Money management refers to the process of tracking and planning an individual or group’s use of capital. In personal and corporate finance, money management usually includes budgeting, spending, saving, and investing.
To be money smart is a skill that needs to be acquired as this skill will help you to lead an almost seamless life of ease with minimal issues.
WORK WITH A BUDGET THAT SUITS YOUR SITUATION. It is good to have a budget that you work with. Income can be divided into parts this may differ depending on where you do your research 10% to Savings, arrangements can be made with your bank to do compulsory savings, 20% towards debt payments if there are any and 70% to live off for the duration until more income is generated. There is a saying that goes "Live Within Your Means", to do this individuals tend to spend all their income, but I prefer the saying by Kevin Trudeau "Live Below Your Means", when this is practised there is hardly anyway that you will overspend.
KEEP TRACK OF YOUR SPENDING. Pay keen attention to your spending habits and always be mindful of where you are spending money unnecessarily, make a record of the things you spend money on, if spending can be curtailed on items that are not a necessity it would be advisable to do so.
INCREASED INCOME EQUALS INCREASED INVESTMENT AND SAVINGS. When you see an increase in income, do invest it or save it. Do not take on any additional monthly debt, or buy items that are not needed. Speak with a trained investment banker to see how best you can utilise the extra money you hold.
INVEST IN THINGS THAT GIVES RETURNS. Instead of buying an item that doesn't give you any returns, look for and purchase or invest in things that gives you returns on your investment, these could include but are not limited to land, stocks and bonds or an apartment complex.
CREATE A CASH RESERVE. This is so that you have money on hand for any unforseen emergencies, this helps you to avoid the use of credit cards. It is advised that at least 20% of your income should go into this area.
Money Management skills are not acquired overnight, this is acquired through diligence and committment, you have to see the value of learning this skill in order to stick to practising it. On the upside it will reduce your stress levels.
Source: Investopedia, The Balance, Corporate Finance Institute
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