We all want more than what we have or could afford. This is not what we need. You might NEED a car but your WANT tells you to go for a Honda instead of a Santro. Do remember and understand that in indulging that desire, you are increasing the expense level in the need section. Once you have bought the bigger, more expensive car, it is not just the monthly installment that will go up but the running and maintenance as well as upkeep and insurance costs. Many people spend their days in a frenzy of activity, but achieve very little because they are not concentrating on the right things.

Most people take their income in the bank as their real income. You have to take into account the tax that is yet to be paid or investments made to save on the tax. If there is more than one earning member in the family, savings are more important. Be aware and, if needed, ask your accountant to help you out to reach this figure. Only when you know your full income can you allocate the amount under various heads for expenses.

Answer the following questions and give yourself 1 mark for every “yes”.
* Are you constantly spending more than you are earning, increasing your debt?
* Are you often surprised by how little savings you have and keep moaning how everything has become more            expensive and your income is not increasing in the same proportion?
* Do you go to sales and markets without any list of what you are looking for?
* Are you using credit cards with the conviction that it is not immediate spending?
* Do you often come home and regret what you have purchased?
* Do you ever need to hide the actual shopping from your spouse because you feel he/she might not agree with your
choice or your timing?
* Does your spouse always wonder why you keep buying more material?
* Do you often feel that your spending money is over before the month is?

More than five yes. Then you definitely need to look at your spending style. If you are lucky and had fewer than five, you could benefit by a little planning. More than five yes—you have a serious problem and you really should curb your spending style before it gets you in serious trouble.

Learning effective money management not only enables you to live comfortably within your means, but also helps you to increase your wealth. Use these money management tips to stay in control of your money.
1. Set a Money Management Goal:
Money management is a means to an end.However, make your goal practical and be sure the “end” is in clear sight. Although your money management goal may be to have a comfortable retirement, start small with objectives like
paying off a credit card within X number of months or saving X by the end of the year. In money management, like in any regimen,there’s nothing like the satisfaction of success to keep you on track.
2. Regular expenses:
These are the expenses that cannot be deferred. Be it house rent or mortgage on your own home, school fees for the children or the milkman. Your kitchen expenses and small things like newspaper money, etc, all add up. Keep a tab on these and be aware of your regular expenses. This amount can never be reduced;the rent or mortgage has to be paid even if you go on a month’s holiday, though you can save on the newspaper and milk. Keep a two to three per cent margin here, as things can become expensive without notice. You can keep the savings from this margin aside and splurge on any one item every six months to give you self a moral boost from knowing your plan is working.
3. Know what you have:
Before you can live within your means, you need to know what your means are. Start money management by taking stock of your money.You’ll probably be surprised at how rich you really are.
* As well as the cash in your pocket or purse,include piggy bank cash, bank balances, and available credit from credit cards.
* Go on a treasure hunt to find lost money.Look in coat and trouser pockets, through Birthday and other greeting cards, jewellery boxes, dresser drawers, under furniture cushions, behind and under furniture, in your freezer and under your mattress.
* Although our money is an asset and all of our assets are types of our money, generally we are more inclined to think of assets as property. However although all of our possessions are part of our wealth that we can turn into cash, usually they are the types of our money that we want to protect from creditors. For instance, you probably don’t want to sell your car or cash in a valuable coin collection to pay a bill. Yet, the ability to convert property to cash is a good concept to  remember in identifying and effectively managing your money. Some assets like vehicles and appliances depreciate over time. Yet, while they don’t increase spending power, you can turn them into cash. Long term assets like real estate holdings, investments and  personal property such as collections, artworks and antiques appreciate over time and actually enable us to save money and increase our wealth.
4. Track your income:
Really track your income! If you have at least a month’s worth of old cheque stubs, add them up and divide them to see what your average income is. Better yet, if you can add them for a quarter year and divide by 13 (number of weeks in a quarter) you’ll get a more accurate view of your earning power. If you haven’t saved the cheque stubs, do it for at least four weeks.Don’t just add your weekly wage times four. You’ll be forgetting sick days, flat-tyre days, and omitting extra income from overtime and holidays.
5. Seasonal expenses:
These often take most households by surprise. At the end of winter, your woolens will need to be dry cleaned and steam ironed. The same goes for silk clothes and  expensive items. Keep money aside for it every month or have the margin money available from regular expenses.
It will not hurt to pay out a few hundred rupees extra to increase the life of your expensive clothes. Similarly during particular festivals like Diwali, Ramzan, Christmas, personal festivals like Birthdays you need to plan in advance regarding your budget. This  should not break the budget.
If you like to go on tour, picnic, watching movies, keep money aside for activities
6. Track your spending:
Once you know what money you have now and what income you can expect to get, it’s time to find out where your money goes. Take a month and track your spending down to the penny. Make your first purchase of a small note
book and pen to carry in purse or pocket. Record everything! In addition to tracking the cash you spend, use your notebook to record every bill payment, cheque, debit and credit card expenditure. Include the amount you paid, who you paid (or where you shopped), and the date you made the purchase.
After a couple of weeks, you’ll find yourself reconsidering if you really need that pack of gum or  mid-morning café latte. However, this money management exercise is designed to show you how you usually spend your money. It’s important during this month not to deny yourself your usual pleasure, no matter how trivial they are.Setting a realistic goal, knowing what you have, what you expect to earn, and tracking your spending are the basics of money management that enables you to control your money and make wise budgeting choices in the future.
7. Avoid money arguments:
Most arguments take place if you have not agreed in advance about a certain expense. Or if you and your spouse do not make each other aware about what you are planning, there can be trouble. If you are thinking of buying a solitaire diamond with the expected savings at festival time but your spouse wants a bigger television, it will lead to disagreement. Try to convince the other members of the family why you think a certain item should be bought but be open to hear their points of view as well. Sometimes, it would be advisable to agree with others so that they are already aware of what you desire.
A FINAL CHECKLIST:
• Balance your income and expense.
• Be aware of your hidden yearly expenses like taxes.
• Be prepared for health requirements even if you have insurance in place.
• Have a ready list of items you need from sales and do not buy material just because it seems like a good bargain.
• Use your credit card prudently.
• Remember expenses like transportation, holiday surprises, entertainment.
• Savings are important.
• A good plan should also be slightly flexible, not rigid, to keep possibilities of changes in mind.
• Decide what to do with cash gifts from other family members or any unexpected income.