5 Foundations of Personal Finance – Must Know & Win

What are the 5 foundations of personal finance and do you know Personal finance is one of the most important topics you will ever need to learn? It’s not just about money–it’s about your life. What if someone told you that the decisions you make today could affect your retirement years from now? Would it change how you think about saving, investing, and spending? Probably so, but too few people give personal finance this level of attention. Why do they put off thinking about these issues until later when it’s more difficult to address them? I’ll answer that question in a moment, but first, let me tell you what being financially sound really means.

There are 5 foundations of personal finance

• The first foundation is knowledge. We all need to be knowledgeable about money in order to make the right decisions when it comes to our finances. Knowledge can come from reading books, listening to experts on radio or TV, or getting advice from relatives or friends.
• The second foundation is borrowing money. This may seem counter-productive–after all, if you want to save money, you should stop spending it–but borrowing money can actually help you save if you do so for the right reasons. For example, if you borrow money at an interest rate of 3% and invest in a stock that pays an average return of 5%, you’ll end up with more money than you would have had if you didn’t borrow it. But, borrowing money can also hurt you if the interest rate is higher than the return of your investment.
• The third foundation has to do with saving money. Saving money is absolutely necessary for everyone to do in order to pay for future needs like retirement, college education for children, or extreme emergencies like medical problems. If you don’t save any money at all now, how will you ever be able to afford these things?
• The fourth foundation has to do with investing your savings well so that they grow quickly and safely. This means choosing investments based upon risk tolerance–how much volatility can I live with given my goals? Is this investment appropriate given my age and/or income?
• The fifth foundation is understanding taxes. This doesn’t just mean paying them–it means realizing how they work and how they affect you financially. For example, if your employer matches dollar for dollar what you contribute to your 401(k), that’s like getting FREE MONEY!

The beauty of the five foundations of personal finance is that they teach you how money can make more money without risk (if only it were that easy!). For every good investment decision you make, there are probably 10 or 20 decisions made by other people that lead to losses. Unfortunately, those losses eventually trickle down to us all because we’re in this financial system together. Money flows up to wealthy investors and trickles down to low-income earners as the stock market goes up and down.

This leads me to my point why do people put off thinking about their personal finances until later?

I think the answer is obvious: it’s easier not to. When I was in college, I probably spent about two grand a month (on food, clothes, entertainment) but earned only $1,000/month working part-time at Starbucks.

Although I had an enormous appetite for knowledge back then (disclosure: that still hasn’t changed much), personal finance wasn’t one of my top priorities–after all, how could it be when I didn’t have any money to speak of? And what was the point anyway since there wasn’t much I could do with so little cash? It would have been an exercise in frustration.

But that was then, and this is now. Now I generally think about money every day not just because I’m married with children, but also because I’ve seen how smart decisions early on can pay off so well later. And is it any coincidence that my wife and I are financially sound precisely when we most need to be?

How much more difficult would it have been if our financial lives were out of control? How strained would our relationship be today if there were no money for college or weddings or family trips or emergencies? Sure, some couples somehow muddle through even though they’re deep in debt, but wouldn’t it be better not to start off that way at all?

After spending some time reading personal finance articles on this blog, you’ll have the tools you need to control your future. You’ll know how to start thinking about money now so that it doesn’t control your life later. And who knows–you might just be surprised at how much you already know about managing money. If nothing else, I hope my articles give you some perspective on what being financially sound really means.

Until next time, here’s wishing everyone the best of luck in all their financial endeavors!

Stay away from credit cards or anything like loans unless they are for something you can afford and understand. Only invest if you are willing to lose everything; otherwise, don’t bother investing because it is not worth losing your hard-earned cash (if I wanted to lose cash, I’d fill my pockets with it and step into the middle of a busy intersection).

Learn how to control your spending habits by using budgets or even some software programs made for this. You can also check out some personal finance blogs/articles here on Hubpages! Finally, make sure you don’t miss out on any future articles about Personal Finance by clicking “Like” below. This is one of the most important topics you will ever need to learn, so be sure to become informed on this topic!

What is personal finance Foundations in Personal Finance High School Edition?

Personal finance is a subject that not a lot of people know about. It can be difficult to understand and quite overwhelming when you first start out in the world of personal finances. This book offers an easy way for high school students to learn more about personal finance. The book starts with making money, saving, spending and ends with investing and retirement planning. The book will help you get started on the right foot financially so that you don’t have to worry about your financial situation later in life!

What are the 5 foundations of financial security?

Financial security is a term that can mean different things to different people. What it means for you will depend on your individual circumstances, financial goals, and risk tolerance. The five foundations of financial security are:

1) Savings, 2) Income Protection, 3) Homeownership 4) Retirement Planning 5) Insurance Coverage

Savings

The first foundation of financial security is savings. You should always save as much as possible, and it’s never too early to start. It’s important that you include long-term savings goals such as retirement and education in your list of priorities, rather than funneling all of your money toward short-term goals like a new kitchen renovation or vacation. Instead, think about investing some of your income into mutual funds or other investments on a regular basis; even if the returns aren’t huge, at least they’ll be growing over time. Getting started with good habits makes it easier to stick with them throughout your life.

Income Protection

Even if you’re saving up plenty for future expenses, you still need protection against the unexpected. Income protection is the second foundation of financial security because it’s designed to help you stay afloat if you’re unable to work due to an injury or illness. You can put together your own plan with fixed-benefit disability insurance, though talking to a professional about it will give you more precise numbers. If there are gaps in your coverage—like if you have cancer but don’t qualify for long-term disability—you’ll want to fill them by purchasing supplemental insurance at affordable rates.

Homeownership

The third foundation of financial security is homeownership, which is not always possible depending on where you live and what your income level happens to be. It can make sense for some people to buy a home rather than continue to rent; in that case, you should be able to get an affordable mortgage with a downpayment that’s less than 20% of the purchase price. If you rent, think about saving up for a downpayment so you can buy in your future when houses are more affordable. Retirement Planning.

Retirement Planning

The fourth foundation of financial security is retirement planning—something else that will require some research on your part. You have many options when it comes to investments, and choosing how much to contribute each month can depend on both your age and income level. As long as you’re putting money away at regular intervals, it will grow over time. The trick is to put enough money into low-risk investments that aren’t likely to lose value while also taking advantage of high-growth opportunities, so your savings are able to keep up with inflation. Insurance Coverage.

Income Security

Finally, the fifth foundation of financial security is insurance coverage. This kind of protection might come in the form of long-term disability, critical illness insurance, or life insurance. Insurance can protect you from major setbacks caused by serious medical conditions or untimely death, but it’s always a good idea to shop around for an affordable plan that offers just enough coverage for you and your family.

you can read more about the importance of personal finance from the other post from our site here: read more

What are the five foundations of economics?

Economics is the study of how people, firms, and societies choose to allocate scarce resources. This allocation is often done through prices or government intervention. Economics focuses on factors that are not readily seen in the real world such as scarcity and opportunity costs which are hard to measure.

It can be argued that economics is a social science because it studies human interactions with one another. Economists use mathematics to make models of how economies work under certain conditions but many economists disagree about what should be included in these models due to their different perspectives.

The five economic foundations are microeconomics, macroeconomics, international trade theory, monetary theory, and fiscal policy theory. These five foundations have impacts on personal finance because they all play a role in determining who gets what share of the national income.

What are the four foundations of money?

Money is one of those things that you can’t do without. Money buys food, clothes, power, and shelter. It’s the universal unit for living standards and it has been around as long as civilization itself.

But what exactly is money? What are its four foundations? To answer these questions we need to first take a step back and look at where money really comes from work. The idea behind this theory was that if people had to work in order to earn their wages then they would be less likely to spend them all on frivolities like alcohol or drugs- which might lead to better outcomes not just for families but also for society as a whole. But there’s more than one way to make money; some people inherit wealth while others gamble or win the lottery. But which way is preferable?

Thought about in these terms, earning money through work becomes what might be called the “natural” foundation of money. This is because it’s how most people earn their wages in real life.

The second foundation of money is what’s called the “fiduciary” foundation of money. The word fiduciary comes from the Latin fides, meaning faith or trust. A fiduciary relationship is one in which you are obliged to act on behalf of someone else with no conflicts of interest.

We see this happen all the time when people put their savings into a bank account- the bank has an obligation to look after that money for its owner, not gamble it away or use it to fund different projects without permission. Banks don’t have any choice but to be good fiduciaries because if they get greedy and take too many risks then there will be a run on them by panicking customers wanting their hard-earned cashback.

In effect, the value of money will disappear and everyone becomes poorer as a result.

Another example of a fiduciary foundation is when people buy government bonds from their central bank or its subsidiaries. The buyer gives a certain amount of money for a bond that promises to repay the full amount in the future with interest if it’s cashed in early there are usually fees involved to compensate for this- just like how banks might charge an early withdrawal fee on your savings account if you try to take out too much cash.

The third kind of foundation for money comes from all sorts of things other than work or savings accounts: it’s called the “commodity” foundation for money. Commodities have been used as currency at times because they have certain qualities that make them inherently valuable. These include rarity, durability, recognizability, and acceptability.

The final foundation of money is called the “government” foundation for money. This is because it’s entirely down to government policy- there are no rules or guidelines for this kind of money apart from what policymakers decide to do with it at any given time. The good news is that if your country hits on a successful way of using its currency then other countries will copy it too- which means you’re less likely to lose all your savings in an economic crisis than during times when nobody trusts their governments anymore and everyone wants to cash in their bank accounts as fast as possible before people stop accepting the notes and coins they use every day.

Student Loan

Student loans have been a hot topic in the news for years, and it’s not going to die down anytime soon. In fact, student loan debt is at an all-time high of $1.5 trillion dollars. But what exactly are they?

Student loans are the money students must pay back after they graduate from college or university with a degree. They can be taken out from federal governments or private lenders such as banks and credit unions. The terms vary depending on who you borrow them from, but they usually involve interest rates that will steadily accumulate over time if unpaid until the loan is fully repaid (which could take decades). Generally speaking though, there are two types of student loans: subsidized and unsubsidized – both of which involve loans that must be repaid at some point.

Subsidized

Subsidized student loans are federal student loans, meaning they are funded by the government and do not accrue interest while you are enrolled in college full-time (12+ credits/semester). The only downside to these is that the loan itself will have a limit to how much can be borrowed, based on financial need.

Unsubsidized

Unsubsidized student loans are just what the name implies – they don’t depend on your financial circumstances or income level. You take out an unsubsidized loan once without any prerequisites for repaying it until after you graduate from college. These types of loans accumulate interest throughout school so when repayment begins 6 months to 9 months after you graduate from university, it will be at a greater price than the original one you borrowed.

Emergency Fund

The first step in personal finance is to establish an emergency fund. This will provide you with a cushion of cash so that if something bad happens, like your car breaking down or losing your job, there’s money available to take care of it without having to use credit cards. And if you don’t save up enough for emergencies, then the problem becomes even worse when the next unexpected event occurs because now you’re out of money plus have credit card debt on top of everything else.

The idea is not just to have some money saved away somewhere; it needs to be accessible and easy for you to get at quickly – which means different things depending on whether you live paycheck-to-paycheck or are more financially stable.

If you have an emergency fund, then you can use that money in case of emergencies or unexpected expenses. Because if you have to rely on credit cards when something bad happens, your debt will just get worse and worse until it becomes out of control.

Having an emergency fund is one of the most important foundations of big-picture personal finance. But many people don’t even think about having one because they’re more worried about how they’ll be able to pay rent at the end of the month rather than what will happen if their car breaks down next week.

However, it’s still very important for everyone – regardless of whether you live paycheck-to-paycheck or not – to establish an emergency fund before making any other major financial decisions like buying a house or getting a new car.

Let’s say your car breaks down and you don’t have an emergency fund to use, so now you have to take out a big loan for the expensive repairs because you already miss several days of work while waiting for them to get done. So not only are you without your car, but now you’re also in debt because of it – plus if anything else bad happens that requires cash immediately, then you won’t even be able to fix that because you’re already paying off the other one!

Andrew W. Mellon Foundation

Andrew W. Mellon Foundation is a private philanthropy organization established in 1969 by Andrew W. Mellon, former United States Secretary of the Treasury, and his wife, Mary P. Mellon. They set up an endowment to support charitable causes that meet certain criteria: the work must be public-spirited; it must offer relief for those who are unable to help themselves; it should advance human welfare broadly construed with special attention to children and youth under 18 years old or their education; and finally, it should demonstrate a significant impact in its approach or methodology.

The foundation has awarded grants totaling over $1 billion since its inception in 1969, primarily through three grantmaking programs: The New World Fund which supports organizations working on peacebuilding issues around the world, The Broader Middle East and North Africa Initiative which provides funding to organizations working on issues related to democracy, good governance, human rights, social justice, youth advancement, women’s advancement, conflict mitigation or prevention in the Middle East and North Africa region; And finally the foundation’s largest grantmaking program is called The Funding Program for Humanities.

This fund was created in 1940 with an endowment of $12 million from Andrew Mellon’s estate.

The Foundation works to strengthen democratic values among young people throughout their lives through the support of education as well as public programs such as citizenship initiatives and cultural activities.    

In accordance with its mission statement “to empower those who will further fair play for all the Foundation supports a number of projects and activities that provide direct services to low-income communities. Other initiatives include support for research on issues related to education, arts and culture, urban affairs and international relations”

Purpose: The foundation will be supporting excellent scientific research in basic biomedical fields with the aim of developing therapies against diseases such as cancer, Alzheimer’s disease, diabetes, etc.

Final Words

Preparing for retirement, creating a household budget, planning for college educations, and caring for aging parents are all components of personal finance. While they may seem daunting at first glance, they can be broken down into steps that any individual can take to build a stable financial future.