Are You Wisely Managing Your Hard Earned Money

 

Personal Financial Management

Personal Financial Management, are we cent percent successful in money management.  What normally we do, what we feel right and is that feeling sufficient enough?  To do smart money management you should have an in depth knowledge in different aspects of Financial Management.

Personal Financial Management is the process of managing once personal finance such as income generation, planning and spending the money, saving a part of that money, smartly investing the money and protecting your future financially.  What are the different aspects or areas of Financial Management?

 For a common man, Income is the money generated to spend for day-to-day expenditure.  Income is the money business receive for the products produced, the wages & salaries received by workers for their services, interest received for capital invested and pension for retired people.  

By analyzing, how much money you generate for a specific period and how much fund you need for expenditure you can create a plan for the expenses.  According to the amount or fund available, you can cut down the expenses or increase the amount of income.  Managing the income and expenses by planning ahead is Cash flow. 

Spending entails household expenses, includes expenses for food, rent for a house, for children, entertainment, transportation and whatever expenses incurred for general living. Expenses incurred by liquid money is Cash and by borrowed money is Credit.  If our spending is more than income, we are on deficit that is we are living on borrowed money.  We should be very careful with our credit card purchases that is incurring Debt. 

In order to manage your monthly expenses without going into debt, a Budget planning is very important.  For preparing a budget you should know clearly your revenue and expense that is, how much money is coming into your hand and where that money is going.  This can be done by tracking your revenue and expenses for two three months with the help of an excel sheet or by apps available.

By smartly managing the income and expenses you will succeed to make some left over money, this money is Savings.  Saving little money daily, weekly or monthly by cutting down from expenses little by little seems very troublesome.  You may feel it does not worth the effort we take to save that little.  But if you know the Power of Compounding you can see in future, that little by little growing into a big fortune.

There are different types of saving accounts offered by banks, which includes products from current accounts to savings accounts and recurring deposit accounts etc.

Investing is to plan and allocate the money we saved to help our Capital grow over time.  Investment has to be done wisely, like fixed deposits, systematic investment plans etc.  We invest with long term goals, like education of children, retirement and Personal protection like insurances.

To summarize personal finance management is take wise decisions to manage the income generated in spending, saving, investing and personal protection for financial wellness.

Financial Knowledge & Financial Wellness

Financial literacy is to acquire knowledge about financial skills and to use these skills effectively, such as personal financial management, earning income, budgeting, paying off debt, savings, investing etc.  The earlier you start acquiring financial knowledge the better in managing your money matters.  When you start practicing financial skills, you are less vulnerable to financial frauds. Once you acquired the financial knowledge impart it with family and friends, because most of the people find it difficult and confusing. READ MORE....