Guys, I hope all of you are pretty well going with this personal finance blog. As i mention earlier this blog are gonna give you real life personal finance tips and suggestions and more but what i have known for the novice who are not quite familiar with personal finance term and its definitions, its need to clarify to them about it. As a student or service holder we everybody know about personal finance. Even a child can tell what is the uses of credit card and cash. But in real its a true fact that most of the countries people are not familiar with it more clearly. So what to know about personal finance and its term and their definitions? Well today i am gonna discuss it elaborately. Hopefully this explanation might be helpful to you to know more about personal finance.
Definition of personal finance
The word personal finance we mean in general that a application which in relation with financial term to the individual or family. By the definition of encyclopaedia now let see here what is the complete meaning of personal finance:
“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.”
By the definition of businessdictionary.com website:
Use of the principles and techniques of corporate finance in an individual’s money affairs, especially the methods of allocation of financial resources. Its objective is financial security and independence so that an individual or a family can meet expected expenses and withstand monetary emergencies. It involves making prudent financial decisions, budgeting, saving, investing, insurance, tax planning, retirement planning, and estate planning.
Definition of other personal Related term:
1.Credit card: A small plastic card which is issued by the bank or credit card companies to the user for payment. more about it read by click on credit card
2.Credit score: By the encyclopaedia “A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus.”
3.Credit card debt:Credit card debt is an example of unsecured consumer debt, accessed through credit cards.
4.Debit card: A debit card (also known as a bank card or check card) is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution. Some cards have a stored value with which a payment is made, while most relay a message to the cardholder’s bank to withdraw funds from a designated account in favor of the payee’s designated bank account. The card can be used as an alternative payment method to cash when making purchases. In some cases, the cards are designed exclusively for use on the Internet, and so there is no physical card.
5.Credit report:Credit history or credit report is, in many countries, a record of an individual’s or company’s past borrowing and repaying, including information about late payments and bankruptcy. The term “credit reputation” can either be used synonymous to credit history or to credit score.
In the U.S., when a customer fills out an application for credit from a bank, store or credit card company, their information is forwarded to a credit bureau. The credit bureau matches the name, address and other identifying information on the credit applicant with information retained by the bureau in its files.That’s why it’s very important for creditors, lenders and others to provide accurate data to credit bureaus.
6.Bankruptcy:Bankruptcy or insolvency is a legal status of a person or an organisation that cannot repay the debts it owes to its creditors. Creditors may file a bankruptcy petition against a business or corporate debtor (“involuntary bankruptcy”) in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor (a “voluntary bankruptcy” that is filed by the insolvent individual or organisation). An involuntary bankruptcy petition may not be filed against an individual consumer debtor who is not engaged in business.
7.Debt consolidation:Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.
8.Insurance:Insurance is a risk management technique primarily used to hedge against the risk of a contingent, uncertain loss that may be suffered by those individuals or entities who have an insurable interest in scarce resources, by transferring the possibility of this loss from one interested person, persons, or entity to another.
9.Tax:To tax (from the Latin taxo; “I estimate”) is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.
10.Budget:A budget (from old French bougette, purse) is a list of all planned expenses and revenues. It is a plan for saving and spending.[1] A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms.
11.Stock market:A stock market or equity market is a public (a loose network of economic transactions, not a physical facility or discrete) entity for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
12.Estate planning:Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity.
Credit:This articles mostly covers by http://en.wikipedia.org/ Please visit the site to know more elaborately about personal finance related term and definitions.
