Personal finance refers to a detailed study of monetary flows at different points of time. This type of financial planning relates to evaluating an individual’s present financial status and budget, with the help of which one can plan for the future.

While checking of savings accounts, investments in the stock market, credit cards and consumer loans, social security profits, retirement plans, insurance policies and income tax management are some components of individual planning, financial planning is considered to be the key constituent of personal planning. There are five steps of regularly monitoring and evaluating personal finance which include:

1.    A person must assess the personal balance sheet which lists the worth of personal assets like car, house, stocks and bank account with private responsibilities like credit card debt, bank loan and mortgage. A personal income statement lists personal income and expenses.

2.    He must set his own goals, both long and short term. These financial goals help directly in financial planning.

3.    A person needs to plan out some details like how he can reduce needless expenses and increase his income by investing in the stock market and in other areas.

4.    After planning, execution of those plans is very much necessary. There are professionals who can guide a person in his financial planning.

5.    Checking and reassessing one’s personal financial plan from time to time is very important.

Other factors of financial planning also include assessing one’s financial position, having adequate protection, investment goals and tax, retirement and estate planning.