It is absolutely critical to understand that everyone is their own CFO (chief financial officer). You are the one that calls all of the shots for your personal finances. Now it is perfectly understandable to go to a finance professional for several reasons, and in fact it is probably a good idea, however that does not excuse you from being ignorant regarding the basics of your money. In fact, it should be your obligation to know your money.
It is my intention to explore finance and personal finance aspects through various posts. Therefore, I wanted to introduce basic concepts below so that the subject matter we explore makes sense. It is my goal to provide value to readers and to expand thinking so that wealth can be built.
Finance: describes the management, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems, as well as the study of those financial instruments.
Personal Finance: the science of handling money. It entails all of the financial decisions and activities of an individual or household: earning, saving, investing, and spending.
Income: money that an individual or business receives in exchange for providing a good or service or through investing capital.
Expenses: consists of the economic costs an individual or business incurs through everyday life or operations.
Cash Flow: the net amount of cash and cash equivalents moving into and out of a personal bank account or business.
Net Worth: the amount by which assets exceed liabilities. It is a concept applicable to individuals and businesses as a key measure of how much an individual or entity is worth.