Money Matters

Personal Financial Management

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Raising your financial IQ

1. Increase your understanding of personal finance:

Personal finance refers to the management of an individual's or a household's financial resources and decisions. It involves all the financial aspects of a person's life, including earnings, spending, savings, investing, budgeting, and planning for future financial goals.

Personal finance encompasses a wide range of topics and activities that individuals engage in to achieve financial well-being and security.

A key component of personal finance is setting financial goals – The essential elements of setting financial goals are as follows:

Budgeting: Creating a detailed plan for income and expenses to ensure that you live within your means and achieve your financial goals

Tithing: Setting aside 10% of your income in accordance with the bible to support the work of the church

Savings: Setting aside a portion of your income for future needs and emergencies, often held in savings accounts or other liquid assets

Investing: Putting money into various assets such as stocks, bonds, real estate, or mutual funds with the aim of earning a return over time

Debt Management: Handling and reducing any outstanding debts, such as credit card debt, student loans, or mortgages, in a responsible manner

Retirement Planning: Preparing financially for retirement by saving and investing in retirement accounts like 401(k)s, IRAs, and pension plans

Insurance: Protecting yourself and your assets through various insurance policies, including health insurance, life insurance, auto insurance, and home insurance

Estate Planning: Arranging for the distribution of your assets and wealth after your passing, often involving wills, trusts, and estate taxes

Tax Management: Minimizing tax liabilities through tax planning, deductions, and tax-advantaged accounts

Financial Education: Continuously improving your knowledge and understanding of personal finance concepts to make informed financial decisions

Personal finance is essential for achieving financial stability, meeting short-term and long-term goals, and ensuring financial security throughout various life stages. It’s about making informed choices and taking actions that align with your financial aspirations and values.

Financial Literacy

A critical step in personal financial management is budgeting for the following reasons:

Financial Control: Budgeting gives you control over your money. It allows you to track your income and expenses, ensuring that you're not overspending or living beyond your means. This control is crucial for achieving financial stability

Expense Tracking: With a budget, you can track where your money is going. This helps you identify unnecessary or excessive expenses and make informed decisions about where to cut back

Debt Management: A budget helps you allocate funds for paying down debts systematically. You can prioritize high-interest debts and create a plan to reduce and eliminate them, which is crucial for long-term financial health

Savings and Goal Achievement: Budgeting enables you to allocate a portion of your income to savings and financial goals. Whether it's building an emergency fund, saving for a vacation, or investing for retirement, a budget ensures you make consistent contributions

Emergency Preparedness: Having a budget and an emergency fund in place provides a financial safety net. In times of unexpected expenses or emergencies, you'll have funds available to cover the costs without going into debt

Financial Awareness: Budgeting forces you to be aware of your financial situation. It encourages you to review your financial goals regularly, assess your progress, and adjust your spending and saving habits as needed

Reducing Stress: Financial stress can be a significant source of anxiety. A budget can help reduce this stress by providing clarity about your financial situation and a plan for managing it effectively

Long-Term Planning: Budgeting is a tool for long-term financial planning. It allows you to save and invest for major life events like buying a home, paying for your children's education, and retiring comfortably

Improved Decision-Making: With a budget, you can make informed financial decisions. For example, when considering a major purchase or investment, you can assess whether it aligns with your budget and financial goals

Avoiding Impulse Spending: A budget encourages you to think before making unplanned purchases. It can help you resist the temptation of impulse buying and encourage more thoughtful spending choices

Financial Accountability: A budget holds you accountable for your financial choices. It helps you set boundaries and prioritize your financial responsibilities, preventing you from overspending in one area at the expense of another

Financial Independence: Ultimately, budgeting is a tool for achieving financial independence and security. It allows you to build wealth, reduce financial stress, and achieve the financial freedom to pursue your life goals and dreams

In summary, budgeting is a crucial tool for managing your personal finances effectively. It provides structure, discipline, and clarity, helping you achieve your financial objectives while maintaining control over your money. Whether you're focused on paying off debt, saving for the future, or simply maintaining a healthy financial lifestyle, budgeting is the foundation for success

Key financial terms:


Something of financial value that you own that provides you with current and or future benefits


An obligation that you owe that you are obligated to repay with current or future funds

Real Estate

Involve purchasing properties for rental income or capital appreciation. Real estate can provide both income and potential long-term value appreciation


spreading your investments across different asset classes to reduce risk


an outcome from a prior investment decision


Individual shares of a company that one can own to benefit from the company’s growth and profitability


any financial decision or event that can lead to an unfavorable outcome – I.E. the likelihood that the return from an investment is less than expected or a total loss of the investment

Asset Allocation

Distributing your investments among different asset classes, such as stocks, bonds, and cash equivalents – a balance allocation should reflect your goals, risk tolerance and time horizon


The process by which your investments earn returns, and those returns generate more returns over time. The longer your money is invested, the more it can benefit from compounding

Time Horizon

The length of time you plan to hold your investments before needs the funds. Longer time horizons often allow for more aggressive investment strategies, while shorter time horizons may require more conservative approaches

Mutual funds

A pool of money from multiple investors to invest in a diversified portfolio of stocks, bonds or other assets. They offer diversification and professional management


Are debt securities issued by governments or corporations. Bond investment is essentially a loan to the company or government entity issuing the bond. Bond investment results in interest income to the bond investor and the return of the principal investment when the bond matures


Traded Funds (ETFS) – Are similar to mutual funds but trade on stock exchanges like individual stocks. They offer diversification and can track various indices or sectors

Need Help?

There are a number of available resources for those experiencing challenges during this season. Below you will find the ones we’ve identified:

- St. Mark AME Staff

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