“Before Money becomes Wealth, it’s just Money. And for making Wealth from Money, we need to MANAGE it.”
Money Management is the broad concept which incorporates the key principles required for developing wealth and for preserving and protecting that wealth. It teaches about investing, budgeting, banking, tracking your expenses and assess the tax liabilities. This can also be called as Investment Management. Thus, Money Management is a technique where high interest output is delivered with any amount invested for money.
Spending money for satisfying needs, wishes and cravings regardless of whether they are justifies and included in a budget. can be seen in every human and is a very natural tendency and phenomenon and this idea of money management is especially developed to make the people, institutions and firms understand how to channelize and reduce the amount of money spent on different items and values which care not significant and which do not have any contribution in enhancing their living standards, long term asset or benefit. Money gives you the sense of self fulfilment and this sense of self fulfillment doesn’t come from rigorous spending of money or buying wealth but from having an amount of money which will not get outlived while fulfilling their lives needs, ambitions and providing a meaning livelihood which is convenient for them.
Thus, for money management it is also important to properly analyze the behavioral aspect of individuals or firms. Money Management also focuses on the behavioral attributes which influence the decision made by investors or organizations or individuals. And this decision making phenomena can severely affect the outcomes of long term strategies. In fact, everyone battles against the powerful elements like taxes, debt or inflation etc. which have the power to destroy and take away the wealth that we have attained by working hard. And a single wrong decision can affect and ensure our defeat.
8 Tips for Money Management:
- CREATING A COMPREHENSIVE BUDGET PLAN (Listing the amount of money you receive and planning how to manage your expenses by using that amount and what will be your savings.)
- TRIMMING UNNECESSARY DAY TO DAY COSTS (Identify different ways to save and start from small scale. Eliminate day to day unnecessary costs and avoid penalty charges and fines)
- FIND WAYS TO PAY LESS INTEREST ON YOUR DEBTS
- MAKE GOALS FOR EFFECTIVE SAVINGS AND ACCELARATE THE SAVINGS
- AVOID PAYING MORE TAX THAN NEEDED
- USE ONLINE BANKING (because they help in setting up payment reminders, scheduling future bills and help in reviewing and analyzing the amount of money spent.)
- SAVE FOR RETIREMENT AND PLAN ACCORDINGLY
- WORK WITH AN ADVISOR (To reduce financial stress and feel secured. They help in analyzing your financial status and set up goals.)
NEED OF MONEY MANAGEMENT
- Money and Finance Management is a vital part of personal and business life. Hence, it is hard to ignore and needs to be planned with proper vision, career, finances, goals etc. and these will drive your future. Proper financial knowledge is important for starting any successful business and it is the ability to manage one’s money.
- It develops the ability of a person to understand financial concepts which will help him in managing money better. And ensures financial well being.
- Money Management and Financial literacy is one of the major life skill and it increases the financial ability of a person. One can start investing in his 50s also but starting early has its own benefits.
- Today, the rich is getting richer, poor is getting poorer and the middle class people are getting indebted. The reason is the lack of knowledge of money management. People learn about money management from their parents and families and not in school. What will the children of poor people learn about money management for them? The only thing that they know is to study hard for getting a job. That’s why even after having proper knowledge, skills and expertise they don’t get proper job and don’t get enough savings.