Money management

Money management is the process of managing money which includes expense tracking, investment, budgeting, banking and taxes. It is also called investment management.

Money management is a strategic technique employed to make money yield the highest interest-yielding value for any amount spent. Spending money to satisfy cravings (regardless of whether they can justifiably be included in a budget) is a natural human phenomenon. The idea of money management techniques has been developed to reduce the amount that individuals, firms and institutions spend on items which add no significant value to their living standards, long-term portfolios and assets. Warren Buffett, in one of his documentaries, admonished prospective investors to embrace his highly esteemed "frugality" ideology. This involves making every financial transaction worth the expense:

1. avoid any expense that appeals to vanity or snobbery
2. always go for the most cost-effective alternative (establishing small quality-variance benchmarks, if any)
3. favor expenditures on interest bearing items over all others
4. establish the expected benefits of every desired expenditure using the canon of plus/minus/nil to standard of living value system.

These techniques are investment-boosting and portfolio-multiplying. There are certain companies as well that offer services, provide counselling and different models for managing money. These are designed to manage assets and make them grow.

Money management is used in investment management and deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function.

Money management gives practical advice among others for gambling and for as well.

Money management can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Greater money management can be achieved by establishing budgets and analyzing costs and income etc.

In stock and futures trading, money management plays an important role in every success of a trading system. This is closely related with trading expectancy:

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Wikipedia