Keep Your Six Personal Finance Needs Under Control | Personal ...

Many financial analysts now consider that the key to successful struggle with monetary worries is though acquiring financial competence that reduces excessive dependency on financial advisors, accountant managers and so on. This is what will help you keep your personal finances under control. A good thing to start with would be to learn the five major financial needs that guide the way people live, as it is mentioned in the traditional financial planning.
The classic financial planning defines 5 financial needs an average person has in the course of life, and sometimes at rather predictable time periods.

I think it is a very useful tip to make a list of these five monetary needs and then try to figure out what you can do in order to address each of them in a proper way:

1. Personal savings are the financial need to make a lump sum from earned revenue in order to achieve some financial goal or put something aside for a rainy day. A good example of this could be you saving money for a down-payment to purchase a home at a certain stage in the future. One more saving example is creating something like an emergency reserve, like setting your living expenses aside for 6 month. You can also save money for a longer-term goal, such as a rainy day fund or retirement reserve.

2. Investments. This monetary need implies investing an amount of money that you will not need for a certain period of time, which is expected to bring you more extra profit if compared with the standard saving schemes. A typical example of this is investing your money into stocks, aimed at generating a medium or high return in future. Another example of such investment would be a lump sum retirement bonus delivered to recently retired individuals, who may therefore invest this money in a proper way. It is natural that you will want to invest this sum in the most beneficial way that keeps with your age, fiscal goals or risk profile, so that you could increase your capital return and generate more passive income.?

3. Personal short-term loans, otherwise called online cash advance loans, represent a financial need to quickly borrow small amounts of cash for a short period of time in order to manage urgent expenses, like medical bills, car repair or college fees. This type of borrowings has become rather popular for the last time due to the recent economical crisis and instability in the labor market.

4. Insurance. This is a financial need to protect yourself from unforeseen events in your life that may exhaust your current income. For example, when a person applies for a mortgage, he or she is usually required to take a life-assurance policy, otherwise called mortgage protection insurance. This helps to ensure the mortgage will be paid back in full amount in case the person dies before the mortgage agreement expires. What is more, in addition to just acquiring life policies, you can also get insured through creating sources of passive or portfolio revenue.

5. Home loans or mortgages, are another financial need to borrow money in order to make the property-related purchase, be it a house, an apartment or a mansion.

6. Retirement management, i.e. the monetary need to make extra funds through passive and portfolio income for retirement, as the person is no longer working and thus doesn?t have a stable source of income.

Basically, the process of financial planning is something you can either do yourself, or entrust your financial advisor with. The main purpose of personal financial planning is to achieve your goals by managing your financial resources in the most efficient way. The overwhelming majority of people still find themselves unable to do financial planning themselves, so they often rely on financial advisors and institutions providing these services. However, there are not so many companies that will truly serve your financial interests. The only advises that are worth following are paid-for advises made in a written form. By paying for the service, there is at least some guarantee the financial consultant is doing his job in return for the payment, rather than applying for free consultations that are often abstract and may not be suitable for your specific situation.

Taking into consideration the recent economic crisis that has made the world?s financial system rather instable, it becomes more and more important to be an expert in your personal finances. One should be fully aware of his financial requirements, as well as the strategies, schemes and tools to meet them. As Napoleon Hill taught us, becoming your own financial consultant is a true way to reach financial success.

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