Catholics believe in the personal and final judgments because Christ told us we would be judged for all of our actions and that He, the Good Shepherd, would separate us like sheeps from goats, the good from the bad.
St. John of the Cross said, 'On the evening of life, we shall be judged on our love.'
All of our actions here on earth matter because we believe that we were created to spend eternity with God. Therefore the things that we do and don't do have an effect on our souls. If we don't choose God on earth, how will we be ready (or willing) to spend eternity loving Him?
First, we experience our 'personal,' or 'particular' judgment at the moment of death when we come face to face with God (CCC 1021 – 1022). After this judgment we're either permitted into Heaven, sent to Purgatory for more purification, or to hell if we desire to be separated from God.
Then, we experience a 'final' judgment after Jesus' second coming and the resurrection of the dead. We can never know exactly when this will be. In Matthew 25:31 we hear that Christ will come . . .
'in His glory, and all the angels with Him . . . Before Him will be gathered all the nations, and He will separate them one from another as a shepherd separates the sheep from the goats, and He will place the sheep at His right hand, but the goats at the left . . . And they will go away into eternal punishment, but the righteous into eternal life.'
After our final judgment, we'll spend eternity either with or without God.
Since God knows all things, He sees the good and bad we do and we have to answer for all of it. The reality of our personal and final judgments shouldn't be a reason to be worried or paranoid about all of our actions. God is just, but He is also merciful. He knows our struggles, our life circumstances, and the desires of our hearts.
Instead, the knowledge of the personal and final judgments should inspire in us a stronger desire to live a virtuous life and run to the Sacrament of Confession at every opportunity. It should also be a cause for hope because at the end of time . . . Christ wins. His love is victorious over the forces of evil. The Catechism says in paragraph 1040 that
'We shall know the ultimate meaning of the whole work of creation and of the entire economy of salvation and understand the marvellous ways by which His Providence led everything towards its final end.'
It’s not easy to choose God all the time, but He sees our efforts and doesn’t forget. He told us that if we live for Him, despite opposition from the world, we should “Rejoice and be glad, for your reward will be great in heaven” (Matthew 5:12).