What Is Personal Finance?
Personal finance is the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time. This includes taking into account various financial risks and future life events. When planning personal finances, the individual would likely consider of a range of banking products.
A Brief History
Before a specialty in personal finance was developed, various disciplines, such as family economics, and consumer economics were as part of home economics for over 100 years. The earliest known research in personal finance was done in 1920 by Hazel Kyrk. Her dissertation at University of Chicago laid the foundation of consumer and family economics. Margaret Reid, a professor of Home Economics at the same university, is recognized as one of the pioneers in the study of Consumer and Household behavior.
Beware of little expenses. A small leak will sink a great ship. — Benjamin Franklin
Therefore, personal finance education helps an individual or a family make rational financial decisions throughout their life. Before 1990, mainstream economists and business faculty paid little attention to personal finance. However, several American universities such as Brigham Young University, Iowa State University, and San Francisco State University have started to offer financial educational programs in both undergraduate and graduate programs in the last 30 years.
As the concerns about consumers’ financial capability have increased, a variety of education programs have emerged. Subjects are created for broad audiences or to a specific group of people such as youth and women. The programs are frequently known as “Financial literacy”. There was no standardized curriculum for personal finance education until after 2008 financial crisis. The United States President’s Advisory Council on Financial Capability was set up in 2008 in order to encourage financial literacy among American people. It also stressed the importance of developing a standard in the field of financial education.