Before I answer “What is Personal Finance“, let me begin with what “Finance” is defined as at a high, easy to understand level!
Finance is the art and science of managing money.
Usually “Finance” is associated with analysis of the books of a business. By books, I mean Accounting statement and other financial ratios. But Personal Finance is basically the same as the definition of Finance about, but with the metrics that the individual (here’s where the Personal aspect comes in to play) deems important to follow. Examples of Personal Finance is debt management (mainly credit card management), checking book balancing, investment (portfolio) monitoring and other select financial goals that an individual finds both relevant and useful. My favorite aspect of personal finance is that I only study the elements that pertain to me. For example, If one was deep in credit card debt, they should monitor and try to obtain the lowest interest rates per credit card. But if one didn’t have any debt, they would not be interested in that aspect of personal finance and could ignore it if they wished. Investing is another example, while the heavy debt owner in the preceding example might be focusing on reducing or better yet – eliminating debt, they would be less inclined to be studying the portfolio analysis of investing.
My Tip
If you are too young to have enough money to invest or you are in fairly heavy debt and have your money tied up paying off that debt, how can you still learn about investing? The simple answer is Investing simulation websites! Many years ago, I use to go to an online site called Investopedia Stock Simulator, to simulate stock purchases. There are many newer online options today though, so google “Stock Simulation” and pick the one you like best, or play multiple sites and then choose the one you like best or play on all of them! Perhaps you could play a different risk strategy per site…
