Personal finance is the practical application of financial principles and accounting to manage the finances of individuals at the micro level. It can be focused at an individual level or at the level of a family unit to explore financial aspects such as saving, spending, strategies, budgeting, and risk management.
Specializations in Personal finance
There are six major fields of specialization in personal finance degree programs:
- Financial Position
- Financial position is an estimate of the net worth of the income of an individual by examining the net flow of income and in-house flow of cash. Net flow is calculated by adding up all the assets of an individual and then subtracting the expenditures from it. This way the financial analyst can make an estimate of the financial status of the client.
- Adequate Protection
- Adequate protection is the study of risk estimation. Risk can be caused from liability, long term care, death, disability, property and health. Based on the estimation of risk, it is decided if an insurance plan should be bought or not.
- Tax Planning
- Tax planning is the estimation of the payable income of a household. Tax mangers calculate the amount of payable taxes and the time when it should be paid. The personal finance analyst also has to make an analysis of ways of taking advantage of the existing governmental policies so that the individual ends up paying the least amount of taxes.
- Investment and Accumulation Goals
- Investment and Accumulation Goals is a field of personal finance that is related to future planning. Personal Finance Consultants counsel their customers about ways to save up enough funds to be able to afford luxuries. Such consultancy requires careful cost analysis and policy making.
- Retirement Planning
- Retirement planning is also a sub field of future planning, under personal finance. Personal finance consultants devise a savings plan to account for any income short fall in future.
- Estate Planning
- Estate planning is an estimation of the payable debts after the death of the client. Personal finance experts devise a strategy to pay all the taxes due to the state before his/her death so that the income gets distributed to all legal heirs or charitable organizations afterwards.
Courses in Personal Finance
Different courses offered during a personal finance degree are;
- Basics of Personal Financial Planning
- Fundamentals of Personal Financial Planning
- Financial Markets
- Family Finance
- Debt and Borrowing
- Introduction to Economics
- Investment Risk
- Investing in Your Future
- Financial Security
- Taxes and Business Strategy
- Entrepreneurial Finance
- Finance Theory
- Behavioral Economics and Finance
- Free Credit Education
- Principles of Macroeconomics
- Principles of Microeconomics
- Planning for a Secure Retirement
- Checking accounts
- Savings accounts
- Credit cards
- Consumer loans
- Investments in the stock market
- Retirement plans
- Social security benefits
- Insurance policies
- Insurance Planning
- Consumer Credit and Debts
- Estate Planning
- Estimating Net Worth
Graduates in personal finance work as personal financial consultants for big business owners, professionals, athletes and entertainers. They also work for insurance companies to analyze the financial situation of the clients.