Definition of Personal Finance in wikipedia -
Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management.'In other words, it's just how you manage your own money or family finance.
Why we should start young when it's come to personal finance? They can save much more of money when they start earlier in their life. Furthurmore, you can easily help your child develop good saving habit when they are young (preferable preschool). It's much more harder develop good finance managing habit later in their life. When those juveniles start entering workforce (get their first salary), they don't fall into the debt trap easily because they have knowledge on how to manage money wisely.
When i was in high school, i saw a lot of my friend looking for a part time job because they need money to get the latest handphone. When they get their salaries, they all spend it up just to buy a handphone. They couldn't differentiate "need'(neccesity) or "want". They think that they "need" to have latest handphone to be look cool by showing off around and using it publicly. Saving never came across their mind at all.
Looking at our current situation, a lot of people starting to learn on managing their money after joining workforce and most probably from their parents.If their parents can manage their money well, then they should be able to learn something from them (by observing). What if their parents can't or don't know how to manage their own money, most likely they will spending most of their money without putting aside a portion of money into saving or end up with piles of debt . Worst, if they have bad financial habit which will lead them to financial disaster.
|Don't ever try to lend money from loan shark|
I am fortune enough to have my late grandmom teach me how to manage my own money while i am still kid (around 7 years old). Everyday before she giving me pocket money, she always remind me to spend wisely and save a little bit of money each day. Later, she open a saving account for me and give a piggy bank so that i can put my money (that i save)into it. When my piggy bank is full, she open it up and help me to put into my saving account. Money from the Ang pows or Red envelopes which i recieve during Chinese New Year also have to put into my saving account as well. Eventually saving become my habit till i graduated from highschool. I able to save approxiametly RM4000 ($1316.87 U.S.dollars) during that ten years of saving my portion of pocket money only.
Without any guidance from parents or knowledge of personal finance, we will most probably end up in finance disaster. In order to avoid this, we should learn at least basic of managing our own money. The very first step towards good financial condition is saving. Saving is one of the main basic principles of a good personal finance habits. With plenty of saving, you have much more chance to diversify your investment since you have a lot of cash flow.
So folks, let's start to saving towards our goals :)