Money Management is most important part of our life. As a financial consultant our focused to manage your money and create a wealth for your dreams.
The concept of money management, like the concept of good health, has both short term and long term aspects. What you do today affects your long term outlook, and what you do long term affects day-to-day living. Money management requires both short term and long term thinking. Generally, short term money management involves budgeting, while long term money management involves financial planning. One is about tactics, while the other is about strategy.
Budgeting: Budgeting is 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. Budgeting is simply balancing your expenses with your income.
Emergencies Fund: An emergency fund is an account used to set aside funds needed in the event of a personal financial dilemma, such as the loss of a job, a debilitating illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to draw from high interest debt options, such as [credit cards} or unsecured loans.
We are recommend that an emergency fund contain enough money to cover at least three months of living expenses. Note that financial institutions do not carry accounts labeled as emergency funds. Rather, the onus falls on an individual to set up this type of account and earmark it as capital reserved for personal financial crises.
A married couple who earns 1000000/- annually after taxes should set aside a readily accessible minimum of 250000/- 5500000 to address unexpected financial surprises. The funds should be highly liquid, you just park this money in your saving A/c, Liquid Funds (Mutual Fund). These vehicles allow quick access to cash for satisfying household expenses during an emergency situation.