The Pros And Cons Of Personal Finance

Personal finance is the management of both financial decisions and money for one person or a family, including budgeting, investments and retirement plans (Personal finance, 2017). Personal finance is a broad topic with many categories, all of which can greatly impact an individual’s life depending on how one manages it. In America a large percentage of individuals struggle to manage their financial conditions. Facing problems from living paycheck to paycheck to the large issue of debt. This paper explores the problems many face in terms of personal finance and covers chief areas one should be informed on; the areas of focus include: student loans, credit, retirement and housing. The paper looks to common financial mistakes individuals make

Financial problems, however, exist not just for those in poverty; only around 20% of those with financial problems are considered in poverty. Personal finance affects every individual and becomes a great burden if one does not understand all that makes it up. One such burden is debt, chiefly credit debt and student loan debt; as of 2017 around 67% of Americans have credit debt and 17.5% have student loan debt, and worse the number of those who have failed to make a payment has increased (Personal Finance Statistics, 2018). Personal finance is the process by which one manages their money and financial decisions. It affects every individual throughout their life and should be understood as to make one’s situation better or to prevent any trouble. The main categories that fall under personal finance include student loans, credit, retirement, and housing; each of which possess certain aspects that if not fully understood or explored could lead to financial

As of 2017, 157 million Americans had credit card debt and that about 62.4% have credit card debt balances (Personal Finance Statistics, 2018). Credit is the practice of purchasing something now under the guidelines that it will be paid back later. One of the basic topics within credit is the credit score, a three-digit score that the higher it is the better interest rates you will receive and easier it will be to get loans. The credit score is determined from five categories: payment history, amount you owe, amount of time the individual has had and used credit, when the individual last had a credit application and the types of credit acquired. To ensure a high credit score the individual should: pay on time, pay debt over a period, avoid closing an account and not open many credit accounts (B. Fay, 2017). While many take up a credit card another option exists to avoid the issue of debt, debit. Debit is as convenient as a credit card without the issue of debt as the money comes out of the individuals checking account. Though it is possible to spend more that one has which results in overdrawing and a fee (Tyson, 2016). Credit is something that while can be abused, allows for the individual to get necessities now even if they do not directly have the cash now. Though it is a feature of society that can easily be misused if one does not manage their