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One aspect of a college student’s life which requires constant monitoring is that of their personal finances. Recently, news sites have focused on the larger financial institutions and the effects of the ongoing economic downturn on them. However, it is the responsibility of every individual to keep informed about their own personal finances in order to assure that they are in the best shape possible.
When the phrase “personal finance” comes to mind, most people think about their checking and savings accounts. Although these are important, there is much more involved. There are many decisions an individual makes which can affect them financially. Having a balance between one’s annual income and their annual expenditures is the goal of any personal finance program and, if possible, having an excess to reinvest. It is also important for many individuals to make provisions for their later life.
Most individuals make use of a bank when dealing with their finances. The bank can offer several ways to help one have access to their money, as well as to increase their earnings. There are four basic types of accounts which are offered by most banks. The two that are most familiar are the checking and savings accounts. The checking account offers a quick way to have access to one’s money. A savings account is just that-a place to put money when one is not spending it. This account usually accrues interest, though the interest rate can be quite low. Another type of account is the money market account. This account is like a combination checking and savings account. One can withdraw their money from this account, as well as save it. The interest rate is higher than one normally finds with a savings account.There is usually a minimum amount needed to open the account, and some banks may limit the number of transactions allowed. The fourth type of account is the Certificate of Deposit (also known as the CD). This is a way of saving money for the future. The interest rate of this account varies, depending on how much one invests and the length of time it will be invested. Banking online, if possible, will allow an individual to have instant access to their financial information at any time.
There are many facets of a personal finance program. To start with, one must know how much their income will be and where it is coming from. This can include sources such as salary, investments, pensions, and social security payments. Other sources of income can include loans such as auto loans, home equity loans as well as lines of credit, or reverse mortgages (available to those 62 or older). The other part of balancing the personal finance equation involves all the expenditures one makes during the year. These include basic items such as mortgage or rent payments, utilities, food, and such. Other payments, which may vary, include things such as college and other personal loan payments, insurance payments, and deposits into retirement plans.
With the above information, one can try to make a plan to keep finances on the plus side. One basic way to keep finances in balance is to follow a budget plan. Before making a budget, one should go over the money coming in and going out for a month, looking for ways to cut expenses. When this is completed, a budget can be made, hopefully helping one to save on expenditures. This savings can be put into a savings account or invested. Many individuals make use of a financial adviser or planner who will help them make the decisions needed to remain fiscally healthy.
Personal finance is something one can read about and understand to a certain degree. However, trying to put the ideas into practice can be quite difficult at times. It requires guidance from a professional, and a lot of self control on the part of the individual. Especially today, keeping one’s finances under control should be goal for everyone.