Money management and budgeting essay sample


Wise money management is the ability of individuals to keep up with their current expenses and invest the remaining money. Budgeting is not something that shall be interesting merely to businesses.   Households need to track their expenses to spend responsibly, in the first place. Excessive purchasing is a problem to those who suppose that everything they buy is essential. Sometimes, budgeting can reveal that the total monthly income of individuals cannot cover the essential spending. Wise money management shall prevent households from running in debts.

Creating a personal budget is the first stage of money management. The simplest way is to put down in the notebook all possible expenses that happen on the monthly basis. The order depends on the priority of payments – taxes and household bills come first because they are obligatory. After that, we need to include living costs into the budget. Shopping and insurance shall be taken as an essential part of the budget. Last of all come the additional expenses on travel and leisure time, for example. As soon as a household budget is ready, people can see how much spare money they will have monthly. This sum can be deposited in the bank account.

A personal budget shall be created as soon as people start to earn money. Young adults frequently need to manage living on their own which a financial challenge. Earning their own money, people cannot resist a temptation to spend them as they like. For this reason, we need a personal or family budget – it will show us that a little part of our income can be spent on entertainment or travel.