Abstract
This paper is a modification and extension of Tobin's inventory demand for money model. The optimal financial management behavior of both individuals receiving wage income at discrete intervals and firms making such wage payments is analyzed within the general Tobin framework. In both cases it is assumed that the portfolio decision-maker takes into account the interest income generated by investment and includes it in the expenditure plan. The compounding of interest is allowed, and the problem is solved in its precise, integer from rather than approximated by a continuous treatment. The basic strategy of evenly spaced transactions proves optimal here as in the Tobin model, but the decision as to the number of transactions to make per interval is considerably more complicated in this version of the problem.
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