Every phase of our life is filled with risk. The good thing is the jeopardy in personal finance can be clearly defined. The risk associated with our personal monies can be categoriezed under three broad areas:
1. personal life
2. loss of income
3.Rising price
Personal risk:- This is a very broad category and can be defined as all the types of risk associated with ourself. This includes the risk of falling an ill or any issues with our health. Personal risk also include the threat associated with the people in our life about whom we care or are responsible for.
The best way to protect ourselves against all ill financial effect of personal risk is insurance. Take health insurance, fire insurance, for house, vehicle insurance and most importantly life insurance.
Inflation risk:- Price of thing we need and thing we buy are always rising and this can lead to a loss of our ability to buy them.The risk with buying now is that we may not necessarly need the stuff now and end up locking precious liquid money by buying it.
Income loss risk:- Although we would always like to believe that our job is forever, it may not always be the story. companies which are stable could close overnight, we may be forced to quit our job ar anytime due to personal reason.
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