n my last post, I started a series on how you can discipline your spending habits and today I will be continuing from there.
The prevention kind of motive for holding money exists primarily to require care of contingencies requiring sudden expenditure and emergencies e.g expenses on sickness and accidents.
This motive is influenced and determined by the extent of income
Speculative motive :- this is the desire to hold money so that people can undertake financial investments at higher returns when the interest rate changes. It is the effect of expectations of changes on interest rates on the demand for money. Speculative motive laid emphasis on the role of cash as a store of wealth. Money is demanded for the sake of investment. It is also a liquidity preference for money.
The functions and motive for money might be seen as reason pocket money becomes an habit and why people hold money .
One of the 2 main major reason for the fundamentals of paying money is denoted from standard of living and price of living of the indi vidual:
Standard of living:- it measures the economic well being of the people in a country in a period. Standard of living is denoted by the per capital income of the people. If the people can enjoy top quality of products and services then standard of living is high. On the opposite hand, if they can't satisfy a good range of requirements then their standard is low . For example, America has higher standard than Nigeria due to higher per capital income and economic welfare.
Cost of living:- cost of living means the total amount of money an individual spends to obtain the goods and services which will sustain him at a particular time. It is determined largely on the prices of goods and services.
If the price is high, the cost will be higher. This is the total cost of maintaining a given standard of living. On the opposite hand , if the worth is low, cost are going to be low examples are cost for shelter, housing and food.
It are often defined because the process of utilizing financial resources like money in an efficient and efficient manner so as to urge maximized returns. Through the first definition of monetary management might be a scientific process of designing , organizing, directing and controlling flows of capital and financial resources in business so as to get maximized profit attainment.
It duely also involve efforts to manage capital flows within the business so as to stop financial mismanagement within the organization. The management of finance cares with an effort to spot the source of returns to management and therefore the factors m, which affect the returns of management.
Some management scholars were also of the opinion that the greater success of a corporation is, highly depends on the power to manage its financial resources effectively. Various businesses operated for few months or years and later totally collapsed the failure of these businesses was attributed to lack of monetary disciplines and guidelines.
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