Reviewed by Sep 30, 2020| Updated on
Money management is the process of tracking expenses, investing, budgeting, banking, and assessing tax liabilities; it is also called investment management. Money management is a strategic technique to deliver the highest interest-output value for any amount spent on making money.
It is a natural human tendency to spend money to fulfil the cravings regardless of whether they can be justifiably included in a budget. The idea of money management techniques was developed to reduce the amount that individuals, firms, and institutions spend on items that do not add any significant value to their standard of living, long-term portfolios, and assets.
Understanding Money Management
Money management is a broad concept that encompasses and integrates resources and solutions around the investment industry as a whole. Consumers have access to a variety of resources and applications on the market, which helps them to manage almost every aspect of their personal finances individually.
When investors increase their net worth, they often frequently pursue qualified money management advice from financial advisors. Generally, financial advisors are affiliated with private banking and investment services, offering resources for holistic money management programs that could include estate planning, retirement, and more.
Frugality by Warren Buffet
In one of his documentaries, Warren Buffett admonished prospective investors to follow his widely regarded philosophy of "frugality". This implies that every financial transaction is worth the expense:
- Avoid any expenses which appeal to vanity or snobbery
- Often use the most cost-effective option to set small thresholds for consistency variation, if any.
- Favour interest-bearing spending rather than all others
- Set the expected benefits of any desired expenditure using the plus/minus/nil canon to the standard living-value system.
These strategies accelerate investment and expand portfolios. There are also certain companies offering services, providing counselling and various money management models. Those are built to handle and grow grace properties.
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