Money Management

Money management refers to planning your money matters, including setting goals, building a budget, cutting down on unnecessary expenditures, saving money and making investments taking into account your risk bearing capacity. A money manager is a professional who can help you achieve your money-related goals, which could range from current survival to long-term stability.

Money management refers to planning your money matters, including setting goals, building a budget, cutting down on unnecessary expenditures, saving money and making investments taking into account your risk bearing capacity. A money manager is a professional who can help you achieve your money-related goals, which could range from current survival to long-term stability. Taking into account your goals and income-generating capability, money management helps to determine your ideal risk exposure and identify the financial instruments that best suit this.

 

Important Elements of Money Management

Money management has four important elements. These are:

• Joining a retirement plan: If the firm you are working for offers a retirement plan, apply for it. Opt for the maximum limit you are allowed in the retirement plan.

 

• Eliminating debt: Clear your credit card debt at the earliest, even if this impacts your lifestyle for a few months.This is because credit card debts have a very high interest rate. Meanwhile, ensure that you are making your monthly payments on mortgages and other loans, as your credit rating may take a hit if you default on these payments.

 

• Building cash reserves: Cash reserves act as a cushion for times such as when your income check is delayed, you are in-between jobs or there is some medical or household emergency. You could build this cushion by putting away funds into a savings account and short-term deposits.

 

• Investing: You could invest a certain amount in money market funds, treasury bills, stocks and/or bonds on a regular basis.

 

Money Manager: The Concept

Personal finances need attention, especially if you have an extensive asset and securities portfolio. A money manager is an individual, business or financial institution that manages your funds and securities and asset portfolio fora fee.

Money managers generally offer personalized services and the ongoing management of your individualized portfolio.A money manager could assist you from the planning stage or simply manage your portfolio of investments, which may include fixed-income securities (such as corporate bonds, agency securities and mortgage-backed and asset-backed securities), equities and other financial instruments. Since the fee for professional money managers is a percentage of the assets they manage, it is in their interest to ensure that your portfolio grows.