Personal finance: What have you learned this semester?



Personal finance: What have you learned this semester?

Introduction

This is the most important semester of my university life, as after the successful completion of this semester I would have to make a final decision regarding the selection of my majors (Bodie, 2003). During the previous semesters, majority of courses I have learned were related to organizational finance, however, by the end of this semester I was able to learned the importance of personal financial planning, personal investment and saving, and avoidance of debt.

During the initial phase of this semester, my course instructor taught me the preparation and speculating personal financial plan in the most important element of individual successful life. Every important event of one's life needs proper forecasting and planning, for instance, whether individual is hoping to spend a weekend with family members, refurnishing of his home, or purchasing of a new car, all of these require proper financial planning. In addition to this, personal planning is considered as the most important aspect on individual life, as it has the potential of securing individual person life and life of people close to that individual, however, careless attitude of individual towards proper financial planning can have a negative impact on the life of individual and his love ones. Development of appropriate personal finance plan comprises of following step that are briefly discussed below.

The initial and the most essential phase in scheduling your finances is to develop an accurate monthly budget that comprises of monthly expenses, monthly saving, and investment plan (Braunstein & Welch, 2002). In these circumstances, it is important to develop a fixed budget for couple of month, as this will enable individual to formulate a successful future financial plan. After the completion of two months, period individual would be in a strong position to decide whether to continue with this budgeted plan, or to modify it to a certain extent according to the prevailing situation. Further, formulation of monthly budget will enable individual to develop a long-term plan financial goals, and would help him in minimizing the issues of short-term financial goals.

Individual because of the budget is aware of his expenses, and this protects him from the issues of debt, and helps an individual in identifying areas, where he/she can face financial issues in future. Development of budget is known as the backbone of strong financial plan, as it provide individual an opportunity of developing an instantaneous saving plan, particularly in situation where individual is expecting an increase in his spending. For example, two years from now my expenses would increase; as my children would be going to school or my agreement with house owner is going to expire and I have to look for new home for my family members and myself. The most important aspect of personal financial planning is that it secure the life of individual, for example, an individual habitual of developing a financial plan, would not have to worry for arranging resources for child education, would ...