The art of managing money is adequately more than just saving it. You might have a good job that pays hourly, weekly, or monthly. The pay depends on the nature of the job or the country you reside in; money management is very necessary as this helps you have financial stability and gives room for investment.
The risk of being in a financial mess can easily be prevented when your money is judiciously managed.
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WHAT IS MONEY MANAGEMENT
Money management, sometimes known as investment management, keeps track of one’s expenses, banking, budgeting, and calculating investing. Money management can also be expressed as a systematic strategy for ensuring that any amount spent will always yield a profitable result or output. Being rich and wealthy is not only by having a stable source of income or being hard work; there is more to it. To be financially stable, learning some basic money management will be helpful. Let’s dive deep into some of the few steps below:
1- SET UP A BUDGET:
One of the best ways to manage your money is budgeting; this will aid you in working out your expenses around a particular amount. To carry out an effective budget plan, you can have a particular percentage of your wages set out specifically for expenses that are important like electricity bills, feeding, etc. These are the priorities. Also, the net income, or the amount of money left over after subtracting your expenses from your revenue, is an important aspect of your budget; this must not be used in attending to less important things.
2- MONITOR YOUR SPENDING:
Analyze where and what you spend most of your money. To do this, you can keep records of your daily spending in a jotter with the receipt for any purchase; then, at the end of the week, you will analyze to see where you have been overspending or the necessary things you spend on.
Keep track of your money as it starts to grow. Knowing how much money is coming in, how much is going out, and how much profit you are getting is vital for making sensible decisions. If you need more time or resources to create your income statement, utilise an income statement template to manage funds.
3- HAVE A FINANCIAL GOAL:
This is one of the most crucial steps in managing your money. Financial goals are the long-term, short-term, and intermediate financial objectives you set for yourself, which serve as the foundation for how you spend and a comprehensive financial saving strategy. Setting financial goals is an important stage toward financial sustainability.
4- DAILY CHECK YOUR GOAL:
To achieve your financial goals, you need to break them down to a daily amount; this achievement can be built up to get your monthly goal. For example, if you plan to save up 30% of your monthly income ($10,000), you will have to be saving $100 per day and $3000 per month. It is easier to achieve a daily goal with a determined mindset.
5- START UP A PASSIVE SAVINGS ACCOUNT:
To build financial confidence takes time, and it is a gradual process. To achieve consistent savings, you have to put on discipline; this helps to expand and builds on every money you earn. Set one aim, of which you can begin with the accumulation of an emergency fund. Open and connect a savings account to your checking account, then set up an automatic transfer from checking to savings for a specific amount each month. You may also use blockchain technology to build up passive savings, for instance, you can buy Ethereum (for example) and hold it for a long period while its value appreciates passively.
6- INVEST IN WHAT HAVE PROSPECT:
Warren Buffet defines investing as “The practice of laying down money now with the anticipation of obtaining greater money in the future.” With a vast range of available assets and various products that might interest you, investing may be intimidating, especially for novices. However, it is critical that you understand that every investment you make must be prospective. You can determine whether a product is viable by conducting your study and gaining a better grasp of what you should invest in, all without any sentimental ties. While there are countless investment options accessible to both seasoned and novice investors, cryptocurrency, e.g., Bitcoin and Ethereum, is undoubtedly one of the most talked-about at present.
7- BUILD A SAVING LIFESTYLE:
According to American author Napoleon Hill, saving money is the foundation of all financial success. Developing a saving mindset only begins with a step to start saving, which is often the hardest part. With this courageous start toward a healthy financial lifestyle, it is necessary to make strategies to save depending on earnings. You must consider your family’s budgets and spending, determine your priorities, and eliminate excessive expenses. These will help you increase your savings exponentially and help in money management
To achieve your plans and dreams, you will have to put into practice the few steps explained above on money management. Also, you have to be consistent and determined and all that will help you to achieve your goals.