Money management is the process of budgeting,
saving, investing, spending or otherwise in overseeing the cash
usage of an individual or group. The predominant use of the phrase
in financial markets is that of an investment professional making
investment decisions for large pools of funds, such as mutual
funds or pension plans.
The key to money management is to budget your money!
- Calculate your regular income. Include that of your spouse also,
as well as regular income from other sources.
- Make a list of all income sources and amounts. Do you receive
regular overtime or a large bonus? Is it guaranteed? Can you
calculate average amounts by using past bank statements or pay
slips? Try to be accurate and get to an average 'net' (after
taxes) income.
- Write down every daily expense no matter how small the amount.
Calculate your regular expenses. Save all receipts and expenses
for one month. Ideally, you need to carry around a pen and
small pad with you for one full month. Write down every amount
you spend, what it is for and where you spend it. Much of the
spending will be on large, regular items (rent, utility bills
and grocery shopping, for example), but there will probably
be many small regular items too (newspapers, magazines, coffee
shops, snacks, haircuts and entertainment)
- Look at the figures. Money coming in (income) and money going
out (expenses). If your expenses are more than income, you need
to take action!
RESOURCES: Money Management
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Personal Finance
Money Tip: Save before you borrow. The best time to charge is when you really could pay cash. Although that's not always possible, it is possible to build a money reserve that can cover several months' expenses if you run into financial problems. |
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