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What Does Financial Management Really Mean?
Trying to find effective ways to manage your money in today's world is becoming increasingly complicated. Not only do we have more spending options than in the past, it is increasingly harder to earn a regular, stable income and there are more temptations for us in terms of credit and other facilities.
People use their money in different ways and they way they spend their money is determined by their own values and priorities. The world is full of temptation for all of us - holidays, new clothes, electronic gadgets, cars, restaurants and new furniture. While it's tempting to indulge in an extravagance it is not always possible. Of course, there are credit cards, personal lines of credit and even borrowing against the equity in your home. But for many of us, these aren't always the best options. In fact, without knowing your financial worth and priorities, you may get in over your head financially.
This is why financial management is such a critical issue. If you have an accurate financial picture you can then plan for the future, irrespective of whether it is three months or 10 years down the road. That's why taking control of our money right now - where it comes from and where it goes - is the first step towards a secure future. Here are some key questions that will help you take this step:
What is a Budget?
This is how you organize your finances. A budget can be as simple or as complicated as you want it to be. A budget provides you with an overall picture of where your money is coming from, when it's coming in and how it's being spent. Above all, a budget should be flexible, so this means that you should allow it to change according to your circumstances.
Budgeting helps us achieve our short-term goals such as paying the monthly bills, taking a course of education or paying off a credit card. A budget can also help us to plan for longer-term financial goals such as buying a home, a car, paying for an education, a wedding or a holiday.
Who Should Budget?
Everyone should take the time to prepare a budget. No matter what you financial situation - how much you do or don't earn and how much debt you do or don't have. A budget gives you a 'snapshot' of where you stand financially and where you're headed.