Last updated on February 26th, 2024 at 07:25 pm
In this post, you’re going to uncover 15 different personal finance topics and dozens of subtopics.
Personal finance management is important when it comes to money. Because we need to face it daily.
From credit cards to shopping to paying off debt and earning money all revolves around personal finance. Knowing it can help you make a fortune and cut out extra costs.
So 15 major topics are the most important.
Let’s dive into the details and learn more.
15 Personal Finance Topics You Should Master
Below financial topics below range from debt to investment and savings. As well as retirement, insurance, and money management.
Let’s explore them one by one:
The first and foremost topic here is debt.
Debt is any amount you owe to any other lender. It comes with an interest rate which you need to pay with the principal amount over time. The common types of debt include credit card debt, mortgage debt, student loans, and personal loans.
But this doesn’t end here. There are multiple related terminologies and types you should know.
Let’s explain them briefly.
1. Revolving debt and Non-Revolving debt
Debt falls into two main categories. One is called revolving debt which means it revolves around a cycle. You borrow it, pay it, and then again borrow it. The most common type of revolving debt is a credit card loan. You borrow, pay, and then again borrow.
The second major type is called non-revolving or installment debt. Here you only borrow for a single purpose not frequently and then pay it in installments over time. For example, mortgage debt, student loans, and personal loans.
2. Secured debt and Unsecured debt
The revolving and non-revolving debt fall further into secured and unsecured debt.
A secured debt has security, a guarantee, or any other type of collateral. If the borrower isn’t able to repay the loan then the lender seizes the collateral to recover the loan. Collateral can be a house, property, land, gold, bank account, or any other.
While unsecured debts are given to borrowers with no collateral. There is no security, that’s why interest rates are also higher. They’re normally given based on how much credit score a borrower has. The higher the credit score is, the more money he/she can borrow and get lower interest rates with less effort.
These loans are further categorized into multiple types depending on their purpose. Here are 8 of the most common types:
3. Student loan
These loans are borrowed by students to complete their education. Students that are undergraduate and want to take professional education. This also includes amounts borrowed by parents to meet their child’s educational needs.
Student loans are further categorized into two main categories:
- Federal student loans
- Private student loans
Federal student loans are given by the US Department of Education through their approved services. These loans have lower rates and other perks and benefits like forgiveness, refinance, forbearance, and zero interest for a specific period. They are further subdivided into:
- Direct subsidized loans
- Direct unsubsidized loans
- Direct PLUS loans
While private student loans are borrowed from outside private banks, and lending institutions. They have higher interests with few benefits.
4. Personal loans
A personal loan is borrowed to spend on a variety of needs. There is no specific purpose. You can spend on any need you have. For example, weddings, debt consolidation, vacations, personal expenses, buying a car, etc.
It is a type of installment loan like a mortgage or car loan. So it falls into non-revolving debt.
Personal loans are unsecured loans. Unsecured options have a higher risk for lenders so they charge higher interest. Also, your credit report and credit score both matter a lot.
5. Home equity loan
In a home equity loan, you borrow money against your ownership of the home.
For example, you purchased a $100k mortgage to purchase a home and you’ve paid out $30,000. This means you’ve $30,000 worth of ownership in your house. You get to another lender and take a $20,000 loan against this ownership. It is also called a subprime mortgage.
That is the reason why there is a lower interest rate on home equity loans. Usually, it is used for consolidating debt like credit card loans.
6. Home equity line of credit
HELOC isn’t different from HEL but with one exception it is a revolving debt. You can take it again and again while your existing balance goes down.
It is money you borrow against your ownership in a home-like home equity loan. And as you pay it down then you can again borrow it as you do with credit cards.
It is secured and that’s why it has a lower interest rate.
7. Credit card loan
Here you have a credit card from a specific lender like a normal debit ATM card. You use it for daily purchases and shopping. The bank pays for that purchase. And you need to pay it back with an interest rate.
Credit cards are a flexible way to pay off your needs but have higher interest rates. So before going for one, you should first compare lenders based on the interest rate and other terms.
They fall into different other categories like reward credit cards, cashback credit cards, and balance transfer credit cards.
Credit card loans are unsecured and have a higher interest rate. Which makes it difficult to pay back the loan.
8. Mortgage loan
Mortgage debt refers to the loan you take to buy a house and then repay it in installments. It has a non-revolving debt and you pay it including principal and interest over a longer period. Its terms can be 10 years, 20 years, or even 30 years longer.
Mortgage comes in big debt amounts and therefore you pay a huge interest depending on the period. The interest rates are lower because the house is placed as collateral.
9. Payday loan
Payday loans are short-term personal loans that you pay on the next pay date. This can be done by giving electronic access to banks to automatically take that amount or handing over a check so they can withdraw the loan amount.
Now you’ve learned the types of debt but what to do to get out of debt? So for that purpose, you need to get enough knowledge on the following topics:
10. How to pay off debt?
This includes different strategies and tactics to pay off debt faster and easier. Whether it is a credit card debt, mortgage, student loan, personal loan, or any other. In these tactics, you also need to be aware of debt repayment methods to pay debt faster. If you want to learn how to pay off debt faster here is the post.
11. Know interest, minimum payment, terms, fees, and total balance
If you’re going to take debt or have an existing one then knowing these terms is important. So here is a quick overview:
- Interest is an amount you pay for using borrowed money. The percentage rate is called the interest rate.
- Minimum payments are the least amount you’re required to pay each month to the lender. It starts from as little as $50 depending on the amount.
- Total balance means the principal and interest you’re required to pay to the lender.
- Fees include any loan origination fees or penalties for late payments.
Knowing all of this helps you have a record of how much debt expense you incurred. And how to pay it off.
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2. Credit score
A credit score represents your trustworthiness regarding your behavior for debt responsibility. Shows how responsibly you paid off your debt. It matters greatly in unsecured loans.
A credit score is important because lenders judge your creditworthiness and risk using the credit score. It is mentioned in your credit report which is a database of your current debt accounts, payment history, and credit score rating.
If your credit score is not good you need to face difficulty in obtaining credit cards and low-interest loans. Lenders ignore your requests to take loans.
Here is what you need to know regarding credit score:
- What it is? What are the credit ranges and how is it calculated?
- How to get a credit report and check your credit report for any mistakes?
- How to increase your credit score?
- Problems and drawbacks related to a bad credit score.
Getting hands-on with all of the above information is a surefire way to educate yourself regarding credit reports and credit scores. This will help you stay higher in credit ranges like the FICO score and Vantage score.
Like earning money, saving is also important. That’s why it is an unavoidable area of personal finance. You may need money in an emergency, for vacation, or any other expense so instead of just relying on debt savings can help you.
So you need to learn how to cut out different expenses to save more money. These tactics include how to save money on food, groceries, utility bills, gas, electricity, and college. You also get to know different money-saving challenges, charts, and apps that make your job easier.
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All of us need to retire one day. But after retirement, our monetary needs are attached to us the same way as before. This makes retirement the most important chapter of personal finance.
In this personal finance topic, you learn how to save and invest money to comfortably retire. Here you get to know different plans and procedures to invest money and how to meet your required goal as fast as possible.
Here are different retirement plans you should know about:
401K plans are given by the employer to employees and contribute a matching amount which provides a free money benefit to employees.
Here a portion of the employee income before tax is deducted from a paycheck and deposited into your retirement account. It is not available to everyone but is available to some nonprofit organizations, public service organizations, self-employed ministers, and cooperative hospital services in the United States.
3. Traditional IRA
In the plan, you can invest money from pre-tax income into your IRA retirement account and the investment grows tax-deferred until you withdraw it. Tax-deferred means you don’t pay the tax until you take out gains.
4. Roth IRA
In a Roth IRA plan, you invest money after-tax deduction and when you withdraw that money then you don’t need to pay tax on it. But you need to fulfill certain conditions.
5. Solo 401K
If you’re a business owner with no employees then you can contribute to a retirement plan called Solo 401K. But you can combine your spouse as well for this benefit.
6. Spousal IRA
It is a retirement account that allows a working spouse to contribute to an IRA account as a nonworking spouse. Simply put the working spouse contributes to a nonworking spouse’s retirement account.
7. Rollover IRA
It is a retirement plan which allows you to move funds from your 401k account into your IRA account. There are no penalties or tax deductions for doing this.
8. SEP IRA
It allows an employer to contribute money to retirement accounts for himself and his employees. All sizes of businesses can use this opportunity. Allows the contribution of up to 25% of the income and has no initial or operating cost.
The other types of retirement accounts and plans you should study include:
- Simple IRA
- Traditional pensions
- The Federal Thrift Savings Plan
- Cash Balance plans
- Cash-value life insurance plans
- Nonqualified deferred compensations plan (NQDC)
Knowing information about these plans and procedures is a surefire way to increase your knowledge about retirement investments. It also allows you to choose the best option for yourself.
Investment means using your money in such a way that it increases. This means it generates a return over time and boosts your wealth.
So if you want to earn a passive income and build wealth then investment is the only option. That’s why you need to have deep knowledge regarding investment topics. The most common ones include:
1. Asset allocation
It means how to allocate or distribute your money among different types of assets. It is also called a portfolio. Simply you invest in different assets or the same assets of different companies to lower your risk.
For how much time you’re going to invest? There are two types. One is called short-term investments that are less than a year and the second is long-term up to 5 years 10 years or 20 years even perpetual.
It is also called return on investment or ROI. It means how much dollars you earn on your investment. Return can be negative or positive. But a solid way to determine when you’ll achieve your end goal.
4. Risk management
Here you’ll learn how to minimize your risk. Mitigation of risk is an important element of a successful investment strategy and earning positive returns. You must get a deep understanding and learn the techniques regarding risk management.
5. Financial assets
Then comes financial assets where you need to learn about different types of financial assets. This includes stocks, bonds, CDs, T-bills, investment accounts, and derivatives. This helps you better decide on which ones to choose for investment.
6. Investment opportunities
Finding profitable options to put your money into work is a great way to build your wealth. Opportunities range from real estate, the construction industry, health companies, the stock market, the bonds market, commodities markets, mutual funds, etc. But you need to get enough understanding to find the best ones that fit your goal.
So if you put strong hands on these topics you can easily achieve your end goal. And earn better and bigger returns.
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Banking is another major one among personal finance topics. The reason is we all need to interact with banks and accounts. They provide us with different financial services and also protect our money.
So let’s uncover the subtopics under banking you should learn about:
1. Current account
This account has a higher number of allowed transactions as compared with others. Its facility is normally given to business owners with large transactions. They can withdraw money at any time without notice. In Islamic countries, the current account is referred to as an interest-free account.
2. Checking account
These accounts help you deposit and withdraw money. They are normal accounts you use for depositing salary, wage, or any other income source. You can withdraw money through ATMs, checks, and electronic debits. It is also called a demand account or transactional account.
3. Savings account
This account is a normal interest-generating account in which you deposit cash for daily use. It earns a lower interest rate as compared with high-yield savings accounts. The features are also limited like the number of transactions, debit card facility, cheque, and overdrawn.
4. Regular savings accounts
Here you make a fixed deposit each month to this account and the bank gives you a higher return on that amount. The yield is higher as compared with ordinary savings accounts.
5. Certificate of deposit account
In this account, you make a fixed deposit of a lump sum amount for a specific period. During that, you don’t withdraw your money. The financial institution gives you a higher return as compared with the money market and savings accounts. Certificates of deposits are a safe investment strategy to earn more return.
6. Cash management account
This account provides combined features and functions of other accounts like checking, saving, and investment accounts. You get a combined overview of cash in one place and don’t need to make separate bank accounts for each function.
7. High-yield savings account
As the name suggests, it is a high-interest paying savings account. A High Yield Savings account pays 10 to 25 times more interest than a normal savings account. And it is a safe way to generate higher returns.
8. Money market account
These accounts work similarly to savings accounts but with some checking account features. You get to check and debit card options for withdrawal. However, there is a limitation on withdrawals and purchases.
9. Specialty savings account
Designed for specific persons or events not for meeting your bigger financial goals. The most common types include:
- Christmas Club savings account
- 529 college savings account
- HSAs or health savings accounts
- Home down the payment savings account
- Student savings account
- Children’s savings account
- Custodial savings account
Other than these banking personal finance topics you can study different banking procedures and policies regarding loans and accounts. So that you don’t face any trouble in the future and make better decisions.
Budgeting is another financial topic you should understand and implement. It helps you analyze how much you’re earning and where it is going. You get a clear picture of your expenses and easily cut down on extra ones.
Here are some budgeting topics you can learn about:
1. Traditional budget
A very common type of budgeting the majority of people use. You list down your income sources and sum them up, then you list down your expenses and sum up, and find the difference between income and expenses.
You get a clear view of income and spending by finding the difference. If the “income minus spending” is positive this means you’ve money left for savings. Otherwise, you either need to cut back expenses or earn more money.
2. Zero-based budget
In this budget, your income minus expenses goes to zero. Here you assign every dollar of your income a certain job to do. It can be savings, investing, insurance, or achieving seasonal goals. So you need to start each new month’s budget from zero.
3. 50/30/20 rule
It is a simple rule that makes budgeting easier. You divide your after-tax income into three categories. One is called need which is most important, then want, and then saving or paying off debt.
According to this rule, you spend 50% of your after-tax income on needs, 30% on wants, and 20% on savings or to pay the debt.
4. 70/20/10 rule
This rule is similar to the above but with one exception which is a percentage of allocation. Here you spend 70% on needs plus wants, 20% on saving, and 10% on charity and/or paying off debt.
5. Cash-only budget
It is a budgeting method where you spend with cash on all expenses. No credit card or debit card.
6. Spending first budgeting
In this budgeting method, you prioritize your expenses over savings. Simply you first spend your disposable income on expenses then what is left goes to savings or investing. This budgeting method is good if expenses are less than income.
7. Envelope method
Using this method you keep an envelope for each expense and put cash in it. When the cash in that envelope wipes out in spending then you’re done. You don’t spend further on that particular expense. You can simply stick these envelopes on a wall and write the names of each important expense on it. Then start spending on each expense according to need.
The money needed to cover the expense can be determined by taking the last 3 months’ average of each expense. This gives you an idea of the actual amount you need to cover it.
8. Saving the First budget
This method is also called as pay-yourself-first method. You prioritize savings over expenses. The money first goes into a savings account. What is left? Is spent on paying off debt, and other important household and personal expenses.
9. Other budgeting methods
- The no budget
- Anti budget
- Spending ceiling
10. Budgeting apps and software
After budgeting methods come the tools and software for budgeting which make your job a lot easier. They help you track and analyze your finances from a 30,000-foot view.
You can get your hands on them. Here is a list of some easy tools:
- You Need A Budget (YNAB)
- Every dollar
- Personal capital
All of these tools are amazing and you can easily learn them through YouTube video tutorials. They make a lot of your work on automation and save time.
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If you earn money you are liable to pay tax. And it’s our responsibility to pay taxes. But tax is an important part of personal finance. Because you pay a major portion of your income into taxes.
You don’t need to be a tax professional who knows every bit of information and code. But at least you should know how much tax expense you pay this year. Along with that how to save money using different loopholes and benefits.
Whether you need to file federal tax or state tax. And how many deductions you can get.
If you have limited time then you can hire a tax professional to do this for you. But knowing yourself can save you hundreds of dollars.
There are different tax software like TurboTax, Quickbooks, Taxact, Taxpayer, etc. They make your job a lot easier.
It is compulsory to protect your assets from unwanted risk.
Many types of risks and threats can damage your assets. For example, fire, theft, accident, illness, and any other. Which can ruin your and your family’s financial life. So before any mishap occurs you should take protective steps.
So here comes the need for insurance.
There are different types of insurance which you need to choose according to your requirements. Here are some common types of insurance:
- Life Insurance
- Car Insurance
- House Insurance
- Health Insurance
- Travel Insurance
- Mobile Insurance
- Cycle Insurance
- Bite-size Insurance
Other things to know are the insurance costs of different companies and policies. Paying attention to that can help you get more out of your insurance policy.
10. Net worth
It is an important factor that determines how much money you have. Networth is simply equal to total assets minus total liabilities. In other words, you subtract debt from your assets, and the remaining value is called your net worth.
Determining your net worth helps you know your financial position. This will help you make better financial choices and know the exact goals you want to achieve.
Also, learn the strategies and tactics to increase it over time. So that you build wealth and get financial freedom.
Home is the biggest investment for Americans. And the government is continuously working to provide homes to middle and lower-class families. That’s why important in all personal finance topics.
It is not just buying a house but more than that. It involves several steps and procedures to help you buy a home.
Here is what you should know under the homeownership area:
- Checking your affordability
- Finding the perfect home
- Home Registration and transfer
- Applying for a loan to purchase it
- Seeing bargains to benefit more
- Preparing for downpayment
- Determining maintenance costs
- Calculating the taxes
And a lot more which you can learn from Google.
Other Personal Finance topics
The above topics are important but they are linked to even more important issues which highly impact your financial success and failure. Here are four other issues that you should hold on to for building your financial future:
- Money management
- Accounting basics
- Making money
I’ll expand on this list later. Now I’m just listing them down to give you a chance to learn and explore these topics.
Now you’re clear about the above 15 personal finance topics. Let’s take a quick look:
- Credit Score
- Net Worth
- Money Management
- Accounting Basics
- Making Money
I hope you find this post helpful and has enough value.
If any important financial topic is missing from the above list, you can mention that in the comments below.
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