Mohamad Syairazi Bin Mohd Affendy BWFF3073 Group B

WHAT IS PERSONAL FINANCE?

There are many scholars, many researchers and many websites with every each of one
with different opinions about personal finance. What is the personal finance all about? From
my research I had found some definition which are relevance with it. Before I explain it deeply,
we need to know the meaning of each term for ‘personal’ and ‘finance’.
Personal meaning according to oxford dictionary is “relating to person’s body or
concerning one private life” (https://en.oxforddictionaries.com/definition/personal). The origin
of term personal is from Latin word persona. There are a few meaning of finance, finance can
be describing as “the management, creation and study of money, banking, credit, investments,
assets and liabilities that make up financial systems, as well as the study of those financial
instruments. Some people prefer to divide finance into three distinct categories: public
finance, corporate finance and personal finance. Additionally, the study of behavioural
finance aims to learn about the more "human" side of a science considered by most to be highly
mathematical.” (http://www.investopedia.com/terms/f/finance.asp).
Other than that Merriam Webster dictionary described finance as “money or other
liquid resources of a government, business, group, or individual” (https://www.merriam-
webster.com/dictionary/finance). From the research had been done by Gaurav Akrani, he said
finance is “If we trace the origin of finance, there is evidence to prove that it is as old as human
life on earth. The word finance was originally a French word. In the 18th century, it was
adapted by English speaking communities to mean “the management of money.” Since then, it
has found a permanent place in the English dictionary. Today, finance is not merely a word
else has emerged into an academic discipline of greater significance. Finance is now organized
as a branch of Economics.” (http://kalyan-city.blogspot.my/2011/11/what-is-finance-meaning-
definition.html).
There are many ideas to describe thus two word of personal finance. Personal finance
is defining as “all financial decisions and activities of and individual or household, including
budgeting, insurance, mortgage planning, savings and retirement planning. All individual
financial activities fall under the purview of personal finance; personal financial
planning generally involves analyzing your current financial position, predicting short-term
and long-term needs and executing a plan to fulfill those need within individual financial
constraints. Personal finance is a very individual activity that depends largely on one's
earnings, living requirements and individual goals and desires.”
(http://www.investopedia.com/terms/p/personalfinance.asp)
In addition, research from Georgia State University had studied about personal finance
which can be define as “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.”
(http://sfs.gsu.edu/the-financial-aid-process/financial-resources/financial-literacy/personal-
finance-and-debt-management/).
Business dictionary also had defined personal finance as “the 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
Mohamad Syairazi Bin Mohd Affendy BWFF3073 Group B

involves making prudent financial decisions, budgeting, saving, investing, insurance, tax
planning, retirement planning, and estate planning.”
(http://www.businessdictionary.com/definition/personal-finance.html)
As we can see, in the simple word to describe personal finance is all about individual
money, it is how to manage the money, how you earn that money and how to grow it. All of
this stuffs are including your spending, your assets, your saving and also about your debt either
it short-term or long-term debt. Financial planning is the key component of personal finance,
which can be a dynamic process that requires regular monitoring and re-evaluation. There are
five steps in personal finance which are assessment, setting goals, creating plan, execution, and
monitoring and reassessment.