Money Management refers to skills in dealing with expenses. What creates the need for Money Management? Definitely, it is expenses that need special skill to manage not much on earnings. If destiny had sent all of us with enough amount of money so that we could buy all the things we wish to have, there would have been no such thing as money management.
Money Management requires proper planning and a lot of discipline. First of all you need to know how much amount of money you are going to earn every month. If you are drawing a fixed amount every month, no matter how much it is, you are at an advantage over the people who do not receive fixed income every month.
List Expenses by Category
Now, you have to make a list of expenses. For the purpose of money management expenses may be divided into sub categories. Some of them fall under the category of constant expenses. Expenses like rent or mortgage do not change from month to month.
Some expenses are called semi fixed expenses. Though, they also require monthly payment, yet they are more or less within your control. Expenses on petrol and grocery are examples of this category.
Add constant expenses and semi fixed expenses. Subtract the total from your bring-home salary. Now you are left with certain amount of money and your variable expenses. Entertainment is a simple example of this category. Here lies the crux of money management. You have to draw a line between what do you want and what do you really need. Determine how much you are going to save every month. Do not forget to set aside some money for unexpected expenses. Now divide with 30 whatever amount is left with you. This is the amount you may spend daily on your variable needs.
