Personal finance is the knowledge, instruments, and techniques used to manage your finances. When you understand the principles and concepts behind personal finance, you can manage debt, savings, living expenses, and retirement savings."}},"@type": "Question","name": "What Are the 5 Main Components of Personal Finance?","acceptedAnswer": "@type": "Answer","text": "The five main components are income, spending, savings, investing, and protection.","@type": "Question","name": "What Is an Example of Personal Finance?","acceptedAnswer": "@type": "Answer","text": "One of the key ideas behind personal finance is not to spend more than you make. For instance, if you make $50,000 a year but spend $65,000, you'll end up with debt that continues to compound because you'll be spending more than you make to pay for past expenses.","@type": "Question","name": "Why Is Personal Finance So Important?","acceptedAnswer": "@type": "Answer","text": "The concepts behind managing your personal finances can guide you in making intelligent financial decisions. In addition, the decisions you make throughout your life on what to buy, sell, hold, or own can affect how you live when you can no longer work."]}]}] EducationGeneralDictionaryEconomicsCorporate FinanceRoth IRAStocksMutual FundsETFs401(k)Investing/TradingInvesting EssentialsFundamental AnalysisPortfolio ManagementTrading EssentialsTechnical AnalysisRisk ManagementNewsCompany NewsMarkets NewsCryptocurrency NewsPersonal Finance NewsEconomic NewsGovernment NewsSimulatorYour MoneyPersonal FinanceWealth ManagementBudgeting/SavingBankingCredit CardsHome OwnershipRetirement PlanningTaxesInsuranceReviews & RatingsBest Online BrokersBest Savings AccountsBest Home WarrantiesBest Credit CardsBest Personal LoansBest Student LoansBest Life InsuranceBest Auto InsuranceAdvisorsYour PracticePractice ManagementFinancial Advisor CareersInvestopedia 100Wealth ManagementPortfolio ConstructionFinancial PlanningAcademyPopular CoursesInvesting for BeginnersBecome a Day TraderTrading for BeginnersTechnical AnalysisCourses by TopicAll CoursesTrading CoursesInvesting CoursesFinancial Professional CoursesSubmitTable of ContentsExpandTable of ContentsWhat Is Personal Finance?The Importance of Personal FinanceAreas of Personal FinancePersonal Finance ServicesPersonal Finance StrategiesPersonal Finance SkillsPersonal Finance EducationWhat Classes Can't TeachBreaking Personal Finance RulesFrequently Asked QuestionsThe Bottom LineInvestopediaPersonal FinanceWhat Is Personal Finance, and Why Is It Important?ByWill Kenton Full Bio LinkedIn Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.Learn about our editorial policiesUpdated September 16, 2022Reviewed byMichael J Boyle Reviewed byMichael J BoyleFull BioMichael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics.Learn about our Financial Review BoardFact checked byAriel Courage Fact checked byAriel CourageFull BioAriel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
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