For more information on Southern's ADA Compliance efforts, please visit our Accessibility Page

By: Charlestien Harris

In last week’s article, I addressed teaching financial principles to your kids, and today we’ll discuss a few important principles to remember as adults. We’re discussing the five categories that attribute to personal finance, which are income, spending, savings, investing, and protection. These are critical to shaping your personal financial planning.

Income is money received, especially on a regular basis, for work or through investments. This is the category that starts the process of understanding your finances. It is the first step that is considered when starting the spending plan or budget process. Knowing how much money you have coming in will influence your decisions when it comes to distributing that income to categories that can affect the outcome of your finances.

It’s also important to know the difference between gross and net income. Gross income is income received before taxes and other deductions are taken out, while net income is what is left after taxes and other deductions are taken out.

Spending is paying out (money) to buy goods or hire services. Spending is usually thesecond action that is taken when it comes to money. In this category we tend to develop habits that constantly affect how we use, think, or feel about money.

Normally, a spending habit is a repeated and sometimes involuntary routine or practice you have around using money to purchase experiences, services, and things.  Those spending habits can make or break a budget. This is especially true for phantom purchases or unexpected events such as an emergency. Keeping a tight grip on spending can determine your success in reaching your financial goals.

Savings is income not spent, or deferred consumption. In other words, it is money set aside for future use and not spent immediately. Saving is the most critical step in the process of understanding your finances. There are seven main ways to save your extra money, and the best way comes down to the financial goals you set for yourself.

Examples of ways to save:

  • Checking account
  • High-yield savings account
  • Money market account
  • Certificate of deposit (CD)
  • Individual retirement account (IRA)
  • Employer-sponsored retirement account
  • Other investments

Take the time to explore each one of these options to see which one fits into your financial picture.  Performing your due diligence can save money as well as time.

Investing is expending money with the expectation of achieving a profit or material gain by putting it into financial plans, shares, or property. In finance, the purpose of investing is to generate a return from the invested asset. Investing should involve careful planning and an acquired knowledge that benefits you financially. It may also require the services of a licensed or certified professional in specific areas of interest.

Protection is any measure taken to guard a thing against damage caused by outside forces. In the case of finances this generally means purchasing some type of insurance. Insurance is a means of protection from financial loss. It is a form of risk management, and it can be used to prevent the risk of a contingent or uncertain loss.

The Consumer Financial Protection Bureau was created to provide some financial education assistance and financial tools to consumers that desire to have the facts about financial matters. For more information visit,

If you would like additional information on this and other financial topics please email me at or call me at 662-624-5776.  Until next week—Stay financially fit!