The process of tracking and planning the use of capital individually or in a group refers to money management. In corporate finance and personal money management includes budgeting, investing, spending, saving and mutual funds investment. Some private banking, financial advisors, give money management services to their individual customers. However, commercial banks provide money management to their corporate clients.
In financial markets, money management is also referred to as portfolio management and investment management. Financial professionals manage investments and draw investment decisions for a pool of funds. Professionals can also use any financial service app to manage their funds. Let us go through money management in different sectors.
- Money, management and personal finance – Money management is a wide concept. It is a strategy and uses of right techniques for determining the use of an individual, company or institutions, capital. Money management of personal finance includes budgeting, spending and saving. Money management can be proactive with regular or periodic financial planning. It may be reactive to specific events without intuitive planning in advance.
Because of various ages, lifestyles, family structures and several other factors, financial planning for individuals is different from one another. However, the fundamental principles of budgeting may be commonly shared. The 50 2030 budget rule guides, an individual spends 50% of their income on essential expenditures. 30% of their income on the things that they personally want. The remaining 20% should be saved or invested for future financial goals. Managing your funds with structural planning and budgeting helps to reduce inessential and extra expenditures. As such expenditures do not add any value to your living standards. Money management even lowers the risk of running out of money and helps and individual to achieve their financial goals in the long term. The financial advisors of private banks, insurance firms and other financial institutes give personal money management services. Individuals can also process their money management needs through money management and online banking app.
- Money management in corporate finance – just like personal finance, corporate finance, money management also includes budgeting and planning. Nevertheless, the process of budgeting is pretty different. The budgeting of a company is mainly shaped by its business strategies and is built upon the company is just Oracle financial statements and adjusted with forecasting estimates. In addition to the use of capital, Corporate finance management also includes the raising of capital. The finance management of corporate sectors is more complex than for an individual as companies need professional teams to provide financial planning and analysis.
- Money management in financial markets – Money management in the financial market is referred to as investment management portfolio management. Investment companies manage a pool of capital from their institutional and individual clients. Money managers in which the capital in different as it classes for generating returns. The assets include bones, stocks, private equity is, real estate in commodities and so on. The firms even offer brokerage, mutual funds, ETFs, investment advice, retirement services, financial planning and many other management services. Different investment strategies are applied depending on different factors. The factors may include investment philosophy, the size of the font, client risk references and many others. Stock portfolio management may either be active or passive. Pastor portfolios invest in mutual funds and ETFs following certain indices. After portfolios are managed by management teams following specific strategies. The management of the day portfolio usually considers interest rate risk, credit risk and risk of reinvestment. Alternative investments May further diversify their portfolio and lower the systematic risk.