In the present-day financial world, simply having a healthy income is not a guarantee to the economic success of individuals. Money management has emerged as a major issue, and people need to make sure that their income is being utilized and managed in a way to support further income-generation. Effective management of money indeed ensures that individuals make the correct investment decisions, and broadly, use their money-stock in a proper manner. This, in turn, is ideal for adding to the existing stock of wealth of the people. Hence, adequate information on the prudent methods of managing money should be possessed by all people dealing in the financial markets.
There are some basic money management tips, which people find useful. These broad guidelines for managing money properly include:
a) Forming reasonable and practical targets for managing money – Successful schemes for managing your money requires a clear, well-defined financial goal from the very outset. People then need to gradually work their ways towards achieving these targets. All finance-related activities need to be undertaken in keeping with these goals. People should make sure they always remain on-course to meet their financial goals.
b) An account of the assets possessed à Individuals need to make a detailed list of all the assets they possess. The nature of these assets also needs to be indicated. Long term assets, assets which depreciate in value over time, and short-period assets, all feature in an investor’s portfolio. These assets need to be managed effectively, so that people attain their required goals with their money,
c) Information regarding income – People have to make sure that they keep track of all the sources of their income. They also need to make an estimate of their average level of monthly income.
d) Information regarding expenditure – When people spend money, they need to do so in an organized manner. A record needs to be kept of all channels of spending by a person. This helps individuals ensure that their spending never goes beyond their income levels.
Effective planning ensures that the income streams and the expenditure patterns of individuals remain ideally matched. This helps in people obtaining the maximum benefits from the money that they earn. With adequate information managing money effectively, people can easily realize their overall (realistic) financial goals as well.