Money is something which is never enough. You may be a billionaire / a millionaire or any-damn-ire, you still percieve that you don’t have enough of it. Rather it is quite the opposite. When you own more money, you need even more of it. I remember the day when I delightedly settled with minimum sum that I had. But with due time, as my earnings grew further, I observed as if I am lacking money. So it is obvious that, what matters more than how to earn money is, how to manage money better. Hence through this blog, I will send word on why money management is important along with some vital personal money management tips. 

Why money management is important ?

Someone has rightly said, “Money has wings.”

If you are not watchful, it flies away. Therefore, comes the concept of money management or financial planning.

What is financial planning ?

Financial planning is step by step guide to manage your income and assets so as to meet your present and future financial goals.

How to make the best use of your money ?

I must admit here that I am no financial expert. However, I am going to share with you couple of personal money management tips, bottomed on whatever little experience I have so far. 

As per layman’s understanding, managing money comes under 2 broad headings. First one is ‘Saving’ and the second one is ‘Spending’. Both are elaborated below. 


When I traverse back to my childhood, I recall the days when we kids were occasionally given some money to spend. Some kids would buy ice-cream. chocolate, toys etc. Whereas some kids would save those money to get something bigger, better and worthier. But, what is the optimal thing to do with your money? Is it to spend or to save?

Well, the answer is, you should balance both. It is said that, you should keep aside at least 20% of your income as saving. Then you can plan ahead to spend rest 80% money.

Below are some ways, how to utilise your money from ‘saving’ 

a. Emergency fund :

The foremost step to financial planning is to create an ‘emergency fund’. An Emergency fund is crucial to deal with unforeseen expenses of future. It can be used for healthcare, education or during the course of financial crisis. 

Evidently this coronavirus has proven the value of an emergency fund. The year of pandemic has definitely taught us why money management is important.

b. Pay Loan :

After keeping some money as reserve for emergency fund, the first thing that you should do is pay your debt. Do away with your loans as early as possible. Here I am talking about the loans especially with high interests, such as personal loan. 

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c. Investment :


If you are pondering how to manage money better, then do not merely keep your savings in bank account. Because, if you do so, then you will not be able to beat inflation rate. Consequently you will be at loss.

Money is something that should flow rather than being stagnant. Thereby, comes the concept of investing.

“Investment” is not just a big fancy word, but it is a necessity. You need not have lacs of money to invest. It can be done with nominal sum, as small an amount as 100 bucks a month.

There are numerous ways to invest. Fixed deposits, recurrent deposits, gold, real estate are some traditional methods put into practice across generations. Also, there are mutual funds, stocks etc. too which provide better returns if utilised judiciously.

If you go by present-day personal money management tips, instead of buying gold jewelleries, buy ‘gold bond’ or gold ETF. Since for gold jewelleries you have to pay added making charge, which does not grow over time. 

d. Retirement plan : 

No one can earn a living through out his/her entire life. Thus secure your future with a retirement plan (pension scheme) from today, with a piece of your saving. 

e. Insurance :

Health insurance for each member in family, is something that no man should miss out. Future is highly ambiguous. You never know what is stored in the box for you. An illness can burn out all your savings. So, you should not mind expending a little money every month on medical insurance. It’s a must.

Term life insurance policy is advisable for each earning member of family. It offers tax benefit as well. Hence, opt a plan as preferred. Also, it shows that you are concerned about people close to you, who are financially dependent on you. 

f. Tax saving :

In majority of the countries, you have to pay quite a fraction of wages as tax. It is disheartening to loose your hard earned money this way. 

However you can certainly reclaim a portion of it by getting insurance policy, EPF, PPF, tax saving FD, ELSS mutual funds etc. If you have home loan or you are paying house rent then also you are eligible for some tax exemption.

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We rely upon money to fulfil our requirements. These requirements fall under 2 categories. First one is basic or essential requirements such as food, clothes, house, bills, gas etc. Another sort of requirements are non-essential requirements, for purely entertainment purpose, say going to restaurants, movies, travelling, shopping etc. 

As stated by budget rule, you should spend 50% of your monthly income on essential/basic requirements and 30 % on nonessential requirements. This is after keeping 20% of your wages as savings as mentioned earlier. 

The  basic requirements can not be cut down, whereas rest expenses are remarkably flexible.

Below are some personal money management strategies you must consider while spending money. 

a. Budgeting : 

At beginning of every month, formulate a budget as to how you are going to utilise your income for that month. It is called budgeting. This blueprint will keep you aware of your financial limit and will help you to manage money better.

b. Cashless money :

Now a days Paytm, Google pay, net banking etc. have effected in easier money transfer. As you don’t have to hold cash with you. Besides, e-commerce sites offer shopping at fingertips. Plus, there are credit and debit cards too. 

Which is why, today money transfer is smooth, painless and more user friendly. But on the flip side, we don’t realise how much we are spending. Doing so, we end up spending more and sometimes recklessly on stuffs that we don’t actually need. That is why money management is important today.

So, always be attentive while spending through cashless means. Budgeting will surely help you here. 

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c. Shopping rules :

Many a times we buy things that are not all-important. Sometimes we get things at add-on price. Also at times we buy things that we barely use. Henceforth, ease off your shopping mania. 

Lockdown has taught us one simple real-life lesson that our budget is very much stretchable. We can adapt with modest amount of money as well. 

So, the bottom line is your hands should not be too tight. However, spend just as much as you can afford. 

How to manage money as a college student ?


I wish someone had guided me on how to manage money as a teenager or at least how to manage money in your 20s. Many eminent entrepreneurs knew the importance of financial planning for students from very beginning. That is why they took personal financial planning process very keenly from their college days. 

You may be wondering, how much money should a teenager save. It should be not less than 20% of whatever he/she get, as per budget rule. But I would suggest save as much as you can. Reason being as a teenager you don’t have to pay much on your basic or essential requirements. 

Let us assume you are in your 20s and have a consistent source of income. You start investing 2000 bucks per month in a good mutual fund that delivers 14% return. When you will be in your 40s, that is 20 years later, your net worth will be close to 26 lacs. 

Yes, I am not kidding. It is all because of compounding. Thus more than anyone a teenager should know why money management is important.

To wind up :

Money is not equivalent to happiness. Yet, people who don’t have idea how to handle money well, end up spending everything irrationally. This eventually leads to an unhappy life.

Thus, you must apply these personal money management tips in your life. Leave your opinion in comment box below. Share this useful post with your friends and family and let them know why money management is important.

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