Financial Management: Where Does the Money Go

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Financial Management: Where Does the Money Go

It is increasingly possible to hear about the importance of financial literacy in the modern world, which largely boils down to thoughtful money management. Moreover, many might think that it is necessary to increase income to achieve financial independence. It is undoubtedly very important, but, as practice shows, it is much more important to manage money competently. The earlier a person begins to think about the competent management of personal money and implement fairly simple principles in his budget, the faster money begins to reciprocate, coming in ever larger quantities.

The most important principle of money management is planning and a clear understanding of the current financial picture. Naturally, it is impossible to foresee everything, but it is unnecessary. After all, the more a person manages his financial well-being, the more he stays in it. At the same time, a certain percentage of expenses is laid down for unforeseen situations, which makes them more financially foreseen (Yuniningsih et al., 2019). It is worth noting that managing money competently does not mean denying yourself everything when achieving a goal.

Moreover, a person should think about how expenditure items can be rationalizedfor example, buying clothes out of season, when it costs much cheaper, food on a wholesale basis at more favorable prices. Thus, the cost items will be reduced in terms of spending while maintaining their high-quality content, which will free up part of the money from expenses to maximize the cash surplus, which is the basis for ensuring financial independence.

In conclusion, for competent money management, it is necessary to rationalize financial flows and invest a financial surplus in investment assets while constantly increasing your level of financial literacy. Learning to save money and rationally treat finances is a natural and correct desire and sometimes an urgent need. This helps in all spheres of life: a person spends less, saves and increases income more efficiently, achieves important goals faster, and avoids financial traps.

Reference

Yuniningsih, Y., Pertiwi, T., & Purwanto, E. (2019). Fundamental factor of financial management in determining company values. Management Science Letters, 9(2), 205-216. Web.

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