The basics of your personal finances are growth, stability, security, protection as well as management. Security begins your investment growth.
The concept of personal finance is broad, but to begin, we would like to talk about what may be considered the very foundations of personal finance: Stability, Security, Growth, Protection and Management. In this article we will begin with discussing security. Financial freedom and growth starts with security.
The first question to ask of yourself is how do you define security? Most individuals would describe security as having disability, health, home and auto insurance in addition to life insurance. Having these policies will insure that if something where to happen to you, your family will be provided for. If you are head of your household and make most of the financial decisions for the family be sure you have left specific direction for your family to follow. These should include but not be limited to the locations and names of all your policies as well as names and numbers of your agents. Be sure to include all the basic information such as account and policy numbers. Make sure all important papers are stored in a safe and secure place such as a safety deposit box. Keeping all your important papers and information in your home may be a disaster especially if your home is destroyed by some unforeseen event.
In addition, you should always maintain a fund for emergencies. This is money which you should place into a money market account which you could write checks from. These are funds that can be utilized if there is an unexpected financial burden such as loss of employment or an extended illness that would prevent you from earning an income. Most experts agree that you should have an amount equal to at least six months of income saved up, and a year may be even safer. You can accomplish this by saving a little bit of money every month as well as adding found money to the fund (money from birthdays, inheritances or any unexpected source). It is also equally important that you have a will which spells out what actions are to be taken in the event of your untimely death. Included should be references to personal property, finances, and your personal wishes regarding life support as well as end of life choices.
Making certain that your family is secure and safe can offer you the piece of mind to invest fully in mutual funds, the stock market or other investments you may choose. Many times we are held back by the risks of losing money. No one can predict with any accuracy your success or lack of with your investments. The one certainty is that all investors know, sometimes you will not be successful and lose money despite your best laid plan. With proper planning minor setbacks will not be a devastating blow to your personal finances. It will be less devastating if you don't have all your money invested in one place. Having your emergency fund set aside means losing money with your investments is not the end of the world. It also means that for those sure to come unexpected expenses, your financial needs can be met without the need to liquidate any of your long term investments. In the case of mutual funds, IRAs and other retirement investments there may be severe penalties for withdrawing money before retirement. Security should be your first step when starting to plan for your personal finance goals .
