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Introduction to Finance and Personal Finance

What is Finance? The Cambridge Dictionary defines it as “the management of a supply of money”. Regarding personal finance, this is just the money that flows through your own life.

As the chart below shows, educational attainment is a fundamental component of a successful and stable financial outcome (particularly in the US).


Those who are better educated, tend to have higher incomes; and consequently, steadier lives.

Therefore, I believe it to be of paramount importance that people educate themselves, particularly in finance, in order to achieve financial stability, and lead worriless lives (at least regarding the money in their bank accounts).

To start off, I would like to talk about the Finance Life Cycle. This traditional cycle – which is becoming more unconventional as we move from a contemporary society to a more postmodernist society – is one of the bedrocks on how to manage money.​

Image by Ben White

Childhood: when someone is a child, they have little financial requirements. They are dependant on adults (typically parents); however, a personal savings account might be an ideal way to start building a new mentality for children to save. A small allowance can also teach the child to manage money and to understand the concepts of earning, spending and saving.

Image by Thought Catalog

Single Young Adulthood: either in a small, initial job, or still studying. Here the individual is not in a relationship and so has a lot of disposable income as they do not have any commitments. They will most likely still be living with parents, and therefore might not be considering the future.

Image by Carly Rae Hobbins

Young Couple, No Children: most likely two incomes coming into the household and given there are no children there will be no key financial obligations. The couple might be considering purchasing a house or moving in together.

Image by CDC

Parents with Dependent Children: divorced parents are becoming increasingly common. However, this applies for whoever has a child and takes care of them. There is less free time, and more duties – such as potential school fees and the future necessities of the child (University, driver’s license, among others).

Image by Elisey Vavulin

Empty Nesters: here, the children have left the home and therefore there will be more free time and a lot more disposable income. Both parents (or the single parent) will be at the height of their career and therefore earning at full potential. They will be older and most likely considering retirement. Nonetheless, with increasing longevity, caring for parents might be a responsibility that falls on their shoulders.

Image by Jaddy Liu

Retirement: the main requirement for retirees is to generate sufficient income to live a comfortable life, so they should look at different potential sources of income, maybe dividends from shares or an annuity.

From this cycle, we might take a few notes and find ourselves in one position or the other. Financial planning is one of the primary components of personal finance, yet so many people overlook it. A person should consider:

  • Home buying and mortgages;

  • Insurance (life, motor, medical…);

  • Credit Cards and Creditworthiness;

  • Retirement Planning;

  • Etc.

Most of these things will be discussed in greater detail in the following months.

Finance is a central part of the world as it is vital to the majority of people. Before money was invented, people used to trade. They would trade a tool they had assembled for some food that a hunter might have fetched. The hunter might have a surplus of said food, and believe that the tool is worth more than the food. Likewise, the craftsman might be very skilled and therefore able to build more tools, but since they need to eat, they’ll trade the tool for the food.

The same concept applies to money in today’s day and age. We work, and an organisation will be willing to pay us for that work since we are providing them with labour that will benefit them – and hopefully generate them profit. From there, we will go to a store and purchase something that we are willing and able to purchase. This is the basic principle of demand, which many will be familiar with. This product will also have been made by a company, which is willing and able to sell it at a price that you, the consumer (and the market), will be satisfied with paying.

It is from here that we find ourselves becoming more ambitious. We want to acquire more resources, we want to make certain changes in the world, and for that we require capital. From this ambition comes imagination and discipline and hard work (although too much and it becomes a vice, as Aristotle said).

We humans have a desire to be grand – most of us dream of changing the world when we are young. And yet, we are also never fully satisfied with what we get. We could literally change the world, and still be unhappy about something, no matter how insignificant that thing is. It is within our nature. But, how does finance help us with life?

Well, for starters, money is one of the basic needs of Maslow’s Hierarchy of Needs[1]. Without it, a person cannot be motivated to progress further in life and try to accomplish more! Although there are of course exceptions, when you do not have money, you will most likely try get more money. People can of course reach self-enlightenment without having money, but money does help. A few things of the topics I will be covering are:

  • Budgeting

  • Book Reviews

  • Insurance

  • Investing & Stock Markets

  • Among Others

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With proper management of your own financial resources, you can establish a stable life that does not have you worrying about money and basic needs such as leisure activities, food and shelter. What are you waiting for? Subscribe to the Newsletter today, and subscribe to the premium membership.


[1] Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–396.

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