Personal finance is for an individual or household rather than an organization, or companies. It includes the area of investment, savings, future plan after retirement, educational spending, for buying real estate or any properties, etc. It refers to the entire field from the individual’s point of view or any other sectors that is providing a fund for a person or an entire family. Personal finance majorly includes the five areas; let us see one by one.
- Income: It is process of receiving money from any public or private organizations for our monthly work and used it for buying some things for our households, or buying gifts for our loved ones, paying some bills, or we shall save this income for our future use, etc. Nowadays at least one person in a family should have an income in order to exist in the world. If we want to live in a sophisticated life, then both the partners in a family should have an income. Income is the basic one that everyone needed to survive in this competitive world.
- Spending: Spending is the word which is antonym to the income .It is the process through we can lose our money in several ways such as paying bills, buying some expenditures, donating the money to some orphanage, etc… If we have an income then definitely we should have a spending also. Without spending our life cannot be completed. Spending is also necessarily we needed in our life.
- Savings: If we have a surplus of money after the spending then it is known as savings. We can save our money by keeping it in bank or in mutual funds. If we don’t like bank savings then we keep it as cash with ourselves. But bank savings is more secured and it is very helpful for us in a critical situation. Savings is also an important part in our life. Savings makes our future more bright and colourful.
- Investing: If we were not satisfied with our interest from our savings then we go for investment. We can invest our money in mutual funds, real estate, etc. If we interested then we can also invest our money in some one’s start-up business and then become a millionaire.
- Protection: Protection is the term refers to safeguarding our money for the future unexpected events. It includes the home insurance, health insurance, car insurance, etc.
Is public finance being different from personal finance?
Yes, of course public finance is different from the personal finance. Public finance is dealing with the income and expenditure of the public authorities. Here the source of income and expenditure is more and it is considered to be a macro level. The main objective of the public finance is doing welfare for the society. Hence the scope of this finance is considered to be broad.
What is corporate finance?
This financial system is extremely different from the other two ones. Its main objective is to maximize the wealth of equity and shareholders and also to maximize the profits.