Money Management: Definition, Importance & Simplified Guideline(+ tips & pdf)

Money is beyond just earning ends meet, there is more to it. Life is much better when you have basic financial skills to help you manage both your outflow and inflow incomes.

How you spend your money affects your credit score and ultimately how much you will owe. Do you have a money management issue? Then, here are some tips you can use to improve your financial habits. But, first, you need to understand what money management is, so as to understand how you can make it work for you.

Money Management

Money management simply refers to the process of monitoring the use of funds through budgets, savings, investments, expenses, or other funds. The term can also relate more closely to investment and portfolio management.

What is Money Management?

Understand that money management is a broad term that encompasses and combines services and solutions across individuals and investment industries.

In the marketplace, consumers have access to a variety of resources and applications. Often, this allows them to individually manage almost every aspect of their personal finances. Just like when investors increase their net worth, they often seek the services of a financial advisor for professional money management.

Typically, financial advisors are associated with private banking and brokerage services. They also provide assistance with general money management plans, including real estate planning, retirement, and more.

Money Management International

Money Management International (MMI) is one of the most accessible not-for-profit credit counseling agencies in the United States. Consumers seeking financial assistance can start the archiving process on the institute’s online portal via the option to chat with an advisor on their website or call the advisor at any time during the assistance process.

Meanwhile, MMI is available in all 50 states. They are available to render help to individuals or organizations seeking 24/7 phone reach for debt and budget counseling. Also, if you need free support after a natural disaster. The agency’s via their post-disaster coaching can help you navigate FEMA, insurance, and financial hardship as a result of the disaster.

MMI Fees and Services

Below table shown vividly on MMI services and it’s fees charges.

MMI ServiceFee
General budgeting and adviceFree
Debt management planStartup fee of up to $75; average is $35Monthly fee of up to $50; average is $24
Bankruptcy counselingPre-filing: Up to $50, depending on state of residencePre-discharge: Up to $50
Student loansUp to $199
Housing counselingFree to $199, depending on the service
Nerdwallet

Tips for Money Management

Money management doesn’t have to be overwhelming. Instead, manage your finances by implementing these skills below one at a time.

#1. Open the right bank account

The right bank account is very important for your financial success. Generally, not having the right bank account to manage your finances is like not having the right spare parts to manage a car. However, you need to create a checking account, a savings and investment account. Because this is an essential element of financial success.

#2. Know your present financial status

This can be a bit scary, but you can not improve your financial situation unless you assess your present situation. Meanwhile, be completely honest with yourself about any outstanding debts and heavy expenses that plague your budget. Congratulate yourself on any good financial choice you make. Also, take your time to write everything down so you can see the full picture.

Read Also: APR Definition: Simple Guide + How it Work.

#3. Determine your monthly earning

Basically, you cannot manage your money if you don’t know your monthly earning. If you do not have a specific number, check your monthly income after tax. It would be easier if you were a regular employee or salary-earned worker. Moreover, freelancers may need to estimate their monthly income as well. Remember, to add the extra income you earn to your monthly earning.

#4. Create a good money plan for your income

If you do not have a plan, it is easy to find that you are running out of money. After all, If you say “yes” to a lot of unnecessary expenses, your savings may be depressed.

In other to avoid financial depression, budget to solve financial problems slowly. However, have a plan on where you want to spend the money. Also, consider your daily expenses and future savings goals. In addition, find a way that suits you and helps you to organize your budget.

#5. Keep track of your expenses

Find the monthly budget expenses that you can reduce. Even if you reduce the $30 unnecessary expenses from your budget, you can save $340 per year.

Some simple ideas on things to reduce may include subscribing to your box or cable package and work lunches.

Read Also: Investment: Definition, Types, Best Guide for optimal Result (+ how it work)

#6. Stick to your plan

When you choose a plan, stick to it for at least a month. Then, take your time to see if it works for you. Anything less than this, you won’t be able to track your finance.

Therefore, find the budget that you want to try, go ahead and follow it. It’s very easy. If necessary, always remember Washington encourages you to “surround yourself” with your goals. So if you are saving money for a trip abroad, just create the picture to keep your goal anew in your mind.

#6. Pay off debts

Debt is an enormous financial burden. It does not only affects your current budget but also your future savings. Therefore, take your debt seriously and make repaying your debt a priority.

Meanwhile, take time to review various debt repayment strategies and choose the one that works best for you. Nevertheless, do not let debt come between you and your other financial goals. Make a plan to resolve it right away.

#7. Improve your credit score

Take steps to improve your credit score. First, take out your credit report and make sure it is error-free, and then use a credit tracking service to avoid future errors. Another way to improve your credit score is to pay on time and keep your credit score low.

#8. Keep good track of your day-to-day income

You can’t make a progress if you don’t understand your daily financial stand. So, make out time each day to keep track of your daily income to help you manage your money well.

#9. Make good use of free money and save early often

Always take advantage of all the benefits your job offers. With free money or extra opportunity from your job or business, you might save some serious cash. Meanwhile, also cultivate the habit of early savings often.

#10. Save for emergency

Emergency funding is absolutely crucial. Unfortunately, life can be very stressful when you do not expect what it brings. Typically, these emergency costs include unpleasant events, such as going to the hospital or unemployment. You never know when an emergency will arise in your life, but you can be prepared for it.

Apps for Money Management

Most people want to spend less and save more, but the daily reality of work, family life, and other promises, makes it kind of impossible. Let’s face it, finding the time and budget incentives is difficult, so some people skip this step altogether.

For these reasons, budget apps have become increasingly popular in the last decade. Using this software, you can link your account to the app and track cash flow. Meanwhile, this makes it easy for you to track your expenses and savings habits.

However, these free or paid apps offer a variety of features that can help improve your financial situation. Below are the six best money management apps you can take good advantage of.

Personal Finance Books

There are over a thousand books on personal finance. Meanwhile, after our research, we are able to list out the best top 10 for you. Check out the following best money management books for 2021.

  • “I will teach you to be rich,” by Ramit Sethi
  • “The automatic millionaire,” by David Bach
  • “The simple path to wealth,” by JL Collins
  • “Retire before mom and dad,” by Rob Berger
  • “When she makes move,” by Farnoosh Torabi
  • “Women and money,” by Suze Orman
  • “Think and grow rich,” by Napoleon Hill
  • “Rich dad poor dad,” by Robert T. Kiyosaki
  • “The total money makeover,” by Dave Ramsey
  • “Broke millennial,” by Erin Lowry

Money Management pdf

For steady refreshment, download the following free pdfs on financial management;

Conclusion

Saving money may seem like a hard thing to do. Mostly, if you don’t have much to start with. But even pennies add up, saving a little can help you do a lot more for yourself. However, It can help you make bigger changes in your life, be in control, and be less dependent on others. So, money management is essential to financial freedom.

Chiemerie Ozurumba (Adorablepen) is a freelance writer & Computer Science degree holder, a personal finance expert, blogger, public speaker, and poet. He is also a relationship & life coach. Currently a writer at BusinessYield.

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