I know nothing about finance, where do I start? ? Part 1

This is a question that comes up often, and one that I find quite difficult to answer. First, I think it?s useful to start by just defining what you mean by finance, and spending some thought on that.

I think it is useful to narrow down finance to personal finance because that?s what people are really interested in when they say they want to learn about finance.

I think of personal finance as the following:

Managing your cash flow to build wealth.

I think this is simple enough to understand and covers the essence of financial planning or personal finance.

The idea is to build wealth so you can meet your life?s financial goals and have enough money during the days of your retirement.

The way you build wealth is by saving money and investing it.

This is not an ?either or? thing, you have to do both to really make it work. Spend wisely, and invest intelligently. Doing one but screwing up the other will nullify whatever good work you?ve done in the other area.

I think life and health insurance are also an important parts of this equation, as they help you protect your wealth when you face an emergency.

http://www.onemint.com/2012/11/05/i-know-nothing-about-finance-where-do-i-start-part-1/

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