Personal finance is a term meant to describe managing your finances through budgeting, spending and savings. This involves long-term planning and considers potential financial risks, retirement and estate planning, investments and how your financial situation evolves over a lifetime.
Terry Turner
Senior Financial Writer and Financial Wellness Facilitator
Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Financial Wellness Foundation and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).
Lee Williams
Senior Financial Editor
Lee Wiliams is a financial editor for Annuity.org. As a professional writer, editor and content strategist, Lee has strengthened the brand storytelling for global and nationally recognized brands in the higher education, advertising and marketing fields.
Thomas J. Brock, CFA®, CPA
Expert Contributor
Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.
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APA Turner, T. (2023, January 18). Personal Finance. Annuity.org. Retrieved January 25, 2023, from https://www.annuity.org/personal-finance/
MLA Turner, Terry. “Personal Finance.” Annuity.org, 18 Jan 2023, https://www.annuity.org/personal-finance/.
Chicago Turner, Terry. “Personal Finance.” Annuity.org. Last modified January 18, 2023. https://www.annuity.org/personal-finance/.
Personal finance incorporates how you manage all aspects of you or your family’s finances – both short-term and long-term. The term is also used to describe an entire industry devoted to the services and products designed to help individuals manage their finances and take advantage of investment opportunities.
Personal finance is a vital part of not only managing your day-to-day financial needs but also planning your financial future. The sooner you get a grip on personal finance, the better your long-term financial prospects will be for things like investing or planning for retirement.
By understanding the elements of personal finance, you can better understand opportunities to improve your finances. This understanding can help you budget for current needs while planning for long-term financial goals.
Though there are several aspects to personal finance, they easily fit into one of five categories: income, spending, savings, investing and protection. These five areas are critical to shaping your personal financial planning.
There are 12 basic principles of successful personal finance, according to the Jump$tart Coalition for Financial Literacy, a nonprofit organization that promotes financial literacy education in U.S. public schools.
Though designed to teach school kids the basics of financial literacy and responsibility, the principles have been used for more than two decades to guide adults toward better personal finance practices as well. And they hold up at any stage of life.
There is a wealth of resources available online, from nonprofit organizations and state and local governments for people who want to learn more about personal finance.
In addition, there are online and in-person classes available – often for a fee – from for-profit organizations and educational institutions.
There were more than 275,000 personal financial advisors in the U.S. in 2020, according to the U.S. Bureau of Labor Statistics. That number is expected to grow by about five percent by 2030 and create 12,600 new roles.
Personal financial advisors focus on helping people manage their personal finances and plan their financial futures. They provide guidance on decisions about insurance or annuities, what types of investments to pursue and how tax laws affect their finances.
Many sell financial products to clients.
Those that sell financial products must have a combination of licenses based on the particular type of product or investment advice they provide. They may be regulated by the state where they do business as well as the Securities and Exchange Commission (SEC) – depending on the product.
A personal financial advisor typically has a bachelor’s degree, though some may have a higher degree. Many positions may require professional certification or continuing education. Education, training and salaries are similar to several other financial professions.
Private bankers and wealth managers are closely related to personal financial advisors, but their clients tend to have much larger amounts of money to invest and manage. Their clients may be closer in financial scale to companies or large organizations than to the amount of money most people have.
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