Personal finance

[1][2] In 1947, Herbert A. Simon, a Nobel laureate, suggested that a decision-maker did not always make the best financial decision because of limited educational resources and personal inclinations.

As the concerns about consumers' financial capability increased during the early 2000s, various education programs emerged, catering to a broad audience or a specific group of people, such as youth and women.

Still, University of Chicago professor Harold Pollack and personal finance writer Helaine Olen argue that in the United States, good personal finance advice boils down to a few simple points:[4] The limits stated by laws may be different in each country; in any case personal finance should not disregard correct behavioral principles and the diligence of a "good family father": people should not develop attachment to the idea of money, morally reprehensible, and, when investing, should maintain the medium-long-term horizon avoiding hazards in the expected return of investment.

The key component of personal finance is financial planning which is a dynamic process requiring regular monitoring and re-evaluation.

Shortened employable age: Over the years, with the advent of automation [11] and changing needs; it has been witnessed across the globe that several jobs that require manual intervention or that are mechanical are increasingly becoming redundant.

Increased life expectancy:[16] With the developments in healthcare, people today live till a much older age than previous generations.

The average life expectancy has gradually shifted from 60 to 81[16] and upwards, which coupled with a shorter employable age reinforces the need for a large enough retirement corpus and the importance of personal finance.

These reasons illustrate the need to have medical, accidental, critical illness, life coverage insurance for oneself and one's family as well as the need for emergency corpus;.

Typical downsides of using credit are: According to a survey done by Harris Interactive, 99% of the adults agreed that personal finance should be taught in schools.

For example, a study by Bell, Gorin, and Hogarth (2009) stated that financial education graduates were more likely to use a formal spending plan.