Money Management for Individuals

November 17, 2008 by  
Filed under Retirement


Money Management is a broader term which includes analyzing your income, expenses, making use of your current resources (cash or asset) and how to achieve your financial goals. Managing money in a right way might be a difficult task for youths. You would not understand the real value of money unless you are engulfed with financial crisis. Always maintain the habit of writing down your income and expenses, liabilities, bill payments etc. Doing so would help you to pay your bills before the deadline and avoid unnecessary late fees.

 

It is always better to set a proper financial plan to meet your future expenses. You can set a short term or long term goal. Planning alone does not mean that you could achieve your goals you need to adhere to the plan and execute it. You could also consult a financial planner who could help you to achieve your financial goals.

 

Always document your bills and receipts. Check your Bank statement and credit card statement, and inform your Banker immediately in case of any discrepancy. As the technology develops there seems to be lot of fraudulent activities, we might not know unless we check our accounts with care.

 

Budgeting

Itemize your monthly expenses in a paper and then check if you have sufficient income to meet those expenses. If you find out that your income exceeds your expenses then you are doing better. On the other hand if your expenses exceed your income then you really need to work out. Either you need to increase your income or cut down some of your avoidable expenses.

 

Savings & Investments for future

 

Always develop the habit of saving a portion of your income. You can probably save your money in a Bank as a Savings Account. Savings Account has the benefit of depositing or withdrawing money at any point of time.

 

If you think you have enough money in hand and have set aside some money for emergency expenses, you could invest the money in Term Deposits, Mutual Funds or Stocks. Investing helps to increase the money you possess.

Maintaining Reserve for Emergency Expenses

Always make sure you have enough money set aside to meet your emergency expenses. You wouldn’t know when you might urgently need money.

 

 

Make more out of your Money

Always try to make more profit out of your money at a lower risk. If you have a fair knowledge in Stock markets you could invest in Stocks instead of the Term Deposits which offer comparatively low returns. But you need to remember that anything that fetches more profit comes at the cost of higher risk.

 

Loans & Credit Cards

 

Apply for a loan only if you really need it not just because you are eligible to receive it. Always try to clear off your debts as soon as possible or else you may need to pay more money by way of late fee or interest. Credit Card bills are a major headache if you don’t pay the full amount that is due. Interest rate for credit card is very higher than personal loans. Make sure you pay your credit card bills way before the deadline.

 

Avoid Lavish Expenses

If you don’t have enough income to meet your regular expenses avoid spending on unnecessary stuffs. Say for instance Tours, Movies, expensive Mobiles, expensive novelties etc.

Life Insurance

Life Insurance is a great way to financially secure one’s family members or dependants in case of his death. Apart from this Term Life Insurance offers the benefit of money-back guarantee which means if the policy holder survives after the policy gets expired he would be paid the maturity amount along with some bonus amount.

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