Experts opine that money management is a tedious task. No matter for what purpose you save money, you need to create a plan in the first place. In fact, designing a money management plan for personal needs is just like creating a budget.
Personal Money management is bigger concept when compared with budgeting. Money management plan involves every activity within your financial resources and encompasses your savings, retirement, recreational spending and so on. You cannot ignore the simple aspects of income and expenditure while planning money management.
Steps in creating a money management plan
- Make sure that you check your spending each day, say for a period of 30 days. You need to itemize the monthly bills including mortgages and utilities. In fact, you incur these expenditures on a permanent basis.
- Take a note of your credit card balance and payments. Enter expenses on food, leisure, parking fees, personal care, gasoline and miscellaneous expenses. It is important that you list every expense.
- You need to document the entire assets owned by you. Make sure that you maintain a running list of investments, equity in home, savings account amounts and so on.
- It is also wise to track your household expenditure. Money management plan will become successful if and only if you include every financial aspect. Ask your spouse to maintain an expense diary to monitor the personal expenses incurred.
- You need to create a budget as well. There is no point in writing your expenses alone. As you know, limit your expenses if it goes beyond your income. In fact, budgeting at regular intervals helps you know your financial strength and self-sufficiency.
- Make sure that when you prepare the income and expenditure statement, you get adequate balance to meet your debt needs. It is not just about the math in the record, you also need to possess the physical cash or equivalent asset shown in the income and expenditure book.
- Ensure that you pay off the debts in the first place. Try not to bilk debts, as it brings only severe financial woes. It is wise to make payments on your bills within the stipulated date.
Finally, yet importantly, take care that you cut down your spending and increase your savings. In fact, the prime motive of personal money management is to bring in financial stability by raising the amount of assets owned by you.