Personal finance is 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.
The key component of personal finance is financial planning, which is a dynamic process that requires regular monitoring and reevaluation. In general, it has five steps:
To put it simply, debt management is the act of managing debts. However, it can also refer to a credit counseling service that consolidates your unsecured debt into one monthly payment, which is sent directly to your creditors by the credit counseling service.
Debt management is one of many options that consumers have for reducing their credit card debts. Consumers can try to manage their debts on their own. Financial experts recommend that consumers should be tracking how much money they pay out every month, not only in terms of what they pay to reduce their various debts, but also for everyday and cost-of-living expenses. By doing so, they may be able to identify ways to cut costs for luxuries and other purchases even before making more radical decisions.