The Importance of Personal Money Management

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The world is becoming more and more competitive each and every day. Just ask your parents how much did it cost to raise a family. Compare the figure today’s spending figure. You should notice a big gap in between. Those days, a working adult can raise a family of few children easily. Today, people struggle to even have two children in a family. What are the things that cause a sudden increase of the living cost? It doesn’t really matter because we have little control over that. What we can control is how we earn and how we spend our money.

It is important for everyone to have correct technique of money management. It is particularly important during this economic crisis period. Without proper money management guidelines, you can hardly control your expenses over your income. You will have difficult time to figure out where does your money actually went. The consequences of poor financial management are negative net worth, stuck in bad debt and always worry about money.

Money management helps you understand your financial health. Most of the people only focus on how much they earn and how much they can save every month. Only focus on how much you earn and how much you save doesn’t tell you the complete story of how you spend your money. By monitoring your personal cash flow, you will have a better idea of where and how you spend your money. Finally, you will be able to categorize your expenses and identify which items to be reduced in order to cut necessary expenses. Thus you spend your money more meaningfully.

Money management helps you to achieve your dreams. We all have our dreams. Our dream cars, dream house, dream vacation, etc. It is not surprised that those items are dream for them eternally. Without proper money management skill and knowledge, people fail to set priority. We spend our money on unnecessary items most of the time. If you have a dream, allocate a portion of your income to your dream. Save a portion of your income that is within your ability and never spend it, unless you spend it on the area that is helpful to achieve your dream. This is like a dream fund. You save a little every day and one day you may be amazed by how much money you have saved and finally your dream come true. Of course, saving along won’t get you there fast. You need to properly invest your saving so that you money earns you more money. There is only so much you can save if you earn a fixed income.

Money management keeps you away from surprise. Our world is less secure today. Whether you agree to that statement or not, we all face some emergency time in our life. Due to some unexpected scenario, we need some huge amount of money that we don’t have urgently. For instant, sudden illness diagnosed by doctor, will of God, etc. If we set aside a portion of our income and treat it as our emergency fund, we won’t face a too difficult time when that kind of scenarios happen. Don’t Wait and Start Planning Today.

It doesn’t really matter how much money you may or may not have right now, start to plan you spending now. A long journey starts with first step. If you keep waiting and find yourself some excuses so you can feel better for the moment, you will forever be where you are. Cut expenses and save money is only the first step to financial freedom. It is followed by proper money management habits and invests your money smartly. Start to set goals and create a spending plan. It only cost you a little time and you will be one step closer to financial freedom. Conclusion

List down all your wants and needs. That includes your daily necessity spending, your children’s education, you dream, your insurance, etc. Allocate a portion of your income to each and every wants and needs and assign an account to them. Spend as per what you have allocated and never exceed the amount. Do not play juggling with the money allocated to those wants and needs. If you have allocated to save 40% of your income to your daily necessity expenses, stick to it. Don’t exceed the amount when you suddenly find some eye catching items and temporary “borrow” some money from your other accounts. Start practice it today.

Source by Yong Tiong

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