The Money Management is a guide to help you take control of your finances. It will help you determine your net value, set goals, monitor your cash flow and track expenses. A sound spending and savings plan is the foundation for your long-term financial success.
Money management is the process of managing money. Good money management starts with good planning. It includes investment, budgeting, banking and taxes. Creating a budget for all household income is the most important part of personal money management. Budgeting helps individuals and families to understand their cash inflows and outflows, giving them an understanding of their current financial situation.
It is also called investment management. The idea of money management techniques is developed to plummet the amount individual, firm and institutions spends on items that add no significant value to its living standard, long-term portfolios and asset-basins. In the twenty-first century it has become fashionable to manage one’s own investments, yet few traders implement disciplined, professional money
management strategies. Professional risk and money management strategies are the foundation for success.
Money management is a defensive concept. Successfully managing your money is not an easy task it requires a lot of time and effort. Money management is a risk management. Risk management is the difference between success and failure in trading. Trading correctly is 90% money and portfolio management.
In stock and futures trading, money management plays an important role in every success of a trading system. Money management optimizes capital usage. Few have the ability to view their portfolios as a whole. Even fewer traders and investors make the move from a defensive or reactive view of risk, in which they measure risk to avoid losses, to an offensive or proactive posture in which risks are actively managed for a more efficient use of capital.
There are three basic types of money managers.
This person doesn’t plan for the future by saving. Some individuals in this category may think about planning for the future but still use all their extra money splurging on items that they want in excess.
This person saves their money on a regular basis. This isn’t a bad strategy if it is coupled with a method that creates multiple streams of income that is residual. The savings is good because it takes care of those unexpected expenses and the
emergent financial crisis.
This person puts their money where it can create residual income over a lifetime. This person does save and will spend but saves for purposes and spends to invest in something with a large return.