Personal finance tools facilitate the management of a particular individual's personal finance. Personal finance tools show the techniques by which significant savings can be made by families or individuals from their investments taking into consideration a number of financial risks and events.
Examples of personal finance constituents are credit cards, consumer loans, checking and savings accounts, stock market investments, social security benefits, retirement plans, income tax management, and insurance policies.
The personal finance tools are broadly categorized into four types:
Money management tools
Investing tools
Retirement tools
Spending wisely tools
The investing tools can be categorized into the following types:
- Investment in funds: An example of this type of a personal finance tool is the Kiplinger's mutual fund finder. This helps the investor in finding the most appropriate mutual fund.
- Investment in stocks: An example of this kind of a personal finance tool can be Kiplinger's stock finder. It advises the investor regarding investments in the proper type of stock.
- Investment in bonds: This type of personal finance tool helps to find the most appropriate bond for the investor. The investor can go for a taxable bond or a tax exempt bond. With the help of this tool, the calculation of return from the bond can also be done. For doing this, an individual just has to fill up some details on the web.
Money management tools can be categorized into the following types:
- Credit calculator: The credit calculator can be implemented for calculation of money which is needed for payment of unpaid balances.
- Insurance calculator: This personal finance tool facilitates to make out the exact requirement of life insurance. This tool is also helpful regarding estimation of Medicare prescription costs.
- Budget worksheet: With the help of this personal finance tool, the monthly finance is planned in such a manner that forced savings is made at the month end.
- Real estate calculator: This tool facilitates to make out how much investment should be made for buying a house. It also advises if renting would be better compared to buying a house.
Retirement tools: An example of retirement tools is the retirement income calculator. This facilitates to search for the investment which would generate the highest retirement income.
Spending wisely tools: This type of personal finance tool facilitates the calculation of monthly car loan installments. It also helps to find the most suitable car loan available in a particular locality.
The following steps are usually used in personal financial planning, which is a significant constituent of personal finance:
- Assessment
- Setting objectives
- Creaton of plan
- Execution of plan
- Monitoring and reassessment