Manage your Finances

FINANCIAL MANAGEMENT
Financial management is very important in our daily lives.We can never be successful in finances if we have a poor financial handling mentality.
Many people wonder  why they find it so hard to save yet they earn some good pennies at the end of the month.
The answer to this question could be"poor financial management"
The biggest challenge is when one earns money at the end of the month,he/she  feels excited,ending up making unnecessary expenditures which makes it difficult to effectively plan.i shouldn't encourage you to have Unplanned expenditures because any character related to such ,affects your long term economic goals.

PRINCIPLES OF SUCCESSFUL FINANCIAL MANAGEMENT

• BUDGETING One of the basic statements in finance management is" Never spend without an approved budget." Budgeting is very important because it forecasts the level of your income,and expected expenditures to be incurred in the period. Budgeting can simply refer to the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Here, you  simply balance your expenses with your income.  

Spending Less Than You Earn

Personal financial software like Quickbooks and Tally erp provide powerful tools to help you track and budget your spending and take steps to achieve your long-term goals. If you learn to track your finances and know where you spend the most, you'll be able to control your money. "The best way to ensure that you either overcome debt or avoid it in the first place is to never spend more than you make," Perez says."
 

Invest/Put Your Money to Work

Take advantage of the time value of money. Perez gives an example: "A 21-year-old who invests $18.50 a day until retiring at the age of 60 at a 5 percent average annual investment return can be a millionaire. At age 30, the required daily savings amount almost doubles. At age 40 the amount quadruples." So save early and often, even if the amount is small.However little the money is,it is important to save it.

Understand Risk

The key to understanding return on investments is that the more you risk, the better the return should be. This is called a risk-return trade-off. Investments like stock and bonds that have a higher rate of return often have a higher risk of losing the principal that you invested. Investments like certificates of deposit and money market accounts with a lower rate of return have a lower risk of losing principal. Since no one knows the future, you cannot be 100 percent sure any investment will do well. An example, "If you diversify your investments, one can go sour without severe impact to your overall portfolio."

-Perez