Money management is important in the sense that it bolsters our future/ future plans and helps to smoothen out the rough patches (of our lives) a great deal.
4 main rules of money management-
1. Spend less than you earn:
We are to keep track of what we earn and what we spend where so that we can streamline our expenses.
Taking credit is not a good option if we cannot repay it or are spending on indulgences.
2. Save at least 10% of your income
Today’ saving is tomorrow’s earning.
We can invest in FDs, mutual funds etc to ” grow” money.
3. Control your debt
RBI reports indicate that credit taking or borrowing has increased manifolds in the last 5 years or so.
Multiple borrowing is a bane for the individual as well as the economy as chances of defaulting increase risk of non-payment of dues thereby siphoning out money from the economic pool.
Rule of thumb says cumulative repayments per month should never exceed 20% of monthly income in order to ensure a decent saving.
4. Invest for your future
After having accumulated a substantial corpus- investment should be done. This way the market gets some money and you will get the return.
It is symbiotic.
A proper financial investment plan has to be done that aligns with the future money that one wants.