In the age of consumerism, many people tend to spend more rather than save or invest their money. This behaviour is due to a lack of knowledge and awareness of personal finance.
Below are the 5 reasons why you need to learn Personal Finance.
The foundation of a financially independent person understands what personal finance is. Maybe you are experiencing a financial crisis or debt problems. The best way to get out of the situation is to learn personal finance. Start by asking persons whom you know are financially literate. Read books about personal finance. Books by Robert Kiyosaki are normally recommended for this type.
In making decisions about what kind of investments you want or the business you want to start, financial literacy in this area is a must. You cannot just throw cash on investments or businesses without studying the financial aspects. You must learn how to analyse and evaluate results, profits, returns etc.
How can you set up your financial goals if you do not know what is Personal Finance? Maybe you can, but what does it look like? How much cash do you need when you retire? When will your dream house be realized? How much do you need for your children’s education? Your starting point to set up these goals is to be financially literate.
Most people normally do mistakes, especially in the area of finances. You think you can save by swiping your card in a zero instalment purchase. Or do you think it’s good to invest in a scheme that gives you a 20% monthly return? Financial mistakes happen frequently when you are not financially literate. You do not know what are the risks and consequences involved.
Risks are Managed
Risks are inherent whether you are in investing in financial instruments or in business. Since risks are natural, it is impossible to eliminate them. There’s always a risk of loss. There’s always a risk of business collapse. The financial crisis is always a threat not just for companies or giant economies. It penetrates individually as well.
And yes, those threats and risks cannot be removed. But the good thing is, if you have a strong personal finance background, you can eventually manage risks. You can foresee events that may affect your portfolio. You can forecast results and outcomes to aid you in your financial decisions.
There is so much to learn in studying personal finance. Learn it here.