Financial planning
Introduction
Personal finances are the financial management required by an individual or family unit to budget, save and spend their monetary resources over time, taking into account financial risks and future events in their life.[1][2].
Personal finance is about applying the principles of finance in managing your monetary assets. Its analysis includes the income and payments received or paid during the event and has the financial tools that the individual has and optimizes their monetary resources.
Definition
Personal finances refer to the management and administration of your money. That is, the management of all your money: your income, your expenses, material goods, funds, investment funds, insurance, credits..
History
Prior to the development of a specialty in personal finance, the various disciplines that are closely related to it, such as home economics and consumer economics, were taught in various universities as part of home economics for more than 100 years.
The earliest known research in personal finance was carried out in 1920 by Hazel Kyrk. Her doctoral thesis at the University of Chicago laid the foundations of consumer economics and family economics. Margaret Reid, professor of home economics at the same university, is recognized as one of the pioneers in the study of consumer behavior and household behavior.
In 1947, Herbert A. Simon, a Nobel laureate, suggested that a decision maker does not always make the best financial decision due to limited educational resources and personal inclinations.[3] In 2009, Dan Ariely suggested that the 2008 financial crisis has demonstrated that human beings do not necessarily always make a rational financial decision and the market is not necessarily self-regulating and corrective of imbalances in the economy.[3][5].
Therefore, personal finance education is necessary to help an individual or family make rational financial decisions throughout their life. Before 1990, economists and business professors paid little attention to personal finances. However, several US universities, such as Brigham Young University, Iowa State University, and San Francisco State University, have begun offering financial education programs in both undergraduate and graduate programs over the past 30 years. These institutions have published several works in journals such as "The Journal of Financial Counseling and Planning" and "Journal of Personal Finance." Research on personal finance is based on several theories such as social exchange theory and andragogy (adult learning theory). Professional bodies such as the American Association of Family and Consumer Sciences and the American Council of Consumer Interests began to play an important role in the development of this field from 1950 to 1970. The establishment of the Association for Financial Counseling and Planning (AFCPE) in 1984 at Iowa State University and the Academy of Financial Services (AFS) in 1985 marked an important milestone in the history of personal finance. Assistance of the two societies come mainly from professors and graduates of business and home economics schools. AFCPE has already offered several certifications for professionals in this field, such as Accredited Financial Advisor (AFC) and Certified Housing Advisors (CHC).