Expert Level

Learn advanced topics about trading strategies, risk management and more.

Lesson 2: Importance of Money Management

financial sense–sticking to your monthly budget and living within your means–is
part of money management. But it also takes a lot of research and effort. You’ve
got to learn how to keep an eye out for bargains and when to stop a bad deal on
a purchase. When you make progress in your career and earn more money, learning
how to invest wisely makes it important to hit milestones such as getting a
home down payment.

Have Good Financial Security

Being a
good money manager allows you to build up your savings. It offers you the
security of knowing that you have the resources to deal with unexpected
expenses–issues like the car crash, your dog destroying your new sofa while you
were at school, and the employer kindly suggesting that you should be looking
for work elsewhere. If you’ve been monitoring your spending for a whole year,
you’ll see that unexpected expenses are unavoidable. Getting enough savings
ensures that you don’t have to use credit cards to pay for emergencies.

Take Advantage of Opportunities

From time
to time, we all have opportunities to make more money or to have an interesting
experience. A friend might alert you to an investment opportunity, or you may
find an incredible one-in-a-life-time vacation bargain. It’s difficult not to
have the money available to take advantage of these opportunities. Those who
have been good in managing their money get to go to exciting events like the
Masters Golf Tournament, while those who have mishandled their money stay home
and play miniature golf with their very irritating relatives.

Reduce stress and conflict

Not being
able to pay your bills by the due date, or realizing that you’re still split at
some point in the month, can lead to significant amounts of stress for a
couple, resulting in tension over financial goals and spending patterns. A 2017
study by the American Psychological Association found that 62% of Americans
were stressed about money. This stress can lead to health problems, including
migraines, cardiovascular disease, and insomnia, according to experts.
Understanding how to manage your finances so that you have a surplus of funds
will alleviate this stress and encourage you to enjoy life with your partner
rather than be in a constant state of concern about the future.

Earn More Money

As your
income grows, your financial planning will not only include budgeting to cover
your expenses on a monthly basis, but will also decide how to invest the excess
that accumulates above what you spend. Getting acquainted with investment
vehicles, such as stocks and mutual funds, will allow you to earn more from
your investment funds than you can by keeping them in the bank’s savings
account. Keep in mind that dog tracks or offshore casinos are not generally
recognized as sound investment opportunities. The great thing about investing
is that while you’re at work earning money, your savings are also working for