Most people need assistance on personal finance and investing. This is because their area of specialization is usually different. Therefore, doctors, engineers, nurses, etc., may need a source or person that they can turn to for any of their personal finance and investments related queries.
Managing Personal finance:
It is absolutely necessary to manage personal finance because nobody else is going to manage it for you. Everybody has enough on their plate. Personal finance refers to income of the individual from all sources, and liabilities of the person, apart from various provisions. It also includes retirement planning and vacation planning. Within the income, liabilities, and savings, the person has to manage day to day expenses, extraordinary expenses such as those towards medical treatment, vacations, children’s education, taxes, house purchase, car purchase, retirement savings, etc. Obviously, all such expenses to relate to the individual and his or her family members.
Gaps in personal finance
It is difficult to manage purchasing many things with limited resources. Therefore, people are often forced to borrow and cover such gaps or deficits. Such borrowings may be short term or long term borrowings. They, therefore, cover the deficit in the purchase value of home or other things by availing loans. However, borrowing without really understanding the impact of such borrowing on overall financial picture of the family can lead to serious financial problems. This is where assistance on personal finance management becomes essential.
Role of medical insurance in your personal finance
It is difficult to plan medical expenses because people can never be certain which ailment can strike them at any point of time. At times people meet with accidents also. All such situations result in financial expenses and if there is no provision for this, people may not be able to afford the treatment. Saving for such personal emergencies is one way to go about it, but this way of managing such risks is extremely difficult. Even if every penny earned by the family is set aside for such emergencies, it may not be adequate. Moreover, other personal goals would remain unfulfilled. Personal finance managers guide people on issues such as life insurance and medical insurances. They are able to estimate the extent of expenditure possible at any point of time, and ask their clients to purchase a cover for such risk. Effectively, such insurances ensure that the family of their client is not caught on wrong foot.
Investing and personal finance
Investing is a crucial part of any personal finance management. Such investments may be done to keep pace with inflation, increase wealth, meet specific goals, and also generate income on retiring. Not all investing options available out there are suitable for such requirements. Some investments may carry more risks, while others may be less risky. Higher risks may result in higher returns. However, it is necessary to assess whether the client would be able to absorb the loss in worst come worst situation. Therefore, personal finance advisors study the finances of the person and decide whether such risk is worth taking and if so, to what extent.
Tax planning is also important part of personal finance
Estate and tax planning are important components of personal finance. People need to monitor their incomes and pay taxes promptly. While income stream is easy to remember, people often forget taxes, and can run short of monies at the wrong time. People may use tax helpline for knowing their tax liabilities, or avail services of personal finance managers for planning their taxes. Such services include assessment and reminders of tax obligations. Guidance on personal taxes includes suggestions such as investing in tax saving schemes, and availing home loans so that the client gets tax discounts on interest paid on loan while getting an asset against such expense.