Introduction

Is it really important if you are earning millions of dollars a year but could not cover your expense? Or you are earning forty or fifty thousand dollars a year but are debt-free and also saving & investing?

“One who is happy has everything, though poor. One who is sad has nothing, though rich.” ― Matshona Dhliwayo

For different people being poor have a different meaning. For some people, it is about money, relationship, happiness, and for others, it is about ability, talent, or motivation. I will only discuss one aspect of being poor is bad money management.

What is Money

According to britannica money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed.

The money you earn is your income and the cost you incurred or used to pay is your expenses. Now, you get a basic understanding of money. Now, you get your paycheck every week or month.

Managing your Money and Income

First Step

First, you take a notebook and put a straight line on the page. You can write down your expenses on the right side and income on the left side. Then, note down this week's income if you had earned it on the left side and the right side your expenses.

Second Step

Compare your income with expenses. If your expenses are more than your income then it is red fag for you. It means you are not managing your money.

If your income is more than expenses then you are doing right for the moment and it can be improved. Now, let's cut down some expenses that might be unnecessary or you are neglecting as they are very small.

Third Step

You now need to note down your reoccurring expenses over the week and month. And divide them into essential and non-essential. Essential and non-essential can vary from person to person depending on their circumstances.

Essential are those that you must have in your daily life like electricity & internet etc and non-essential are those if you had not those products it will not affect your daily routine life like a subscription that are you not using anymore and memberships that are not needed.

Final Step

If you are following all those steps. Then, you already made a list according to your circumstances. And It will be different for every person. So, Cutdown those non-essential products and things.

Bonus

You can invest 10 or 5 percent of your monthly income in stocks or your business. You need to save at least 10 percent of your income because you need to have at least 6 months of money reserved for your income in an emergency.

And what strategies and methods do you use to manage your money?

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