Personal finance refers to a financial management process which an individual or a family unit engages in to budget, save and spend financial resources over a given period of time, considering various financial risks and future life events and expectations.
Financial experts argue that personal finance literacy is critical in helping an individual make rational financial decisions following the fast changing lifestyles and economic situations across the global economic landscape.
With an increasing demand for consumer financial literacy, various institutions across the world have designed tailor-made financial literacy training programmes targeting broad audiences or a specific group of people such as the youth and women.
Before personal finance was developed, family and consumer economics disciplines were taught in various colleges as part of home economics.
Though financial literacy is not part of secondary or college education curriculum, developing an understanding of how to handle your personal finances is important in regard to future career and personal development.
Financial literacy can be thought of as learning about the range of financial products and using that knowledge to increase the benefits from your personal spending, borrowing and investing.
Good credit rating provides a big room for financial flexibility unlike bad credit rating. Managing your credit starts with developing the discipline and habits to pay every bill on time. It is equally important to protect your credit by not applying for more credit than you can afford to pay off.
Controlling and managing debt can sometimes be difficult with student loans hence it’s important for students to ensure they borrow the least possible amount while putting into consideration their future income and living expenses.
Understanding your personal financial situation requires some type of plan or budget. The basic concept of a budget is listing the income you have and your expenditure. A budget can be as detailed or simple as you want.
Financial literacy empowers you with knowledge on the products you can use to save and invest. Through financial knowledge, you can learn how to open a savings or money market account as a safe place to have cash available for emergencies or for more expensive purchases.
By Ben Oroko
The writer is Communication practitioner and correspondent based in Kisii.