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. A 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: 1. Assessment: One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, mortgage). A personal income statement lists personal income and expenses. 2. Setting goals: Two examples are "1. Retire at age 65 with a personal net worth of $1,000,000," and, "2. Buy a house in 3 years while paying a monthly mortgage servicing cost that is no more than 25% of my gross income." Having multiple goals is common, including a mix of short term and long term goals. Setting financial goals helps to direct financial planning. 3. Creating a plan: The financial plan details how to accomplish your goals. It could include, for example, reducing unnecessary expenses, increasing one's employment income, or investing in the stock market. 4. Execution: Execution of one's personal financial plan often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers. 5. Monitoring and reassessment: As time passes, one's personal financial plan must be monitored for possible adjustments or reassessments. Typical goals most adults have are paying off credit card and/or student loan debt, investing for retirement, investing for college costs for children, paying medical expenses, and planning for passing on their property to their heirs (which is known as estate planning).[citation needed] The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are: 1 - Financial Position: this area is concerned with understanding the personal resources available by examining net worth and household cash flow. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flow totals up all the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished. 2 - Adequate Protection: the analysis of how to protect a household from unforeseen risks. These risks can be divided into liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract.

Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning. 3 - Tax Planning: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as your income grows, you pay a higher marginal rate of tax. Understanding how to take advantage of the myriad tax breaks when planning your personal finances can make a significant impact upon your success. 4 - Investment and Accumulation Goals: planning how to accumulate enough money to acquire items with a high price is what most people consider to be financial planning. The major reasons to accumulate assets is for the following: a - purchasing a house b - purchasing a car c - starting a business d - paying for education expenses e - accumulating money for retirement, to generate a stream of income to cover lifestyle expenses. Achieving these goals requires projecting what they will cost, and when you need to withdraw funds. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which typically will subject the portfolio to a number of risks. Managing these portfolio risks is most often accomplished using asset allocation, which seeks to diversify investment risk and opportunity. This asset allocation will prescribe a percentage allocation to be invested in stocks, bonds, cash and alternative investments. The allocation should also take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person. 5 - Retirement Planning: retirement planning is the process of understanding how much it costs to live at retirement, and coming up with a plan to distribute assets to meet any income shortfall. 6 - Estate Planning: involves planning for the disposition of your asset when you die. Typically, there is a tax due to the state or federal government at your death. Avoiding these taxes means that more of your assets will be distributed to your heirs. You can leave your assets to family, friends or charitable groups.

PersonalFinance: Student loans & career building 101

By Linda Stern WASHINGTON | Wed May 20, 2009 1:11pm EDT (Reuters) - This is a tough time to be graduating from college. Your student loan bills, averaging over $22,000, are likely to arrive before a job does. And once it does, that job may not come with benefits. The career you went to school for may not seem a reasonable path right now -- companies that typically recruit on campus have spent the last few months rescinding offers and hiding from the resumes piling up in their mailrooms. The unemployment rate among 20- to 24-year-olds is pushing 14 percent, almost double the overall unemployment rate. That whole 20-something task -- figuring out what you want to do with your life -- may seem like a luxury you can't afford. But hang on -- there are worse situations to be in than young, smart and educated. New programs will make those college debts easier to manage, and employers will eventually want to hire a new generation of workers. You can use the slow economy as an opportunity to prepare for your next stage. Avoid the debt-and-discouragement abyss by organizing your own finances and building a job-search strategy. Here's a checklist for the new grad. -- Consider consolidating your student loans -- but don't rush into it. For most borrowers, loan consolidation isn't the great, low-cost deal it used to be, though it does offer some advantages. New government programs will allow you to stretch out your payments as long as 30 years. The Education Department also offers a new plan that will make the size of your loan payments contingent on your salary -- a boon to graduates who have trouble finding work or who want to enter low-paying fields or do internships and volunteer work. (see www.IBRinfo.org for details.) The minority of students who still have pre-2007 variable-rate loans should move to consolidate right after July 1, suggests financial aid consultant Mark Kantrowitz. Others should check the calculators on his website here to see whether consolidating makes sense for them. One reminder: The longer you stretch out the loan, the lower your monthly payments will be, but the more interest you'll pay over the long term. -- Get educated. Now that you no longer have to memorize Beowulf, the periodic table or Latin verbs, use those study habits to get smart about money. Read as much as possible about credit, investing, saving and taxes. Start, if you haven't already, to keep track of your money; just keeping those records will help you understand the big picture. You can use free online financial websites like mint.com and wesabe.com to track your expenses.

-- Get health insurance. Industry pros sometimes call new graduates the "young invincibles" because of their belief that nothing can happen to them. Young people are healthy, but even a surfing accident can push you over into bankruptcy if you're not protected. Allergy medication, birth-control pills, physical therapy for sports injuries -- they're all expensive if you're not covered. Some states and professional organizations (such as the freelancers union, www.freelancersunion.org) offer programs specifically aimed at the young, poor and healthy. Check out online broker ehealthinsurance.com, but also get competing offers from a broker in your state who may know of local regulations and programs that work for you. You can also buy a short-term, six-month program to bridge the post-graduation gap from Golden Rule (www.goldenrule.com). -- Avoid taking on debt just to live -- even if you have to move back home for a while. Piling everyday expenses on the Visa or MasterCard will just limit your freedom to do what you want. Live like a starving student for a little while longer; it will allow you to do that extra internship or take that post-college trip. -- Set financial goals. A car? A job-interview suit? Spring break 2010? A house? Do the legwork so you know what you really want and how much it costs. Just having the goal will help you earn and save to meet it. Use an FDIC-insured bank account to build up some savings for these shortterm goals. -- Go after the career you want, not the one you think you should have. Job placement powerhouse Adecco is telling grads to pursue careers they care about. Just looking for jobs you think are lucrative doesn't really work; ask all the newly unemployed Wall Street wunderkind from the Class of 2007. -- Fill gaps. Beef up job skills you didn't get in college by learning the computer programs, procedures and lingo used in your chosen industry. -- Network like crazy. Hunt for a job by telling everyone, especially former professors in your department and past bosses, that you are looking, says John Challenger of outplacement firm Challenger, Gray & Christmas. "The current job market requires a much more aggressive approach, as well as some creativity." He also tells newly minted graduates to use their social networking skills to research jobs and possible employers via FaceBook (www.facebook.com), Twitter (www.twitter.com) and LinkedIn (www.linkedin.com). Join the professional association that fits the career you want to have, and go to meetings. Find a mentor -- or two -- in the career you want and soak up all they have to share. -- Avoid the angst. Stress about money, work and life are a typical part of the post-graduate experience, so use proven techniques to calm yourself. Exercise, get together with friends and think about the bright side: No more term papers and tests.

Should You Walk Away From Your Student Loans? Its not surprising that you didnt realize what you were getting into with your student loan. You were just barely out of your teen years when you signed the paperwork. If youre like most people, you probably had little understanding of what it means to incur debt and were lulled into a false sense of security with the knowledge that payments will be deferred for years to come. The language can throw you too. Whats the difference between a subsidized and an unsubsidized loan? What about federal vs private loans?, and so on. This lack of understanding can make you the victim of predatory interest rates from private student loan providers. But walking away from your student loan isnt the same thing as walking away from your home loans. Youd better be aware of the consequences before you decide not to pay. Put simply, the only way to absolve yourself of your responsibility to pay back your student loan is to die, or to become unable to work due to a serious disability. From the governments perspective, defaulting on an obligation to pay back a student loan, which in the case of federal loans, is lent with taxpayers dollars is almost as serious as not paying your taxes. While its not a federal offense to fail to repay these loans, the government, and government-approved student loan companies have ways of getting money that is owed. That said, what can you do when the debt seems to be too much to bear? Student Loan Consolidation and Refinance Federal student loans are locked in based on current rates at the time of each disbursement. This can vary when the loan documents are signed. Private loans typically have a higher rate, and are usually tied to an index such as the Prime Rate or Treasury averages, much like a credit card. These are typically locked in at a fixed rate, and also vary depending on what federal rates are in place. As a result of loans being disbursed each semester, many students will find themselves with multiple loans at multiple rates. For students wishing to consolidate their loans, they must apply for this with each lender. This will generally result in say, four loans, with varying interest rates, being consolidated into one amount with a common rate. Refinancing typically means reduced monthly payments with a longer repayment period usually at a lower interest rate. If you have federal student loans, and private loans, the interest rates will most likely vary greatly, and must be refinanced separately as you cannot combine your federal student loan debt with private student loans. To get the best rate with either type, make sure your credit is in good shape before applying. Your credit will be referenced, and will play a role in refinancing at a preferred rate. Deferment Deferring the repayment of loans is typically granted for a number of valid reasons. This postpones the repayment of principal for a specific period of time. This is typically for people who continue to be enrolled in school, disabled students that are undergoing some type of rehabilitation, or those individuals that have left school and are either unemployed, or able to

display a marked financial hardship. For subsidized loans, no interest accrues during this time. For private loans, interest will accrue and will be recapitalized (added to the loan balance), thus increasing the size of the loan. Forbearance Those without an approved reason for deferment, but are still unable or unwilling to pay, they may be granted forbearance. During this period, payments can be postponed or reduced, but interest will continue to accrue. Interest is not subsidized during a forbearance, as its viewed as a voluntary postponement by the debtor. As a result you are responsible for the additional interest accrued while payments to the principal are not being made and its added to the loan balance. These are typically granted in twelve month intervals, but can be made in shorter ones such as three or six month intervals. Alternate Payment Options As with any debt, there are always options based on an individuals specific circumstances. Federal lenders are typically easier to work with than private lenders, but there are always options. For the former the options include: extended repayment, graduated repayment, income sensitive repayment, income contingent repayment, and income-based repayment. For more information on these options its best to contact your lender and ask about what they can do for you. As with a deferment or forbearance, it is extremely important to contact your lender to discuss this option while your account is in good standing. Should you allow your account to go into default, many of the above options will cease to be available. Declaring Bankruptcy? Nope. In nearly every circumstance, student loans are non-dischargeable. Walking away from student loans is not like walking away from a credit card, mortgage or car loan. So, What are the Consequences? Collections Like any substantial debt, the companies you borrowed from will hound you if you stop paying. Then your account will probably be sent to collections. They will call, send letters, and in many cases start contacting your family if you fail to respond to their attempts. If you were a minor when applying for your student loans and your parents co-signed for you, then they can start calling them as well and put pressure on them to make your payments. Additionally, if your account goes to a collections agency, you will be liable for any legal and court costs associated with collection attempts. Lawsuits

This is more common with private lenders, but students that default on their student loans may be sued for the full amount of their debt owed. Courts will typically enforce this via wage garnishments. Job Hunting These days, many companies run a background and credit check during the application process. This is increasingly popular for positions that require even a modest level of responsibility, especially financial responsibility. While bad credit is not always enough to bar getting hired, having defaulted on student loans is typically a red flag. In short, it can communicate a lot to an employer about an applicants ethics and track record. Default Interest Rates If you neglect to pay your student loans, you will accrue penalties, fees and interest. Your account will eventually adjust to a default rate, and it will continue to accrue interest until action is taken. The process and rates for each type of loan varies. For more information visit the Federal Financial Aid website Damaged Credit Going thirty days past due on your student loans will have a negative impact on your credit. So, you can imagine that walking away from your student loans will carry far greater consequences. Most estimate the credit impact of defaulting on student loans to be similar to the hit for a realestate foreclosure. While debtors prisons have not existed for over a century here in the US, defaulting can haunt you and your credit report for around a decade. To make matters worse, if you had a co-signer on your loans, their credit will be similarly affected, unless they make the payments for you. This, of course, could then put a huge strain on personal relationships. Wage Garnishments Heres the biggest difference between other debts (mortgage, auto, and credit cards, for example) and student loan debt: if you fail to pay your student loans, your lender can garnish your wages. Many people move abroad as an attempt to avoid repaying their student loans. For those with an excess of $100k, this can make sense at first. If you move to the EU and find employment there, and pay taxes there, there is no way the US government can garnish these foreign-based earnings. The problem is, if you want to return to the US and work one day, youll return to the unsavory reality of a much higher balance due to accrued fees, penalties and compounded interest and very likely, a wage garnishment.

http://www.mint.com/blog/how-to/shouldyou-walk-away-from-your-student-loans/

Private Student Loans- easily accessible and offers flexibility

ttp://www.yourpersonalfinance101.com/blog/private-student-loans-easily-accessible-and-offersflexibility.html

Education is becoming very expensive gradually. Henceforth, you need to deposit a lump sum amount as fees to the universities for pursuing higher degrees. If you are a student and looking forward to get some financial assistance to complete your studies, first apply for scholarships or aids offered by the government. These can resolve all the monetary issues related to the studies. This will be of great use because you dont have to return the amount. If you cant secure these, then look out for education loans. Try out for the federal student loans if it goes beyond your hand then the second best solution is private student loans. There are two types of loans available for the education of the students, such as: federal loans and private loans. If you ask me what is the difference between federal student loans and private student loans? I can provide you with a brief description about these.

Federal loans are more flexible while it comes to repayment terms than that of the private loans. Federal student loans come with fixed interest rates that private student loans do not offer. Private loans defer in interest rates and the lender is not very supportive with the requirement of the students. The modifiable private student loans propose much lower interest rates of payments than the fixed rates of the federal loans. If you can uphold a good credit score then private loans put forward greater facilities for you than the federal loans. When you exceed in the amount of federal loans private loans are the remained options for you. Federal loans consume more time than the private loans to get issued. Private student loans are simple to access.

With its many benefits, these loans are really useful for the students.

Student loan crisis threatens financial futures

By Theo Keith, David Earl and Blake Hanson Special to msnbc.com updated 7/1/2011 8:19:58 AM ET

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COLUMBIA, Mo. Allison Skare is still living as a college student, unable to invest or save for retirement. A new car is only a dream even though Skare is a college graduate and has a good job in the government sector. Change -96.87 12143.24 DJIA -0.79% -9.87 NASDAQ 2756.38 -0.36% -8.39 S&P 500 1292.28 -0.65% Quotes delayed 15+ min. Major Market Indices And Skare is one of the lucky ones. The 2010 University of Missouri grad has $22,000 in debt, slightly below the national average. Many students take on $100,000 or more in debt to finance their education. U.S. student loan debt has reached $900 billion, more than what Americans owe on credit cards. Those struggling with repayment can't default on student loans in bankruptcy, and the problem continues to get worse as states cut funding for higher education and schools raise tuition. "It didn't seem to add up as much as it did that first payment," Skare said. "That was a big shock and very much a revelation on how much debt I'm in." The student loan crisis is about to get worse. At least 43 states have decreased funding for public higher education since 2008, according to data from the Center on Budget and Policy Priorities. Story: Before you sign for that loan, get educated "Students fall in love with their dream college, they want to go and it doesn't matter the price," said Lynn O'Shaunessy, who writes about higher education affordability on TheCollegeSolution.com. "They just go, 'Oh, we'll pay it off when we get out,' not realizing this Index Last

is a huge financial burden they're taking on when they're 18 years old. They don't even have a clue what they're getting themselves into." The problem isn't just one for students and parents it affects future generations, too, said Mark Kantrowitz, president of FinAid.org and FastWeb.com, websites that match students with potential grants and scholarships. "More students are taking on 20 or even 30 year repayment terms, which means they're going to be repaying their own student loans when their children enroll in college," Kantrowitz said. "They're going to be less willing and less likely to borrow for their children's education." An indebted graduate is less likely to donate to his or her alma mater. Saving for retirement isn't even an option, graduate Skare said. Student loan resources 1. By the end of October 2011, colleges in the U.S. will have to create online net price calculators, as specified by a federal requirement. These calculators are supposed to help prospective students and their families estimate how much certain colleges will cost them after grants and scholarships are factored in. The aim of the calculators is to help students anticipate how affordable particular colleges would be. Click here to read more about the net price calculators. Here are some more online resources to check out for help with student loan debt: American Student Assistance Repayment strategies, repayment options, repayment calculators FinAid Student loan calculator FastWeb Tips for paying for college in a tough economy Student Loan Borrower Assistance Information about student loan options and rights "I'm certainly not in a position where I can invest right now or put a lot in savings away. My living expenses and student loan payments are a very big majority of my salary right now," she said. Advertise | AdChoices Skare, who lives in Columbia, Mo., said her job allows her to pay back her debt, although she must live frugally. Students who rack up $100,000 or more to attend graduate schools are finding it more difficult to make the payments, but they won't stop coming, O'Shaunessy said.

"I would rather be in trouble with the IRS than with my student loans," she said. "You can never get rid of these things. They can haunt you for the rest of your life. They will hound you and, if you still owe money, they can garnish your Social Security checks if they last that long." O'Shaunessy said students should not exceed the approximately $25,000 cap on borrowing from the federal government. Government loans have more favorable payback terms than private, or bank-backed, loans, she said. Graduates can even sign up for a plan which ties their payments to their salaries. No one should borrow more than his or her expected starting salary, although ideally, everyone would borrow less than that threshold, Kantrowitz said. That means students majoring in highpaying fields can have more loans than those entering low-paying careers. Borrowing some money to attend college is a good thing, O'Shaunessy said. "Some debt is good because it gets you in the game and it gets you a college degree, and you absolutely need that," she said. O'Shaunessy also said federal law will soon require all U.S. public colleges and universities to post cost calculators on their websites, which she called a victory for consumers. For Skare, there have been other lessons from the process. "Going through this process, I definitely want to make it a personal goal to save a little bit to provide for my own children in the future," she said. "It's also brought a lot of character and personal responsibility as I pay these things back." 2011 MSNBC Interactive. Reprints

Education Loans in India Frequently Asked Questions

Students perusing Higher Education dont have to struggle hard anymore to finance their Studies as now many Banks in India have are providing student loans. Not only loans, private foreign banks also seem to be interested in funding students, enthusiastic enough to announce scholarships for bright and deserving students. With expensive professional education becoming mandatory for people across the country, a student loan seems the most effective way to tide over these expenses. Most students expect to land high salaries at the end of their professional training and are likely to be in a position to repay these loans over a period of time

What does one needs to look at in order to choose a loan? Ideally, take a loan from a bank located at your place of study than one located where you reside, unless it concerns overseas studies. This is because you will have better access to funds if you take a loan from the place of your study. Secondly, Make sure the repayment period starts only after six to twelve months after you begin your working life. And thirdly, Banks typically prefer to finance students who opt for traditional courses. For What Professional Courses do Banks generally provide education loans ? Management students are among the top choices for most of the banks. Technology students from the country's premier institutions can also get student loans from Banks and Medical and engineering college students. Banks dont provide loans for students with a bachelor's/master's in Arts . Also, for courses where employment prospects are less (as per Banks own evaluation), loans are sanctioned on the basis of the parents' income. How much Loan you can get ? Loan for Studies in India Most of the Public Sector Banks in India have categorized Student Loans in two categories. For Studies in India , Students can borrow up to Rs 4 lakh without providing any security or margin. A loan amount of Rs 4 lakhs to Rs 7.5 lakhs can be availed against a third-party guarantee. This loan comes with a five percent margin (what this means is that you will get five percent less the amount sanctioned as loan; you will have to put together the rest of the money). The third-party guarantee can come from an uncle, neighbor or friend standing guarantee for the full amount. Overseas study loans : Amounts worth Rs 7 lakhs and above are usually sanctioned against fixed deposits, NSC certificates, property worth the loan amount and a margin amount of 15 percent (what this means, again, is that you will get 15 percent less the amount sanctioned as loan; you will have to put together the rest of the money). Also, if a loan below Rs 4 lakhs comes at x rate of interest, the loan over Rs 4 lakhs is usually charged one percent higher interest. The Reserve Bank of India prescribes the specifics (amount, rate, repayment period) of education loans and the government provides a two per cent subsidy on these loans to the banks. Important Note : Indian Banks Association (IBA) has recently formed a working group to address the issue of student loans and the rising rate of default. The group has submitted its

findings to the Reserve Bank of India and the main suggestion is to make it mandatory for parents or guardians, of the student borrowing loans, to be co-borrowers thereby making them liable for repayment.

Repayment - Course period + 1 year or 6 months after getting job, whichever is earlier. What are the Documents required for applying a Student Loan ? All students are required to submit mark sheets of last qualifying examination, poof of admission scholarship, schedule of expenses for the specified course, his/her bank account statement for the last six months, an income tax assessment order for the previous two years, a brief statement of assets and liabilities, of the co-borrower, which is usually the parent or guardian and proof of income, if any. Some banks require all or any of the following documents as pre sanction documents: To furnish the following documents along with the completed application form. Relevant information would relate to the guardian and the student both, when the loan is jointly taken.

1)Mark sheet of last qualifying examination for school and graduate studies in India 2)Proof of admission to the course 3)Schedule of expenses for the course 4)Copies of letter confirming scholarship, etc. 5)Copies of foreign exchange permit, if applicable. 6) 2 passport size photographs 7) Statement of Bank account for the last six months of borrower. 8) Income tax assessment order not more than 2 years old 9) Brief statement of assets and liabilities of borrower. 10)If you are not an existing bank customer you would also need to establish your identity and give proof of residence. What is the Interest rate charged for Student/education loan ? Most banks are vying with each other to aggressively market personal loans. The student loan segment is being viewed as vast untapped potential. Citibank and ICICI Bank are offering equally competitive schemes. Almost every prominent bank in the country has a student loan scheme in some form. What matters the most to an individual is obviously the cost of credit the terms and conditions for education loans. These, like any other loan, vary among banks. Besides pricing of the product, the most important thing is documentation requirement and the quality of service offered by the bank and the speed at which the loan is approved.

Some banks, such as SBI, also give you a choice between fixed and floating interest rate. Whereas, private and foreign banks offer loans with a fixed interest rate, some banks charge interest on a daily or monthly reducing balance.

Eligibility for getting a loan: The applicant should be an India National The applicant must have secured admission to professional/ technical courses through Entrance Test/ Selection process Secured admission to foreign university/ Institution Which Banks are offering Education Loans in India ? Most of the Private Sector banks, Foreign Banks and Public Sector Banks in India are providing Student Loans. You can visit Banks offering Student Loans in India for an overview of various loan Schemes offered by banks in India