Many of the business accounting concepts and methods of financial analysis that we have discussed in this book can be used in managing an individual's personal finances. This chapter discusses how these concepts can help individuals to manage their personal finances. It is often the case that parents cannot or do not teach their children about managing money effectively. Also, schools do not teach students about the fundamentals of earning and managing money. The result is that often young adults start their careers with little or no knowledge of effectively earning and managing their money.

Financial literacy is the ability to understand money how you get it and how you use it. Unfortunately, most people don't take the time or have the opportunity to learn about managing their own money. Managing money takes financial knowledge, discipline, and a plan. Anyone can improve his or her financial position by obtaining the necessary knowledge and tools. It is important to start when young to develop and apply fundamental money management principles to enable individuals to create equity and net worth.

This chapter includes information from prominent authors and corporate programs on money management and investing. This information focuses on understanding the fundamental concepts of managing and investing money and how to develop your own personal financial plan. Two important goals are, first, to generate enough monthly income or cash flow to live as you would like and, second, to develop the knowledge and establish goals to increase your own equity or net worth.