All financial decisions which include insurance, mortgage, savings and plans for retirement come under the topic of personal finance. There are many features of personal finance. Some of the most important ones will be mentioned below.

The Financial Process

Financial assessment
The financial position of an individual is usually assessed by gathering information of all his financial records consisting of income statements and balance sheets. It is determined by observing the expected cash flow and present savings.

Setting goals
Every individual has their own short-term and long-term goals. A long-term goal refers to saving for later such as for retirement. A short-term goal, however, is associated with savings which can help in the upcoming days such as saving for a new television within the next six months. The main target of setting a goal is to achieve precise financial needs.

Implementation
The implementation of a financial plan of an individual usually asks for dedication and self-restraint. Therefore, many people need help from experts in the fields of debt consolidation, accounting and finance. It is a tool to use on a daily basis to manage your business, get across your demanding goals and, of course, celebrate your success.

Creating a plan
This includes reduction of needless or worthless expenditures, increasing the working wage and investing in the stock market. Once you have planned how much you need to save and for when to save, you can set your saving goals.

This financial plan is analyzed for possible changes as the time passes.

Areas of Focus

Financial position
This is particularly associated with the knowledge of personal revenue by calculating the net worth and total available household capital. The net worth is calculated by adding up all the capital which is under an individual’s supervision minus everyday debts. On the other hand, the household capital (also known as household cash flow) is the net income expected within a year minus the expected expenditure.

Suitable protection
Also known as insurance, this is a study on how to protect the household from unexpected risks. These risks can be divided into liability, death, poverty, etc. This is why many people such as sports players pay a premium for their insurance.

Planning taxes
Income tax is the main spending for an individual in a household. The main question that arises is about when and how much tax has to be paid. As a rule, the rate of taxes is directly proportional to the increase in income; the higher the income, the greater the tax amount.

Retirement and estate planning
Retirement planning is basically how one has planned to save to move on with his household expenses after he retires and when he has no source of income. However, estate planning is about how one has planned to distribute his assets after death.

One has to sensibly plan his financial duties so that he does not have to face any problems in his later life, which is after retirement. He should be well aware of his income and household expenses so that he may calculate what and how to save.