Money Management for You and Me

1. Most of us work hard to become experts in our jobs and master the technical skills involved because that is what we have been taught to do to be successful in this world of competition. There is one thing more important than all this, that is the knowledge of money management, after all we do all the effort in life to earn good money and have a comfortable life. It many times happens that we start earning also but don't know what to do with the money because we never cared to learn about money management. Consequently, we are not able to get best out of hard earned money and end up putting extra money in bank because that is the only option known to the common man.

2. The education about money management is in fact more important then any other knowledge, due to the shortage of this knowledge in the individuals we find the finance experts being the most sought after people around. It is best that everyone of us know equally well about money management, so that we make our money work hard for us in the same way as we have worked hard to earn it.

3. It is required to be understood that the return on the money we invest is directly related to the element of risk in the investment. The higher the risk, the higher are potential returns that may be possible from the investment and vice versa. The risk appetite of an individual should be higher when someone is younger and has less responsibilities, the same should decrease progressively with age and responsibility increase. Therefore to make maximum out of your money one should make investments according to one's risk appetite and other related factors. An individual should not just put your money in bank deposits only as the money in a bank decreases in buying power instead of increasing because it is not even able to beat the inflation.

4. The available avenues for investment in decreasing order of risk are business investment, property investments, shares, mutual funds, government bonds, post office and bank deposits. One can choose to invest the appropriate percentage of earnings in the above listed instruments for a duration that is likely to yield good returns. Though it is not easy, one has to study each form of investment and then take decision, believe it is worth it.

5. Another important aspect is minimization of tax liability as the tax one can save adds up to the saving, the available means such as tax saving investments, housing loans, medical insurance, life insurance etc. should also be used to the hilt. The net result is increase in saving element and increase in facilities enjoyed at the cost of saving the money that would have gone in tax otherwise.

6. The last but not the least aspect of the money management is the liquidity of investment that is the time frame in which an individual can get the required amount back when he requires the same. The liquidity aspect so important because everyone saves money for a unforeseen requirement that may arise, if the saved investment tool is not able to give you money at the time of requirement than it may be futile. The investment tools in order of the ease of liquidity are Business investment, Property investments, Post office, Government bonds, mutual funds, Shares and bank deposits.

7. So next time get yourself educated about the investment options and put appropriate amount of money in the available tools after a good evaluation of your saving requirement, risk appetite, liquidity need and tax saving element to get maximum out of your hard earned money.