Personal Finance

Written by Sarah Provost
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Personal finance is a subject fraught with emotions. Fear, anxiety and confusion are common responses to the topic, regardless of a person's level of education or sophistication in other areas. Many people, therefore, avoid dealing with their personal finance issues until they are in crisis.

However, many of those same people discover that once they bite the bullet and begin to look seriously at their overall financial picture, it isn't as intimidating as they thought. Especially today, with all the resources of the Web available to us, there is no excuse for not taking charge of your financial situation. Start with the basics, use all the help available to you, and soon you will be in control of this very important aspect of your life.

Budgeting Is the First Step in Personal Finance Competence

Before you can make any decisions regarding your finances, you have to know where you stand. A surprising number of people have only the fuzziest notion of how much they spend each month, and on what. In fact, studies show that a vast majority underestimate their spending by approximately ten percent!

The first thing you have to do, then, is to amass accurate information about your personal finance situation. Start by tallying your net worth, including real estate, retirement accounts, and all other assets. You may be pleasantly surprised by the total. Next, set up a budget. Keep in mind that a budget is not a stringent description of what you can't do and can't have. A budget is only information, and the more accurate this information, the more likely you are to be able to meet your goals and realize your dreams.

It's important to list every expenditure you are likely to have over the course of a year. First, list your monthly expenses, then go through your check register and credit card receipts to find those expenditures that happen less frequently. Divide that total by twelve and add it to your monthly expenses. Once you see where your money is actually going, you will be better able to make decisions and set priorities.

Other Personal Finance Resources

While a budget is absolutely necessary if you want to take charge of your personal finance, don't stop there. Look into the other services offered online, such as electronic bill pay, investment counseling and hints for financial health. Electronic bill pay is particularly useful for those who tend to be disorganized or who procrastinate. Your bills arrive by e-mail, and reminders are sent as needed. You pay them electronically, by direct withdrawal from your bank account. The transaction is processed immediately.

You can also link your bill pay service to your budget, so that your expenditures are automatically entered in the appropriate category. Personal finance management doesn't get much easier than that! Investigate the various budget programs available and choose one that fits your financial style.

Once you have your budget and your bill paying under control, you might feel emboldened to test the waters of more arcane areas of personal finance such as investments, retirement planning and loan shopping. Here, too, the Internet can be an invaluable resource, allowing you, for instance, to comparison shop to find the best rate on a car loan. Just be certain that you are dealing with reputable concerns, and that you keep your security measures such as firewalls and passwords constantly up to date.

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