Personal Financial Management Essay

Rarely do we hear people asking us, “How is your relationship with money? ” Do you spent your money wisely? This question is a little sensitive but honestly, if you’re asked this question, how would you answer? Are you guys still “talk” to each other, separated or worse, “divorced”? Understanding your relationship with money is important in helping you manage it wisely. What am I talking about? Do you have any idea? Ok now,I am talking about the personal financial management. What is meant by personal financial management? Personal Financial management is process of managing your money to achieve personal economic satisfaction.

In other word,it mean every aspect of your life that deals with money. Your personal finances affect your relationships, your lifestyle, and very possibly, your perception of yourself. The idea of management implies that you have a goal or a set of goals in mind. Therefore, the first and most important part of money management is to clarify your own goals, commit to them and write them down. Why do you need money? What will you use your money for? How much do you need? For what? For When? Be specific and realistic. Different people have different needs and different wants.

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Prioritize your needs. Some wants and needs will have a higher priority than others. Make your priorities clear and allocate sufficient funds to each according to the importance you give it. Avoid inconsistencies. For example, if retirement is more important to you than owning a house, then more savings should be diverted to retirement than to housing. And, if funds are scarce, then you should fund your retirement savings before funding your housing savings. Here I would like to associate with the problem of financial management with student in the university.

More often than not, students have problems in their personal life as a results of poor financial control. Why? Is it because the lack of money? or the over expenditure,or ignorance or caused by the poor planning? Through my research that I have done,and the result is shocking because the statistics show that the problem of financial management is rarely as much as 17%, 37% for occasionaly and frequently is 46% meanwhile the frequency of saving money for categorize that save money is only 40% when compared that they does not save their money is 60%.

We can conclude that, they experienced a financial crisis. Here,the several ways on how to manage our financial that is always have a budget for your spending,avoid impulse buying,maintain a cash flow journal and lastly minimize non-commercial lending . Let me begin with my first point that is always have a budget for your spending. So what is budget? A budget is nothing more than a breakdown and plan of how much money you have coming in and where it goes. Could you imagine a business becoming successful if it didn’t keep track of its income and expenses?

The same holds true when it comes to your personal finances. If you don’t know how much money you have coming in and where it goes, your road to financial success will be a difficult one. In other words, you are most likely spending too much. The biggest fear that most people have when creating a budget is that they will need to suddenly cut back on all of the fun spending — things like the occasional coffee or dinner out, movie night, or even the trip to grandma’s for the holidays.

While you may find that you do need to cut some spending after putting together a budget, without actually sitting down and creating one, it is impossible to know what expenses need to be cut, if any. Now that you know how much income you have coming in, it’s time to take a look at your monthly expenses. You can get a solid idea in as little as one month and as you continue, you’ll see patterns develop that you can address. So what you can do? Start with the regular and fixed payments you have, such as your mortgage or rent, car payments, insurance, debt and taxes.

For most people, these are going to be relatively fixed, meaning you can’t easily change the amount that is due each month. After you’ve listed your fixed monthly expenses, it is time to dig deeper to find out where the rest of your money goes. Take out your checkbook or pull your latest bank statement to help you with this step. Jot down how much you spend on things like utilities, groceries, entertainment, subscriptions, and so on. This handy worksheet can help you with keeping track of expenses.

In addition,you also can use a Row-by-Column ledger, spreadsheet or other software to keep track every month. If you exclusively use a debit card for your purchases, the bank will do this for you. Now that you can visually see how much you fall short, you can adjust your spending or saving in certain areas to improve the situation. Oftentimes you’ll realize that by just making a few small adjustments to your spending habits, you can significantly improve your situation. Maybe this means cutting back on one of your magazine ubscriptions, eating out one time less a month, or even just hitting the matinee instead of the prime time movie. Typically, just saving a few dollars here and there can be enough to not only make sure you spend less than you earn, but also apply a few extra dollars to things like high-interest credit card debt or your retirement savings. Let me end by saying good money management is largely a matter of making good decisions and setting up good systems to manage your financial operation.

If you can set up systems that work for your organization to handle your daily accounting, payroll, payables/receivables, and grants management issues; if you can anticipate and deal with cash flow problems; and if you can invest wisely when you have money to spare, then you’ll have your money management under control. This will allow you to do a better job at whatever it is your organization is trying to do, and thus to provide more benefit for your target population and for society. A man is but the product of his thoughts. What he thinks, he becomes. Mohandas K. Gandhi