5 Money Management Principles are discussed in this article with some key points listed and explicated and we hope you find them helpful.
5 Principles of Finance
What are the basic Personal Finance Principles
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Money is heard in the mouth of everyone, whether a man or a boy. It is not just heard, it is seen everywhere, both online and offline.
Everyone wants to make money and a lot of it. The goal of every business venture is to hit the stock market and be listed amongst the top gainers.
Money is very important in our day-to-day activities, it helps us to meet our needs. But unfortunately, not many of us can manage our money well.
We get our salaries on the 28th of the month and before the 5th or 10th of the next month, we are already broke. Our inability to manage finances tells on our children, they are sent out of school for non-payment of fees, and sometimes, we are unable to renew our rent when it does expire as well as so many other misfortunes that are caused by lack of money.
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Money Management Principles
Let’s take a closer look at how to manage the finances that we have acquired or earned. Follow these simple steps and see your financial life ascend.
Below are some of the Money Management Principles:
1. Make sure that what you spend never exceeds what you earn
It is common knowledge that when what you spend in a month exceeds what you earn, you are heading toward a life of debt and depression.
For instance, if you earn 500 naira on a monthly basis, you should plan your expenses at around 300-400 naira. Eventualities often loom when we least expected, so be sure that your expenditure is not equal to more than your income so that you don’t get to borrow from anyone.
2. Meet the needs, not the wants
As a human, there are so many things that you want but your present income may not allow you to have all that you want. It is then important that you state clearly what you really need.
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Most people buy things that they do not need and when the actual need arises, they end up running from pillar to post in search of money to meet that particular need.
3. Set Priorities
even after you have decided on the things that are your needs, there are some of them that take the first place. For instance, if your rent will be due in two months’ time, it is important that from this month, you plan towards paying your rent by setting a greater percentage of your earnings aside for the payment of your rent. Doing this will ease the stress of having to owe a landlord.
4. Avoid Impulse buying
Don’t buy everything your eyes see and like in the store. The best way you can do this is to write a list of what you want to buy before going to the store lest you will find out that you will just be buying anything that comes your way.
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5. Engage in bulk buying
Things are usually not expensive when they are bought in bulk. Retail purchase is usually very expensive because both the wholesaler and retailer will benefit from your purchase. Meager things like sugar, salt, seasonings, noodles, etc should be bought in bulk to save more money for yourself and your family.
