the Financing of Terrorism (CFT) Definition

Combating the Financing of Terrorism is a set of policies aimed to deter and prevent funding of activities intended to achieve religious or ideological goals through violence.

Investment Consultant Overview: Types, Job Prospects, Pay

An investment consultant provides investors with investment products, advice, and/or planning.

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1The financial system

2Areas of finance

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2.1Personal finance

2.2Corporate finance

2.3Public finance

2.4Investment management

2.5Risk management

2.6Quantitative finance

3Financial theory

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3.1Managerial finance

3.2Financial economics

3.3Financial mathematics

3.4Experimental finance

3.5Behavioral finance

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3.7Quantum finance

4History of finance

5See also

6Notes

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8Further reading

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From Wikipedia, the free encyclopedia

This is the latest accepted revision, reviewed on 12 March 2024.

Academic discipline studying businesses and investments

For other uses, see Finance (disambiguation). "Financial" redirects here. For the Georgian newspaper, see The Financial.

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Finance is the study and discipline of money, currency and capital assets. It is related to and distinct from Economics which is the study of production, distribution, and consumption of goods and services. The discipline of Financial Economics bridges the two fields. Based on the scope of financial activities in financial systems, the discipline can be divided into personal, corporate, and public finance.[a]

In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans, bonds, shares, stocks, options, futures, etc. Assets can also be banked, invested, and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities.

A broad range of subfields within finance exists due to its wide scope. Asset, money, risk and investment management aim to maximize value and minimize volatility. Financial analysis is the viability, stability, and profitability assessment of an action or entity. In some cases, theories in finance can be tested using the scientific method, covered by experimental finance.

Some fields are multidisciplinary, such as mathematical finance, financial law, financial economics, financial engineering and financial technology. These fields are the foundation of business and accounting.

The early history of finance parallels the early history of money, which is prehistoric. Ancient and medieval civilizations incorporated basic functions of finance, such as banking, trading and accounting, into their economies. In the late 19th century, the global financial system was formed.

In the middle of the 20th century, finance emerged as a distinct academic discipline, separate from economics.[1] (The first academic journal, The Journal of Finance, began publication in 1946.) The earliest doctoral programs in finance were established in the 1960s and 1970s.[2]

Finance is today also widely studied through career-focused undergraduate and master's level programs.[3][4]

The financial system[edit]

Bond issued by The Baltimore and Ohio Railroad. Bonds are a form of borrowing used by corporations to finance their operations.

Share certificate dated 1913 issued by the Radium Hill Company

NYSE's stock exchange traders floor c 1960, before the introduction of electronic readouts and computer screens

Chicago Board of Trade Corn Futures market, 1993

Oil traders, Houston, 2009

Main article: Financial system

See also: Financial services, financial market, and Circular flow of income

As outlined, the financial system consists of the flows of capital that take place between individuals and households (personal finance), governments (public finance), and businesses (corporate finance).

"Finance" thus studies the process of channeling money from savers and investors to entities that need it.[b]

Savers and investors have money available which could earn interest or dividends if put to productive use. Individuals, companies and governments must obtain money from some external source, such as loans or credit, when they lack sufficient funds to run their operations.

In general, an entity whose income exceeds its expenditure can lend or invest the excess, intending to earn a fair return. Correspondingly, an entity where income is less than expenditure can raise capital usually in one of two ways:

(i) by borrowing in the form of a loan (private individuals), or by selling government or corporate bonds;

(ii) by a corporation selling equity, also called stock or shares (which may take various forms: preferred stock or common stock).

The owners of both bonds and stock may be institutional investors – financial institutions such as investment banks and pension funds – or private individuals, called private investors or retail investors; see Financial market participants.

The lending is often indirect, through a financial intermediary such as a bank, or via the purchase of notes or bonds (corporate bonds, government bonds, or mutual bonds) in the bond market.

The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.[6][7][8]

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Investing typically entails the purchase of stock, either individual securities or via a mutual fund, for example. Stocks are usually sold by corporations to investors so as to raise required capital in the form of "equity financing", as distinct from the debt financing described above. The financial intermediaries here are the investment banks. The investment banks find the initial investors and facilitate the listing of the securities, typically shares and bonds.

Additionally, they facilitate the securities exchanges, which allow their trade thereafter, as well as the various service providers which manage the performance or risk of these investments. These latter include mutual funds, pension funds, wealth managers, and stock brokers, typically servicing retail investors (private individuals).

Inter-institutional trade and investment, and fund-management at this scale, is referred to as "wholesale finance".

Institutions here extend the products offered, with related trading, to include bespoke options, swaps, and structured products, as well as specialized financing; this "financial engineering" is inherently mathematical, and these institutions are then the major employers of "quants" (see below).

In these institutions, risk management, regulatory capital, and compliance play major roles.

Areas of finance[edit]

As outlined, finance comprises, broadly, the three areas of personal finance, corporate finance, and public finance.

These, in turn, overlap and employ various activities and sub-disciplines – chiefly investments, risk management, and quantitative finance.

Personal finance[edit]

Wealth management consultation – here the financial advisor counsels the client on an appropriate investment strategy

Main article: Personal finance

Further information: Financial planner and Investment advisory

Personal finance is defined as "the mindful planning of monetary spending and saving, while also considering the possibility of future risk".[9] Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, investing, and saving for retirement.[10]

Personal finance may also involve paying for a loan or other debt obligations.

The main areas of personal finance are considered to be income, spending, saving, investing, and protection.[11]

The following steps, as outlined by the Financial Planning Standards Board,[12] suggest that an individual will understand a potentially secure personal finance plan after:

Purchasing insurance to ensure protection against unforeseen personal events;

Understanding the effects of tax policies, subsidies, or penalties on the management of personal finances;

Understanding the effects of credit on individual financial standing;

Developing a savings plan or financing for large purchases (auto, education, home);

Planning a secure financial future in an environment of economic instability;

Pursuing a checking or a savings account;

Preparing for retirement or other long term expenses.[13]

Corporate finance[edit]

Main articles: Corporate finance and Financial management

Further information: Strategic financial management

Corporate finance deals with the actions that managers take to increase the value of the firm to the shareholders, the sources of funding and the capital structure of corporations, and the tools and analysis used to allocate financial resources.

While corporate finance is in principle different from managerial finance, which studies the financial management of all firms rather than corporations alone, the concepts are applicable to the financial problems of all firms,[14]

and this area is then often referred to as "business finance".

Typically, then, "corporate finance" relates to the long term objective of maximizing the value of the entity's assets, its stock, and its return to shareholders, while also balancing risk and profitability. This entails[15] three primary areas:

Capital budgeting: selecting which projects to invest in – here, accurately determining value is crucial, as judgements about asset values can be "make or break"[16]

Dividend policy: the use of "excess" funds – are these to be reinvested in the business or returned to shareholders

Capital structure: deciding on the mix of funding to be used – here attempting to find the optimal capital mix re debt-commitments vs cost of capital

The latter creates the link with investment banking and securities trading, as above, in that the capital raised will generically comprise debt, i.e. corporate bonds, and equity, often listed shares.

Re risk management within corporates, see below.

Financial managers – i.e. as distinct from corporate financiers – focus more on the short term elements of profitability, cash flow, and "working capital management" (inventory, credit and debtors), ensuring that the firm can safely and profitably carry out its financial and operational objectives; i.e. that it:

(1) can service both maturing short-term debt repayments, and scheduled long-term debt payments,

and (2) has sufficient cash flow for ongoing and upcoming operational expenses.

See Financial management and Financial planning and analysis.

Public finance[edit]

President George W. Bush, speaking on the Federal Budget in 2007, here requesting additional funds from Congress

CBO: 2023 US Federal Budget Infographic

Main article: Public finance

Public finance describes finance as related to sovereign states, sub-national entities, and related public entities or agencies. It generally encompasses a long-term strategic perspective regarding investment decisions that affect public entities.[17] These long-term strategic periods typically encompass five or more years.[18] Public finance is primarily concerned with:[19]

Identification of required expenditures of a public sector entity;

Source(s) of that entity's revenue;

The budgeting process;

Sovereign debt issuance, or municipal bonds for public works projects.

Central banks, such as the Federal Reserve System banks in the United States and the Bank of England in the United Kingdom, are strong players in public finance. They act as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.[20]

Development finance, which is related, concerns investment in economic development projects provided by a (quasi) governmental institution on a non-commercial basis; these projects would otherwise not be able to get financing.

See Public utility § Finance.

A public–private partnership is primarily used for infrastructure projects: a private sector corporate provides the financing up-front, and then draws profits from taxpayers or users.

Investment management[edit]

Share prices listed in a Korean Newspaper

"The excitement before the bubble burst" – viewing prices via ticker tape, shortly before the Wall Street Crash of 1929

Modern price-ticker. This infrastructure underpins contemporary exchanges, evidencing prices and related ticker symbols. The ticker symbol is represented by a unique set of characters used to identify the subject of the financial transaction.

Main article: Investment management

See also: Active management and Passive management

Investment management[21][22][14] is the professional asset management of various securities – typically shares and bonds, but also other assets, such as real estate, commodities and alternative investments – in order to meet specified investment goals for the benefit of investors.

As above, investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts or, more commonly, via collective investment schemes like mutual funds, exchange-traded funds, or REITs.

At the heart of investment management[14] is asset allocation – diversifying the exposure among these asset classes, and among individual securities within each asset class – as appropriate to the client's investment policy, in turn, a function of risk profile, investment goals, and investment horizon (see Investor profile). Here:

Portfolio optimization is the process of selecting the best portfolio given the client's objectives and constraints.

Fundamental analysis is the approach typically applied in valuing and evaluating the individual securities.

Technical analysis is about forecasting future asset prices with past data[23]

Overlaid is the portfolio manager's investment style – broadly, active vs passive, value vs growth, and small cap vs. large cap – and investment strategy.

In a well-diversified portfolio, achieved investment performance will, in general, largely be a function of the asset mix selected, while the individual securities are less impactful. The specific approach or philosophy will also be significant, depending on the extent to which it is complementary with the market cycle.

A quantitative fund is managed using computer-based mathematical techniques (increasingly, machine learning) instead of human judgment. The actual trading also, is typically automated via sophisticated algorithms.

Risk management[edit]

Crowds gathering outside the New York Stock Exchange after the Wall Street Crash of 1929

Customers queuing outside a Northern Rock branch in the United Kingdom to withdraw their savings during the financial crisis of 2007–2008

Main article: Financial risk management

Risk management, in general, is the study of how to control risks and balance the possibility of gains; it is the process of measuring risk and then developing and implementing strategies to manage that risk.

Financial risk management[24][25] is the practice of protecting corporate value against financial risks, often by "hedging" exposure to these using financial instruments.

The focus is particularly on credit and market risk, and in banks, through regulatory capital, includes operational risk.

Credit risk[26] is the risk of default on a debt that may arise from a borrower failing to make required payments;

Market risk relates to losses arising from movements in market variables such as prices and exchange rates;

Operational risk relates to failures in internal processes, people, and systems, or to external events.

Financial risk management is related to corporate finance[14] in two ways.

Firstly, firm exposure to market risk is a direct result of previous capital investments and funding decisions;

while credit risk arises from the business's credit policy and is often addressed through credit insurance and provisioning.

Secondly, both disciplines share the goal of enhancing or at least preserving, the firm's economic value, and in this context[27] overlaps also enterprise risk management, typically the domain of strategic management.

Here, businesses devote much time and effort to forecasting, analytics and performance monitoring.

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nce | Definition, Types, & Facts | Britannica MoneyHistory & SocietyScience & TechBiographiesAnimals & NatureGeography & TravelArts & CultureGames & QuizzesVideosOn This DayOne Good FactDictionaryLifestyles & Social IssuesPhilosophy & ReligionPolitics, Law & GovernmentWorld HistoryHealth & MedicineScienceTechnologyBrowse BiographiesBirds, Reptiles & Other VertebratesBugs, Mollusks & Other InvertebratesEnvironmentFossils & Geologic TimeMammalsPlantsGeography & TravelEntertainment & Pop CultureLiteratureSports & RecreationVisual ArtsCompanionsDemystifiedImage GalleriesInfographicsListsPodcastsSpotlightSummariesThe ForumTop Questions#WTFact100 WomenBritannica KidsSaving EarthSpace Next 50Student CenterSubscribe NowMoney HomeHousehold FinanceInvestingRetirementHistory & TheoryTable of ContentsExternal WebsitesTable Of ContentsHistory & TheoryfinanceeconomicsWritten and fact-checked byThe Editors of Encyclopaedia BritannicaThe Editors of Encyclopaedia BritannicaEncyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.Table of ContentsExternal WebsitesTable Of Contents Key People:Steve BannonCharles H. KeatingCarl IcahnMichael MilkenJeffrey EpsteinTop QuestionsWhat is finance, as defined within economics?Finance, of financing, is the process of raising funds or capital for any kind of expenditure. It is the process of channeling various funds in the form of credit, loans, or invested capital to those economic entities that most need them or can put them to the most productive use.What are the areas of finance?There are three broad areas in finance that have developed specialized institutions, procedures, standards, and goals: business finance, personal finance, and public finance. In developed nations, an elaborate structure of financial markets and institutions exists to serve the needs of these areas jointly and separately.What is a financial intermediary?The institutions that channel funds from savers to users are called financial intermediaries. They include commercial banks, savings banks, savings and loan associations, and such nonbank institutions as credit unions, insurance companies, pension funds, investment companies, and finance companies.finance, the process of raising funds or capital for any kind of expenditure. Consumers, business firms, and governments often do not have the funds available to make expenditures, pay their debts, or complete other transactions and must borrow or sell equity to obtain the money they need to conduct their operations. Savers and investors, on the other hand, accumulate funds which could earn interest or dividends if put to productive use. These savings may accumulate in the form of savings deposits, savings and loan shares, or pension and insurance claims; when loaned out at interest or invested in equity shares, they provide a source of investment funds. Finance is the process of channeling these funds in the form of credit, loans, or invested capital to those economic entities that most need them or can put them to the most productive use. The institutions that channel funds from savers to users are called financial intermediaries. They include commercial banks, savings banks, savings and loan associations, and such nonbank institutions as credit unions, insurance companies, pension funds, investment companies, and finance companies.Learn about good debt and bad debt.Encyclopædia Britannica, Inc.Three broad areas in finance have developed specialized institutions, procedures, standards, and goals: business finance, personal finance, and public finance. In developed nations, an elaborate structure of financial markets and institutions exists to serve the needs of these areas jointly and separately.Business finance is a form of applied economics that uses the quantitative data provided by accounting, the tools of statistics, and economic theory in an effort to optimize the goals of a corporation or other business entity. The basic financial decisions involved include an estimate of future asset requirements and the optimum combination of funds needed to obtain those assets. Business financing makes use of short-term credit in the form of trade credit, bank loans, and commercial paper. Long-term funds are obtained by the sale of securities (stocks and bonds) to a variety of financial institutions and individuals through the operations of national and international capital markets. See business finance.Encyclopædia Britannica, Inc.Personal finance deals primarily with family budgets, the investment of personal savings, and the use of consumer credit. Individuals typically obtain mortgages from commercial banks and savings and loan associations to purchase their homes, while financing for the purchase of consumer durable goods (automobiles, appliances) can be obtained from banks and finance companies. Charge accounts and credit cards are other important means by which banks and businesses extend short-term credit to consumers. If individuals need to consolidate their debts or borrow cash in an emergency, small cash loans can be obtained at banks, credit unions, or finance companies.The level and importance of public, or government, finance has increased sharply in Western countries since the Great Depression of the 1930s. As a result, taxation, public expenditures, and the nature of the public debt now typically exert a much greater effect on a nation’s economy than previously. Governments finance their expenditures through a number of different methods, by far the most important of which is taxes. Government budgets seldom balance, however, and in order to finance their deficits governments must borrow, which in turn creates public debt. Most public debt consists of marketable securities issued by a government, which must make specified payments at designated times to the holders of its securities. See public debt.The Editors of Encyclopaedia BritannicaThis article was most recently revised and updated by Adam Augustyn.Britannica MoneyHousehold FinanceInvestingRetirementHistory & TheoryAbout UsPrivacy PolicyTerms & Conditions© 2024 Encyclopædia Britannica, Inc.

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Personal FinancePersonal FinancePersonal Finance Defined: The Guide to Maximizing Your Money

Advertiser disclosureYou’re our first priority.Every time.We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.Personal Finance Defined: The Guide to Maximizing Your MoneyPersonal finance is the process of making money, saving money, building wealth and protecting assets.By Hal M. Bundrick, CFP® Hal M. Bundrick, CFP®Senior Writer | Personal finance, financial planning, investingHal M. Bundrick is a former NerdWallet personal finance writer. He is a certified financial planner and former financial consultant and senior investment specialist for Wall Street firms. Hal advised families, business owners, nonprofits and trusts, and managed group employee retirement plans. Learn More Updated Jul 12, 2022Edited by Kathy Hinson   Kathy HinsonLead Assigning Editor | Personal finance, credit scoring, debt and money managementKathy Hinson leads the Core Personal Finance team at NerdWallet. Previously, she spent 18 years at The Oregonian in Portland in roles including copy desk chief and team leader for design and editing. Prior experience includes news and copy editing for several Southern California newspapers, including the Los Angeles Times. She earned a bachelor’s degree in journalism and mass communications from the University of Iowa.Learn More Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.Follow the writerYou’re following Hal M. Bundrick, CFP®Visit your My NerdWallet Settings page to see all the writers you're following.MORE LIKE THISMoney ManagementMaking MoneyPaying Your BillsPersonal FinanceWhat is personal finance?Personal finance is a term encompassing all of the matters related to managing your money. It might refer to things as basic as tracking your spending and saving money — or as complicated as taxation and estate planning. (Note that this is just one of a few different types of finance.)Why is personal finance important?Dealing with money can be overwhelming. In fact, 4 in 5 Americans (80%) say they put off financial decisions, and 35% of those delaying those decisions say it’s because they feel overwhelmed at the thought of them. This is according to a June 2022 NerdWallet survey conducted online by The Harris Poll.But take each element one facet at a time. Master that, then move on. Personal finance is important because it deals with four very critical stages of managing your lifestyle security: 1) Making money. 2) Saving money. 3) Building wealth. 4) Protecting assets.These missions can overlap throughout your life. It's likely you've already accomplished some of the basics. Knowing that can give you confidence as you move to another task designed to maximize your money.Examples of personal finance in everyday lifePersonal finance is more than a textbook theory. It is the foundation of how you live your life on your own terms.For example, manage your cash flow so that you have money to spare. Save for the future so you can explore career options — and not feel stuck in a job because you have a pile of bills to pay.Knowing how personal finance works is empowering.While 39% of Americans say they feel anxious when making financial decisions, according to the survey, 30% feel confident and 17% excited, suggesting it is possible to feel good when navigating your finances. Understanding how it all works is the first step in building that confidence.13 fundamentals of personal finance1. Making money.

2. Managing money.

3. Building a budget.

4. Saving money.

5. Credit cards and loans.

6. Borrowing money.

7. Your credit score.

8. Taxes.

9. Paying off debt.

10. Insurance.

11. Investing.

12. Starting or running a business.

13. Travel.Many financial fundamentals can be accomplished on your own, with a bit of organization and a commitment to make the most of what you earn. Tax and estate planning, as well as investing, often call for professional help. 1. Making moneyIt's very likely that there are millionaires in your neighborhood who you would never suspect as being wealthy. They may make a lot less money than you would guess necessary to amass such a fortune.Some people are mentally wired for frugality. Most of us have to work hard to set aside a few bucks. That's where the old saying, "it's not what you make, it's what you keep" comes into play.Here are some key personal finance concepts related to that:Net incomeYour take-home income, or net pay after all deductions, is what you have to spend. It's the building block of your budgeting process. It’s essential to know the amount of money you'll receive after all insurance, taxes and benefits are taken out so you spend only what you really have in the bank.Side incomeWant to make money, but you’re not sure where to start? NerdWallet rounded up more than two dozen legitimate ways to make money — whether it's working at home or out and about — and listed each option based on how fast you can get started and get paid.While most people prefer fast cash, don’t discount the “slow” gigs, as they may pay more in the long run.Ways to make money online and offline Back to top 2. Managing moneyBankingNearly 2 in 5 (38%) Americans are likely to put off opening a new bank account or choosing a new bank, according to the survey. But deciding which bank accounts are best can help minimize your costs and maximize your savings.Checking accountsLearn more about checking accounts, one of the simplest types of accounts available to consumers.Savings accountsGet advice on savings accounts and find accounts with low fees and the best interest rates.Certificates of depositOpening a certificate of deposit is a solid way to get guaranteed returns on your money with little risk. CDs tend to have the highest interest rates among bank accounts and are federally insured, unlike investments kept in stocks and bonds.Renting versus buying a homeShould you rent or buy a home? Use our simple rent vs. buy calculator to find out which option is best for you. Back to top 3. Building a budgetBudgeting systems are designed to help you understand and evaluate your relationship with money. While all share a common goal, they often use distinct tactics to get you there.How to choose the right budget system Back to top 4. Saving moneyInterestInterest is the money you receive for loaning out funds, and it’s also the money you pay when you borrow funds. In a nutshell, it’s the amount charged for the privilege of using someone’s money.Emergency fundAn emergency fund is money set aside to pay for large, unexpected expenses, such as:Unforeseen medical bills.Home-appliance repair or replacement.Major car fixes.Unemployment.Health savings accountsA health savings account, or HSA, is a handy way to save for medical expenses and reduce your taxable income. But not everyone can — or should — sign up for the kind of health insurance plan required to open an HSA.Saving to buy a houseFigure out how much down payment you'll need, use money-saving hacks and keep savings in the right type of account. Here are five tips on how to save for a down payment on a home.Saving for collegeA 529 plan can be a great way to save for college if you know the rules and how to optimize your investment. A 529 plan is a type of savings and investment account in which money grows tax-free as long as the withdrawals are for qualified education expenses. They are named after a section of the IRS code.There are two types of 529 plans. Get the details and see 529 plans listed by state. Back to top 5. Maximizing your credit cardsFinding the best credit cards is part art, part science.No single credit card is better than all others in all categories — or for all people. But by understanding your options and asking the right questions, you can find the card that's the best fit for your spending habits and credit situation.How to pick the best credit card for you: 4 easy stepsA beginner’s guide to points and milesCash back vs. travel: How to choose credit card rewards Back to top 6. Borrowing moneyVehicle loansGet help finding the right vehicle loan — and find options if you're having trouble. The NerdWallet Auto Loans hub has calculators and tips on affordability, down payments and fees.Student loansShould you refinance your student loans? If so, how can you find the right lender or the right payment plan? NerdWallet has compiled the resources you need to answer those questions and more.Joe Biden's student loan plan: What's happening now.Find a FAFSA guide to help with grad school financial aid.Locate student loan relief.Personal loansPersonal loans have fixed annual percentage rates, generally 6% to 36%. The loan with the lowest rate is the least expensive — and usually the best choice. Other features, including no fees, soft credit checks and whether lenders directly pay creditors if you’re consolidating debt, set some loans apart.We spent many hours reviewing loans from over 30 personal loan companies to find the best online rates and loan features.Best personal loans todayMortgagesEasily compare and find the smartest mortgage for you. Whatever your homebuying goals are, we’ve got the tools, calculators, and nerdy know-how to help you tackle them.Compare mortgage rates.Get preapproved.Calculate your mortgage payment.Explore refinance options.Estimate your home's value.Find the best mortgage lenders.All about mortgagesHome equityIt is often said that homeownership builds wealth. So, what is home equity, and how can it enhance your net worth? Home equity is the current market value of your home, minus what you owe. You’re looking for a positive number. Any gain comes from: 1) Paying down the principal balance on your loan. 2) An increase in market value over time.Home equity: What it is and why it matters. Back to top 7. Your credit scoreCredit score factorsA credit score is a number lenders use to help determine how risky it is to lend you money or give you a credit card. Your score plus things like your debt and income help lenders decide whether to approve your credit application and set the interest rate.Two things matter most to your credit score: whether you pay bills on time and how much of your credit card limits you use (less is better).What is a credit score, and what are the credit score ranges?How to build creditIf you don’t have a credit history, it can be hard to get a loan, a credit card or even an apartment.But how are you supposed to show a history of responsible repayment if no one will give you credit in the first place?Several tools can help you establish a credit history. Here's how:How to build creditIt pays to keep watch on your credit history because it can affect how much you pay for car or home insurance, your ability to rent a house or an apartment, and even your chances of getting some jobs.Monitoring your credit can be a little like checking your blood pressure to see how your new exercise program and diet are affecting it. You’re unlikely to see steady, unbroken progress, but it can let you know if you’re on the right track. A big, unexplained change in your credit score or reports should get your attention; it could signal identity theft or a mistake in your credit reports.How to restore creditRestoring damaged credit can be tougher than starting from scratch. You’re trying to show lenders and credit card issuers that despite slip-ups on your part or disasters you had nothing to do with, you’re very likely to make future payments as agreed. Consider these basic strategies for rebuilding credit. Back to top 8. TaxesFind federal income tax brackets or the best tax software, and calculate your tax bill — or refund — at the NerdWallet Taxes center. You can also track your federal and state tax refunds and learn the latest deductions and tax breaks. Back to top 9. Paying off debtStrategies for paying down debtMore than 1 in 5 (22%) Americans are likely to put off creating a debt payoff plan, according to the survey. But getting out of debt is something you can likely do yourself with the right tools and motivation.Take it from those who’ve been there. The people profiled in NerdWallet’s How I Ditched Debt series tackled thousands of dollars of debt using smart strategies and everyday tricks.NerdWallet's pay off debt calculator can help you wrangle your debts. It shows your debt-free date with your current payments, then how much faster you’d get there by paying more each month. You can also compare debt snowball and debt avalanche payoff strategies.How to get out of debt: 7 tips that workPay off your mortgage?If you’re thinking about paying off your mortgage, you’re in an enviable position. That’s assuming you are maxing out your retirement savings, have set aside an emergency fund and have found yourself with a sizable chunk of cash available to put toward that home loan debt.Or perhaps you’re considering an accelerated payment plan to knock out that mortgage faster.There are many reasons you might want to pay off your mortgage, but should you?Should I pay off my mortgage?How much debt is too much?Wondering if you have too much debt? Add up your monthly debt payments (like car loans, credit card payments and child support) and divide by monthly income to get your debt-to-income ratio. Higher DTIs can be difficult to pay off and make accessing new lines of credit difficult.For example, a DTI greater than 43% may be overwhelming and a sign you need debt relief.Debt relief/bankruptcyDo you find you're just not making progress on your debt, no matter how hard you try? If so, you might be facing overwhelming debt.To break free of this financial burden, look into your debt relief options. These tools can change the terms or amount of your debt so you can get back on your feet more quickly.But debt-relief programs are not the right solution for everyone. Understand your options and the consequences of debt relief. Back to top 10. InsuranceInsurance is the transfer of risk — for a price. You pay a company to accept limited risk in the case of death, injury, disability or damage to property. It's one of the pillars of personal finance. Your insurance needs will vary throughout life and can depend on family needs and your personal wealth.Life insuranceLife insurance protects anyone who depends on you financially. If you die unexpectedly, life insurance provides money that can replace your income, pay off a mortgage, or pay for your kids' college tuition or any other expense you want to cover.Homeowners insuranceYour home is more than just a roof over your head. It may be your most valuable asset — and one you likely can’t afford to replace out-of-pocket if disaster strikes. That’s why protecting your investment with the right homeowners insurance coverage is so important.Auto insuranceOn average, car insurance costs $1,592 annually, according to NerdWallet’s 2021 rate analysis. Shopping around for insurance quotes regularly, among other factors, can help lower your auto insurance rates.AnnuitiesAnnuities are financial products that could help provide steady income in retirement. But an annuity can be a complex creature. Read an overview of how annuities work, their pros and cons, and how annuities compare with IRAs.Annuities: What they are and how they workLong-term careIt might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. The big question is: How will you pay for it?Buying long-term care insurance is one way to prepare. Long-term care refers to a host of services that aren’t covered by regular health insurance. A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Back to top 11. InvestingTo buy stocks, you’ll first need a brokerage account, which you can set up in about 15 minutes. Then, once you’ve added money to the account, you can follow five steps to find, select and invest in individual companies.Retirement accountsAn individual retirement account, or IRA, is a tax-advantaged investment account individuals use for retirement savings. Contributions to some IRAs may be tax-deductible, or withdrawals may be tax-free.There are several types of IRAs, such as traditional, Roth, SEP or SIMPLE. IRAs are available from banks, robo-advisors or brokers.What is an individual retirement account (IRA)?Investing in a brokerage accountA standard brokerage account, or taxable account, offers no tax advantages for investing through the account — in most cases, your investment earnings will be taxed.On the plus side, that means there are very few rules for these accounts: You can pull your money out at any time, for any reason, and invest as much as you’d like.Mutual funds and exchange-traded fundsMutual fund investors own shares in a company whose business is buying shares in other companies (or in bonds, or other securities). Mutual fund investors don’t directly own the stock in the companies the fund purchases, but they do share equally in the profits or losses of the fund’s total holdings — hence the “mutual” in mutual funds.Exchange-traded funds can be traded like individual stocks but offer the diversification benefits of mutual funds. In many cases, ETFs will have a lower minimum investment than index funds.How to invest in mutual fundsFixed-income investmentsFixed-income investments, such as government and corporate bonds, can provide a steady, predictable source of income, often with lower risk than other investments.Along with stocks and stock mutual funds, fixed-income investments make up the backbone of a well-diversified investment portfolio. Back to top 12. Starting or running a businessFrom loans to lender reviews, we'll help you connect with the right resources so you can take care of business:How to get free money for your business.Compare small-business loan options and apply.View small-business lender reviews.What is working capital and why it matters. Back to top 13. TravelDreaming of a vacation? NerdWallet has the tools and tips to help you compare and find the smartest travel credit cards and loyalty programs to make your next trip as budget-friendly as possible. Back to top Learn more about personal financeWant to learn more about every facet of personal finance mentioned above? You can listen to interesting and informative conversations about money matters anytime you like with NerdWallet's podcast.The NerdWallet Smart Money podcastYour money questions, answered. That's the Smart Money podcast from NerdWallet. Have a money question? Ask one of the Nerds. Text or call us at 901-730-6373 or email [email protected], then subscribe and listen to the podcast.METHODOLOGYThis survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from June 14-16, 2022, among 2,039 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 2.8 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Sarah Borland at [email protected].Disclaimer: NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.About the authorHal M. Bundrick, CFP®FollowYou’re following Hal M. Bundrick, CFP®Visit your My NerdWallet Settings page to see all the writers you're following.newFollow for more nerdy know-howKeep up with your favorite financial topics on NerdWallet.Hal is a former NerdWallet personal finance writer. He is a certified financial planner and former financial advisor. Read moreGet started with budget planningCheck your current spending across categories to see where you can saveSEE YOUR SPENDINGDive even deeper in Personal FinanceHow to Set Financial Goalsby Lauren SchwahnThink about what you want and why. Then, assess where you are right now to determine what you need to do to get there.Read moreWhat Is Finance?by Laura McMullenThis term may relate to the money management of governments, businesses or individuals.Read moreUltimate Guide to Your Credit Score and Credit Score Rangesby Amanda Barroso, Lauren SchwahnCredit scores estimate your likelihood of repaying new debt. Learn what range your score falls in and how to grow it.Read moreExplore Personal Finance

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tokenpocket官网app下载安卓版|finances

tokenpocket官网app下载安卓版|finances

Yahoo Finance - Stock Market Live, Quotes, Business & Finance News

Personal Finance: The Complete Guide

Personal Finance 101: The complete guide to managing your money

Types of Finance and Financial Services

Google Finance - Stock Market Prices, Real-time Quotes & Business News

Finance - Wikipedia

5 Easy Ways to Take Control of Your Personal Finances

Finance | Definition, Types, & Facts | Britannica Money

What Is Personal Finance, and Why Is It Important?

Personal Finance Defined: The Guide to Maximizing Your Money - NerdWallet

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