Basics of Personal Finance
So let's get back to some basics of finance. We all know that Earnings=Savings +Expenses Hence Savings =Earnings - Expenses How many of you agree with this ? It is correct ? Yes it is correct but only mathematically. In order to live a healthy financial life Expenses =Earnings-Savings . However most people including professors who teach finance forget this basic truth So now let's move a little forward Why do we need savings? The answer is very simple. We humans can earn only up to a certain age,after which we are forced to retire.For example, if we retire at 50, earnings will last only till age 50. But our expenses will continue to be with us even after that .We cannot depend on any one for our expenses including our children. So for surviving post our retirement , we need our savings today to meet our expenditures later . This answers the question ,as to why we need savings. Are just savings enough ? Most people will doubt whether today's savings will be en...