Personal Financial Management

Personal financial management is a key component to making your money work for you. Why work so hard to save money if you aren’t going to maximize your returns on those savings? At the same time it is pivotal to measure your tolerance for risk and invest accordingly. For many people, the security of their savings is paramount.

Safe Investments

Most of the safest investments available are cash investments. These include savings accounts, money market accounts, and certificates of deposit. These accounts are insured by the FDIC, and assuming you meet its criteria, are about as safe as an investment can get. There is no risk of losing your money shy of the government defaulting.

Additionally there are other types of investments that are nearly as safe, such as government bonds. While in some cases there may be a slight chance of default, the increase in returns can often be worth the increased risk.

Maximizing your returns at a comfortable level of risk can be a balancing act. Moreover, as you get older, your tolerance for risk may, and probably should, decrease. A young man or woman who suffers severe losses in the stock market can often easily recover them and then some by continuing to invest. An older person with only a few years' window before their retirement may have to make serious changes to their plans if they suffer the same kinds of losses.

Budgets and Finance Tracking

One of the most important components of a personal financial management strategy is to pay close attention to all of your investments and expenses. Modern software products can be a significant boon in this pursuit. You should have a budget and watch how your money comes in and goes out. You should also pay close attention to your savings and investments, and make sure that you are maximizing your returns.