What Is Money Management?

What Is Money Management?

It simply means managing your income in a way that you can live a decent life while amassing wealth as time passes. There are a lot of people who have zero knowledge about managing their money. They get their salary at month-end and splurge all of it. The result – they have few to no savings left with them. This should not be the case with you. Everyone wants to fulfill the desires of their hearts, like having, a nice car owning a designer bag, or getting an expensive salon treatment.

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But you must learn the art of patience to become a long-term winner. Spending might feel good at the start. But believe me, a few years down the line, not having enough savings and living paycheck to paycheck is a sure-shot recipe for constant anxiety. You must have observed some people who as soon as they get a job, start buying vehicles or making substantial repairs to their houses. This looks good on the surface. But what happens at the month-end. They have to borrow money from friends and relatives for basic expenses.

Yes, there is a group of people who face this. This is the reason why everyone must learn about it. It is an important skill. Often money management and financial management are used interchangeably. It means to budget and plan your income and expenses in such a manner that you would be fulfilling your future goals like financial stability and retirement plans.

Why is money management important?

Financial freedom

Everyone seeks to achieve financial freedom. What does that mean? It simply means that you do not have to be tied to your income to get the things you want. You are in such a position that you have enough wealth to afford a certain lifestyle

Wikipedia even defines it as “the status of having enough income or wealth sufficient to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.” Now, there are a lot of people who have achieved that. Not everyone has to go to such lengths.

If you have sufficient financial cushioning in terms of savings, investments, and available cash balance with a good retirement plan, and that you are doing what you love, you have attained financial freedom. The key to this is starting the habit of savings and investment early on in life. Thus, you would be able to enjoy the power of compounding and generate wealth.

REDUCED STRESS

People with good financial planning and money management habits have reduced stress as they do not have to worry 24*7 about how they are going to pay their child’s tuition fees or how they are going to arrange for their child’s birthday party.

If you do not learn to manage your money, you will have to worry about the fulfillment of the small desires of life or in some cases even the basic needs. Starting early on, it is the best decision. If you have not, the next best time is now. 

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