Personal Finance is the application of financial principles to financial decisions made by a family unit or individual. It addresses many facets of financial issues, including budgeting, saving, financial risks, and spending available money over time.

In the world we live in today, personal finance and planning are no longer a luxury for the rich, but have become a necessary part of life. Preparing for the future is essential and there is never a good time to start like today.

For many people, thinking about personal finance is like speaking a language from Mars and they have no idea where to start. It can be mind-boggling when talking about terms like budgets, balance sheets, and income statements. However, this should not sound like an alarm, since most of us make personal financial decisions without knowing it. For example, when making decisions about where to live, what car to buy, where to take your children to school, among others. These decisions have a financial factor involved somewhere.

There has been a rise of personal finance advisors in the recent past, who have sprung up to help people who need financial coaching or advice for a fee. They are especially useful for those of us who do not have a strong financial background and need help.

Whether you choose to do it yourself or enlist the help of a personal finance advisor, there are some basic common things one should keep in mind. The order of these may vary from person to person or from one advisor to another.

To begin with, one needs to look at their current financial position. That’s taking an honest look at what you owe and what you own. You then proceed to set your financial goals for both the short and long term. You can think along the lines of the type of lifestyle you want to have in the future. Finally, and most importantly, is to come up with a strategy or roadmap that will help you achieve your set financial goals and stick with them. This could include saving and investing a portion of your income, for example.

Another thing to take into account is the tax element depending on the country in which you live. Taxes can be a major expense that most people never give a second thought to, so they end up missing out on opportunities to reduce it. Most of the tax regimes have some incentives or reliefs that are given to the taxpayer to encourage them to save or invest in certain things. For example, retirement payments, life insurance, or specific purchases such as buying a home through a mortgage. It would be wise to inquire into the potential savings available to you from a tax perspective.

Whichever way you look at personal finances, it is vital that each of us take control of our finances by avoiding the common pitfalls that many have had to endure, because they never took the time to consciously analyze their personal finances. Are you going to leave your finances to fate or are you going to take charge of your financial destiny today? The choice is yours.