Simple money management tips that’ll change your relationship with money forever
If you’ve been seeking financial security and are looking to get more confident with your money, here are 10 simple money management tips that’ll help you gain more comfort with your personal finances. These money management tips are easy enough to start doing today – so let’s get you one step closer to financial freedom, shall we?
1. Assess your finances on the regular
Are you someone that avoids looking at your bank account or checking in on your credit card debt? If so, the first and most important tip, is to assess your finances on the regular. There’s no doubt that finances can be stressful. And sometimes, avoiding it all together feels easier. What may feel like a little-less-stress now is going to have huge implications in the future – so make sure you are not avoiding your finances.
Create a habit of monitoring, assessing, and reviewing your finances on the regular. At a minimum, make sure you’re doing this once a month. Ideally, you’re doing this every week and really understanding what your personal finances look like week over week.
2. Get organized with your money
So, you’ve got a ton of credit card debt, an outstanding student loan, multiple streaming subscriptions, and a whole lot of other stuff happening with your finances.
To avoid getting overwhelmed, and in order to actually understand what’s happening with your money, you need to get organized. This means doing a complete sweep of all of your accounts, credit lines, loans, investments, expenses, income, and more. Organize your money to understand (1) what your current financial state is, and (2) what your monthly expenditure looks like.
For your current financial state, you want to review the following:
- what are your total assets? (money saved up, investment accounts, etc.)
- what are your liabilities? (loans, mortgage, credit card debt, etc.)
Then, take a look at your finances at a monthly level, and assess the following:
- How much money do you earn each month? (all income sources)
- How much money do you spend each month? (write out all of your bills, expenses, payments, etc.)
If you need some help with getting this all down on paper, then you can get your free copy of our Money Moves Toolkit here. The toolkit will help you do a complete financial assessment and categorize all of your income in and expenses out to get organized.
3. Pay yourself first
Spend less than you learn. Save your money before spending it. Pay yourself first.
There’s a million ways to say it, but it all comes down to this: before any money goes out of your account, make sure your top priority is to save a portion of your income earned first.
A lot of times people tend to attempt saving after they’ve made all their payments and completed their spending for the month. And more often than not, there’s usually not any money leftover to save.
Instead, reverse the thinking and flip the switch. The first thing you want to do, is save x% of your money, and allocate the rest to cover your bills and expenses. So let’s say you earn $2500 a month. Instead of covering all of your expenses first, commit to saving $x (let’s say $300 in this case) first and foremost.
That means that even though you’re earning $2500 a month, you’re automatically reducing that by $300 for savings, meaning you only have $2200 left to work with. This inherently forces you to spend less, because you’ve got less money to work with.
Meanwhile, that $300 a month is going to start accumulating pretty quickly, and before you know it you’ll have plenty of money stashed away in a savings account.
4. Create a budget (and stick to it)
Spending your money aimlessly will catch up to you real quick, so a great best practice to follow is the simple act of budgeting.
Budgeting is a great way to add a scientific flair to your money, basically deciding exactly what will be spent where before the money’s in your account. There are a number of budgeting systems that can be catered to your personal preferences. Some are pretty flexible, and others are more rigid. For more tips on how to start budgeting for beginners (and actually stick to it) you can check out this article here.
5. If you don’t have enough money, don’t put it on credit
General rule of thumb: before you decide to purchase something on your credit card, make sure you have enough money in your debit account to cover it first.
Now you might be thinking, …well, what’s the point of that? Isn’t the whole idea of having a credit card to buy things when I don’t have the money?
Although credit cards are perceived that way (and tend to market themselves that way), credit cards should actually be used as a tool to help strengthen your credit (to basically prove that you’re a reliable borrower for larger loans like mortgages in the future).
Using credit to purchase a pair of shoes that you can’t afford quite yet, or that super cute vanity set to furnish your room, isn’t the best move for your finances if you’re not able to pay it back in the short term. Interest accrues, your credit gets affected, and next thing you know you’ve started to rack up credit card debt (and some more financial stress).
Just because you have a large credit limit doesn’t mean you should be using it. Spend wisely, and assume that what you’re putting on your credit card should already be in your debit.
6. Always have an emergency fund
An emergency fund, or a rainy day fund, is a stash of cash you can access in a time of, well, an emergency.
We can’t plan for everything in life, so even the most unexpected instances can lead to financial stress when you don’t have an emergency fund to fall back on. Think of life events like a sudden job layoff, falling ill unexpectedly, a furnace breakdown, and the list goes on.
It’s likely not something you budgeted for, so having this wad of “safety net cash” is a great way to hedge any risk when it comes to an emergency. Not only will it provide you with some financial stability while you’re working through that life event, but having this “back-up” money gives you major peace of mind. Watch just how your stress levels begin to decrease once you’ve built your emergency fund.
For more details on emergency funds and how to start saving for one, you can check out this article here.
7. Set financial goals
Sometimes we tend to get so stuck in the short-term view of our finances. Monthly bills. Weekly pay checks. Daily coffees.
It’s really important to take a step back, and look at the big picture of your finances. A great way to do this, is to look at where you are currently, and where you hope to be.
Set 3-5 BIG financial goals for yourself. What are your financial dreams? Do you want to achieve a certain income? Are you striving to pay off your debt by a certain period of time? Is there an ideal net worth you’re hoping to hit?
Set up an action plan to determine how you’re going to get there, and keep yourself accountable.
Remember, sky’s the limit – so don’t sell yourself short when setting your financial goals!
8. Change your mindset with money
Your mindset with money can either make or break your financial situation and your potential for earning in the future.
Many of us are conditioned with limiting beliefs that really get in the way of having a good relationship with money. This limits how much we can earn, how fast we can pay off debt, and so much more.
Do any thoughts like these sound familiar?
- I’ll never make that much money.
- I’m going to be in debt forever.
- There’s no way I’ll ever be wealthy.
- Money is evil.
- I’m just not meant to be good with my money.
These are just a few examples of negative money mindsets we carry with us. It’s important to train your mind to start believing that money is simply a tool. There’s enough of it out there in the world for all of us, and with the right strategies a positive relationship with money is in fact possible.
A few examples of how you can start switching those thoughts around:
- If they can earn that much, so can I.
- Once I stick to this plan, I’ll be debt free.
- I am capable of becoming wealthy.
- Money is a tool – it does not define who we are within our souls.
- I am smart and intelligent – I can learn the ins and outs of money.
A few small tweaks in your mindset can go a long way when it comes to your finances, so give it a try and start thinking differently.
9. Consume as much information on money management as you can
We become what we ingest – the food we eat, the books we read, the podcasts we listen to.
If you’re really wanting to improve your personal finances, start consuming more information on all things money. Read more books. Watch YouTube videos. Surround yourself with information to help you learn, grow, and understand the ins and outs of your money.
Here are a few of our favorite personal finance books that’ll change your mindset and help you take a huge leap in your journey towards financial freedom:
- Think and Grow Rich by Napoleon Hill
- You Are a Badass at Making Money by Jen Sincero
- Rich Dad, Poor Dad by Robert T. Kiyosaki
- Money: Master the Game – 7 Steps to Financial Freedom by Tony Robbins
- Millionaire Success Habits by Dean Graziosi
10. Be in complete control of your finances
Last but not least, one of the most effective yet simple money management tips, is that you need to be in complete control of your finances. Not your significant other, not someone else in your family. You.
It is so important for you to understand every single detail of your money. Everything from what’s coming in to what’s going out, understanding how much each bill payment is and why. Knowing where all your bill details and credit card statements are located. You need to know it all.
Though that may seem overwhelming at first, with practice, comes more skill, so overtime this will be way easier for you compared to how daunting it is now.
This doesn’t mean you shouldn’t get a financial advisor or ask for help if you need advice for your finances (those are great things to do, of course. Always seek expertise when you have a complex question). However, there’s a difference between consulting someone and handing over the reigns. Ask questions, learn, and seek out more information, but at the end of the day you still need to have a firm grasp on your personal finances, your accounts, your credit card bills and the whole deal!
Again, if you need some help with getting started on all of this, then get your free copy of our Money Moves Toolkit here.
A few simple money management tips can go a long way when it comes to being better with your money. You’ve got this!
Interested in more simple money management tips? Check out some of our other articles on money:
- 11 Financial Habits of Women Who Are Never Broke
- 5 Reasonable Steps to Pay Off Debt Fast
- 5 Things I Stopped Buying to Save Money Fast
