Money management involves tracking income and expenses through budgeting. It is important to start learning money management early to avoid debt. Mastering basic money management skills like budgeting, setting financial goals, and saving can help achieve financial freedom. Effective money management includes planning a budget each month, paying bills on time, setting aside savings each pay period, and minimizing wasteful spending. The keys are tracking spending, living within your means, avoiding debt when possible, and developing healthy financial habits.

1. MONEY
MANAGEMENT
By Stephen Kiritu Mwangi
Mr. Co-operative
@Frenzyied on Twitter

2. üMoney management is often referred to as budgeting.
üManaging your money is a away to map out how your
money will be spent and how it is currently being
spent.
üIts good to start as early as possible on learning how to
manage your money effectively so that you do not
end up in debt or spend beyond your means.
What is Money Management

3. üYour ticket to financial freedom doesn’t lie in getting a
raise (though that might help) or enlisting services of a
personal financial consultant.
üYour ticket to financial freedom lies in mastering basic
money management.
üAll you need to do is to regulate your finances by logging
income and expenditure, set motivating financial goals
and save for a rainy day just in case e.g. your company
is hit with a round of layoffs.
What is Money Management Cont’d

4. üMoney management is used when you are
planning for a purchase.
üSet aside a certain amount of money each
month or week to reach your goals.
What is Money Management Cont’d

5. üBy setting a goal on what you wish to purchase
you will know exactly how much money you
need to put aside.
üSetting financial goals is an effective way to
weed out unnecessary spending.
üIf you have a specific goal in mind, you are
more likely to set aside money than if you had
no specific plans for your savings.
What is Money Management Cont’d

6. üDetermine how much money you will need and when
you will need it.
üDivide the total amount by the number of months until
you need the money, and you know how much to set
aside each month.
üShort-term goals are attainable in less than one year,
mid-term goals are attainable within two to five
years, and long-term goals will take five or more
years to reach.
What is Money Management Cont’d

7. üAn impending wedding is an example of a short
term goal you can save towards.
üSetting goals will keep you on track with your
spending
What is Money Management Cont’d

8. üPlan out your budget each month
üMake sure to include all fixed bills such as
rent/mortgage, electricity, water, airtime, etc.
üThese are bills you know you have to pay each month.
üSubtract this from your income and you will know how
much you have left.
üIts important to pay these bills first so that you do not
get behind payments.
Budgets

9. üKeep all you bills in one place.
üA filing system works great.
üHave one file for incoming mail and another for bills that
have been paid.
üNote when the bill was paid and other payment details.
üIts important to have a permanent record of bills and
purchases on file.
üThe key is to stay organized and know where everything
is.
Organization

10. üTake your lunch to work daily and save eating
out for special occasions.
üThis will reduce the amount of money you
spend.
üBring your own soda or bottled water to work
instead of buying.
Wasteful spending

11. üSet aside money each payday for savings.
üIf you have direct deposit, have the money transferred
into savings every time you get paid.
üSaving is important for those emergency expenses that
you had not budgeted for.
üYou can also use saving to plan for vacation or for
Christmas holiday.
üThe important thing is to be prepared and know where
your money is going.
Savings

12. üEven if you feel you have job security, plan for
the possibility of rainy day.
üYou should have enough savings in the
bank/Sacco to cover at least three months of
bills and expenditures.
üIf your income doesn’t allow for you to rapidly
build your savings, consider cutting back on the
little extras.
Savings Cont’d

13. üFinancial problems can easily surface if left
unmanaged.
üThe best way to avoid financial problems is to
learn to budget money and watch spending
closely.
üLearning to better manage money can help
save you from financial distress later on.
How to Better Manage your
Money

14. Step 1.
üRecord all you expenses on paper or
spreadsheet.
üCategorize you expenses under areas such as
rent, loan payment, electricity, water, grocery,
entertainment, kids and other expenses.
üThis way you can keep track of how much is
spent on each category and develop a budget
plan.
Steps on how to Better Manage your
Money

15. Step 2.
üReview the expenses incurred each month.
üIf it exceeds your take home income, look for
ways to reduce your spending.
üEat out less, shop for cheaper alternatives or take
you children to less expensive activities.
üThe rule to remember is if you can’t pay it with
cash, you can’t afford it.
Steps on how to Better Manage your
Money Cont’d

16. Step 3.
üSet aside some money for savings.
üFinancial professionals advise that the amount
should be at least 10% of your pay.
üIf you cant save that much, every little bit you
save adds up and can make a difference.
Steps on how to Better Manage your
Money Cont’d

17. Step 4.
üBuy what you need, not what you want.
üIf you cant afford it, don’t buy it.
Steps on how to Better Manage your
Money Cont’d

18. Step 5.
üMake it a habit to check your bank, credit and
Sacco statements.
üCredit card companies, banks and Saccos
sometimes make mistakes that cost you
money.
Steps on how to Better Manage your
Money Cont’d

19. Step 6.
üStrive to own a house instead of renting.
üOwning a house is an investment in your favour
and renting is putting money into someone
else's investment.
Steps on how to Better Manage your
Money Cont’d

20. Step 7.
üAvoid using credit cards or avoid bank loans. If you have
to for major expenses, use them sparingly as possible.
üAlso, shop for a credit card or bank loan that has a low
interest rate.
üWARNING: If you cant pay up in full each month, the
interest rate can creep up on you.
Steps on how to Better Manage your
Money Cont’d

21. Step 8.
üStay away from short cuts to wealth such as gambling
or get rich quick schemes.
üThe chances of losing or getting frustrated are much
higher than success.
üYou just end up throwing your money away.
Steps on how to Better Manage your
Money Cont’d

22. Step 9.
üSeek a financial adviser to help you plan your
finances and investments.
Steps on how to Better Manage your
Money Cont’d

23. The End