How to Manage Your Money: 10 Money Management Tips

Are you the boss of your budget? Even if you don’t feel like it right now, you can sharpen your skills and get a handle on your finances. It’s time to take back control of your money — and feel great about doing it — with our money management tips. 

You likely have basic knowledge of budgeting, but you want to take your money-management skills to the next level. That’s all about getting financially organized.

Getting financially organized is a three-tiered life skill. It means:

• Setting realistic life and financial goals
• Responsibly handling your debts with effective budgeting
• Establishing a sustainable financial routine to build wealth

Once you get a handle on all three steps, you’ll be well on your way to managing your money.

It takes work to build this foundation. You’ll need to dig deep and change your psychological and emotional relationship with money. But, once you start to change your mindset and apply sound money management tips and tools, you’ll begin to see your financial situation change and feel much more in control of your own destiny.

Let’s jump in.

10 Smart Money Management Tips & Tools

Awareness is an important step toward mastering your money. Once you’re aware of your limiting beliefs around money and seek out effective money management tips, you’ll begin to gravitate toward more beneficial beliefs. There are plenty of ways to change your beliefs and behaviors around money, but it takes diligent practice:

1.Becoming Aware of Your Money Traumas

Whether we like to admit it or not, there are certain times in our lives when we tend to avoid our financial situation. It’s easier to distract ourselves from the problem rather than take charge and learn how to manage our finances. Though we might insist money mastery is one of our priorities, sometimes the work is easier said than done.

Often, people avoid taking the necessary steps to improve their situation because they feel stuck. One reason this may happen to you is due to the money habits and financial traumas you’ve experienced and learned throughout your life. This can impact your current feelings and actions toward money on a deep, subconscious level.

Awareness of what’s blocking you is the key to taking the step beyond budgeting and eventually mastering your money. Once you’re aware of your hindering beliefs, work to change them to beneficial beliefs. There are plenty of ways to flip your beliefs and behaviors around money, but it takes diligent practice:

2. Learn, learn, learn

Read credible books and websites about transforming your money beliefs. Attend personal finance seminars online or in person. Check your local library for money talks or look for no-cost programs about financial stability and investing.

3. Take baby steps

Take specific small steps, from creating an emergency fund to paying off smaller debts first, to gain financial control. Reaching some goals early on gives you the motivation and momentum to keep moving forward. Tools like Mint make this process easier by allowing you to manage all your finances in one place and providing custom tips on how you can save the most money based on your lifestyle and goals.

4. Identify your wants versus needs

Distinguish the difference between your personal wants and needs. Doing that helps you cut down on emotional spending. And it’s okay to have wants — we all do. But giving in to them can hold you back from building your savings and reaching other goals. Utilizing Mint can help you stay on track by showing you exactly what you’re spending your money on by category – allowing you to determine what future purchases you can choose to cut to meet your budget.

5. Know your credit score

Find out your credit score. Lenders and financial institutions rely on this score to determine if it’s a good idea to lend you money or not. Knowing your credit score and how to improve it is one important way to keep track of your financial health. There are a variety of apps and websites that allow you to check your score for free without impacting it.

6. Automate your money

Some people find it scary to look at bills or bank statements. But if prosperity is your goal, you’ll need to view these statements regularly to keep your finger on the pulse of your expenses. Automating as much of your banking as possible—including your bill payments—will ease your mind and could even save you money.

7. Plan a Budget

Tracking your income and expenses is a crucial step towards taking control of your finances. Take a look at your household’s money to uncover opportunities to save—these can help you quickly get on the right track.

If you’re unfamiliar with how to make a personal budget, you can start by:

• Calculate your income. Be sure to add the income from your job and other sources, such as investments. It’s important to update this number as you switch jobs, get promotions, and keep your career moving forward over time.
• Calculate expenses. Include everyday bills like utilities, housing, food, transportation, etc. Also be sure to include any student loans, gym memberships, and other recurring monthly expenses. It can be easy to forget these, so when you think you have every expense on your list, double-check your bank statements.
• Do the math. Tally your income and expenses. Once you sift through all your financial papers and arrive at those two numbers, the rest is easy. Subtract your income from the expenses and see where you land.

8. Keep an Eye on Your Spending

Once upon a time, it was necessary to track your expenses manually. People would log every expense into a ledger or checkbook to make sure their “book” was balanced at the end of every week, month, or year. Fortunately, there are apps and other tools for that now. From your own bank’s online system to independent financial tools, you have a variety of options to help you keep track of your spending.

9. Make a Plan to Pay Off Debt

Debt, especially high-interest consumer debt, can take a big chunk out of your monthly income. In fact, just knowing you have outstanding debts or upcoming expenses—such as an annual tax payment or holiday shopping—can contribute to a lot of money-related anxiety. From experiencing an unexpected expense to prepping for extra spending around the holidays, but any problem can be tackled with the proper plan in place. The trick is to take it one step at a time.

Here are two effective strategies to help pay off your personal debts:

• The Avalanche Method: Categorize your outstanding debts by interest rate and begin paying off the highest-interest debt first. Then move to the next highest and so on until all your debt is paid.
• The Snowball Method: Make the minimum payments on all your outstanding debts and put any extra money available toward your smallest debt balance. Then, after that debt is paid off, use the money you’ve freed up to pay off the next smallest debt, and so on. A potential downside to this method is that higher-interest debt may take longer to pay off. 

10. Implement a Money Management Plan

Once you get an idea of your income vs. your expenses and begin tracking your spending, you’ll need a new framework to stick to for managing your money in the future. Old habits got you to where you are currently, so you’ll need to actively work to change them.

The good news is that a money management plan can be as straightforward or as complicated as you want. If you wish to implement Excel spreadsheets and formulas, be our guest. But, if you’re starting from square one, there are much simpler beginner strategies.

One of those simple money management strategies is the 50/30/20 rule. This rule lays out the percentages of your income you should allocate to each “bucket” of your life:

• 50% of your income should go to your Needs bucket. These essentials include housing, utilities, food, transportation, etc.
• 30% of your income should go toward your Wants bucket. These are things like clothes, shoes, golf clubs, vacations, eating out, and other leisure-related expenses.
• 20% of your income should be left over after the first two buckets. This 20% is for your Savings bucket. Use this to save for retirement or invest. Consider working with a financial planner or investment advisor to help you determine the best ways to save.

Demystify Money 

Once you turn around old beliefs and get educated with some money management tips, you’ll feel empowerment instead of dread.

After shedding those old beliefs, you’ll be in a position to successfully implement the actionable steps we’ve given you to create your overall financial plan. Knowing your plan and sticking to it will help you be in control of your finances.