personal finance assignment help australia

personal finance assignment help australia

Personal Finance Management

1. Introduction to Personal Finance

At Salzburg Management, personal finance management is embedded early in the classroom learning process. The architecture of the personal finance management study is built at LVL (Logical View level) as the Bachelor of Law of business finance unit when students journey through the multiple learning steps – level 1, level 2, and level 3 of EMLEX (European Master Law and Economics) degree. We discussed the foundation of personal finance management and introduced three essential personal finance management pillars that will be developed in-depth one by one in the classroom in this essay, and they are wealth building, budgeting, and credit management.

Personal finance refers to a comprehensive picture of your financial well-being at any given time. Preparing for your financial future is important. Whether or not you like the idea of money management, every aspect of your life is related to personal finance, and money management is a skill that is crucial knowledge for everyone. The significance of personal finance is that it enables a person to not only save and earn but also plan his or her financial future so that they can have a good lifestyle without any financial risks. If an individual manages and plans his or her finances well, they will have a well-planned family. Marketing professionals simply put it as CPA: earning, saving, and investment management leads to an optimal return on your expenses, in terms of wealth maximization. You can only make an investment when you have enough savings, and the only way you can save is by decreasing your expenses.

2. Importance of Budgeting

A budget is also more easily fulfilled if the person actually sees the goals and knows at all times that soon needs to be a little reach them. Small daily sacrifices let you reach goals in the blink of an eye. It is important to notice negative spending habits or attitudes. Having a budget is a first step towards financial awareness. We gradually realize how important it is to take control of our personal finances. By having an established budget, it is possible to know how many debts the person is incurring and, by this, start to control those same expenses and financial life.

It is said that goals can only be fulfilled if they are realistic and achievable from a budget. Many people who want to start saving or investing avoid making a budget and prefer to use the following idea: “I will save what is left over, in the end.” Generally, it is not the best formula. According to the way that the stairs, the thought process is the same as that of those who want to lose weight but continue to eat the same way and avoid exercise. The perfect weight loss plan is designed.

Believe it or not, following a budget brings many advantages to a person’s finances. Whether it is to lead the life assumed by credit or to build wealth, a budget is synonymous with good financial health. According to specialists, these are the main advantages of having, and mainly following, a defined budget: acceleration of the saving process, financial discipline, agility in reaching goals, notice of negative financial attitudes, increased saving, control of spending, and financial control.

3. Strategies for Saving and Investing

The Public Provident Fund, often abbreviated as PPF, is a long-term saving instrument by the Indian government, which is extended to investors for a minimum tenure of 15 years. PPF can provide investors with a tax deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act. Besides, interest earned on PPF investments is tax-exempt, which does not make it liable to tax deduction. This tool is considered very safe and risk-free, which gives investors a better alternative to bank deposits, particularly for individuals having much higher expertise endowed knowledge in Indian money market investments or taking minimal risks.

An equity-linked saving scheme, commonly referred to as ELSS, is a dedicated equity mutual fund scheme with numerous tax benefits offered to investors in India. This investment option is elective to investors in India who can claim tax deductions of up to Rs. 1.5 lakh under section 80C of the Income Tax Act. At the same time, the capital gains from ELSS schemes are tax-free, even at the time of liquidating the investment, which could not be found in other tax-saving investments such as PPF, Tax-saving fixed deposit, or tax-saving NPS scheme.

Recurring deposits are a type of Term Deposit offered by banks in India, which help people with a minimum balance to deposit in small amounts for a tenure that can yield high returns. The citizen can deposit a minimum of Rs 100/- per month for a period of 6 months to ten years and in multiples of 3 months. Interest on recurring deposits is calculated quarterly.

Fixed Deposits are considered to be one of the favorite saving instruments amongst Indian households. A fixed deposit ensures good returns on account of a higher interest rate compared to a Savings Bank Account. This tool can be most useful to attain short-term financial targets as it ensures hedge against the erosion caused by inflation.

There are different saving instruments available in the market which can be linked to financial goals. Out of these, a few popular options are discussed below, which can be worked upon to achieve the pre-decided financial targets appropriately.

4. Managing Debt and Credit

Debt and credit are linked to each other because debt management is one of the large components of personal credit. Consequently, credit is mentioned when referring to loans like home loan – a contract between a person and a lending institution – or a promise from a person to pay back money. When someone pays a bill right away the expectations of others that they’ll do so again are higher. The reverse is also true; when people have a history of failing to meet their financial responsibilities others become scared to offer them additional credit; this is the reason people with a lot of past-due accounts often have a hard time opening a new account, renting an apartment, buying a home or even getting a job.

Sometimes it’s better to take out a loan to deal with your financial troubles, but at other times borrowing money will only lead to more trouble. Understanding when you can handle a loan and when you can’t is the key to prevent issues concerning debt and credit; once taking on a debt you’re unable to pay back or make the regular payment agreed upon can lead to late payments, living outside your means and unnecessary stress. Understanding credit and the factors that affect it as well as determining the right kind of loan for your situation isn’t complicated, but developing a sense of responsibility is key. This applies to all people regardless of their income: it’s possible for everyone to find themselves in some type of financial strife at some point in their life.

5. Planning for Retirement

(2) Start Investing Early: Someone who enters the workforce aged 25 and invests Rs 48,000 a month at a 12% rate of return (assuming a 12% pre-tax return, 8.36% post-tax return for the 33% tax bracket) will be a crorepati by the time he is 49 years old. Once the nest egg is ready, inflation-adjusted income options must be chosen for a comfortable lifestyle. Economic changes can reduce the value of maintained income. Periodic reviews must also be factored. For coping with high debt, an early debt plan should be initiated to ensure an asset creation program and limit liabilities. Also, do not stick to one type of investment asset class, mix your investment in equity and debt due to having enough exposure of equity to earn a better return. More returns ultimately lead to a bigger corpus.

(1) Set the target: The most important first step in retirement planning is to set a target. It should also be a realistic target. If you want to maintain a certain standard of living after retirement or need a large amount of medical corpus or leave a legacy for your children, etc., are also ensured in your retirement corpus. If you want a corpus of INR 3 crores, you need to have a target corpus of 1.439 crores if you are in the 33% tax bracket. If you do planned saving of 48,000 per month at 12% returns before tax and 8.36% post-tax (under SLR 80c and 10(10) (D) or LS 80c and 1020(D) 7.14% effective return post-tax), you can be a crorepati in 24 years.

To put it simply, investing your savings to let your money work for you achieves this objective. Well-planned preparation for retirement can help you lead a comfortable life without making any compromise to your living standards. The success of good retirement planning is also directly influenced by financial discipline and prudence. Here are a few key points that you need to consider while planning for retirement: