However, wealth cannot buy you happiness. You can feel safe and secure with an understanding of personal finance, which, without it, you can never feel financially secure. Without a budget, you simply never know when you will be financially vulnerable.
In fact, 25% of Americans say they are always worried about money, and research has shown that 37% of Americans would borrow a credit card, get a loan or ask a good friend to cover a $1,000 emergency. You should try to avoid being financially vulnerable, which is why you must manage your money well.
Managing your money well can lead to greater control over your life in general. However, it isn’t too difficult to get your personal finances under control.
Let’s explore how to manage your money properly.
19 tips for how to manage your money the right way
Managing your finances doesn’t have to be overwhelming. We’ve included some of the best ways to manage your money easily. Use these money management tips one by one to take control of your finances.
1. Set up the right bank accounts
The right bank accounts are essential to your financial success because attempting to manage your financial affairs without the right bank accounts is like trying to take care of your car without the correct parts. You need establishing, saving, and investing accounts.
These constitute the foundation of financial success. It is imperative to have a high-interest checking account and a high-yield savings account to be able to easily distinguish between your liquid assets and long-term savings.
Leaving your savings in your bank account makes it easy to unintentionally squander your hard-earned money.
2. Take stock of your current financial situation
Attempting to manage your finances or improve your lifestyle without taking stock of where you are now will ultimately prove futile. Thus, you should ruthlessly analyze your current financial status with any job-related debts, school loans, or high expenses that are hurting your budget.
Appreciate your excellent financial decisions, while also asking yourself, “How can I improve my finances?” Write down everything so you can see the big picture.
3. Make a plan for your money
Without an organized plan, it is very easy to be short of money. This can result in overspending. Given how easy it is to give in to temptation, it is crucial to have a budget in place.
If you say yes to too many unnecessary expenses, then you might get frustrated with your cost savings. In order to fight this, try making a budget.
Plan for where you’ll be using your money. Besides your rent and car payments, consider your savings goals for the future. You also want to devise a budgeting strategy that works for you because it can help you manage your money more effectively.
4. Set the right financial goals when deciding how to manage your money
Setting goals can be a useful money-management tip if you are attempting to save money. Setting financial objectives will help you stay focused and on track toward where you want to be financially.
There is no wrong choice, but you’ll require a minute to consider your options and how money would affect them. When you have a good idea of how money will impact your life, clarify and specific goals for your spending.
5. Check in with your finances every day
If you don’t know where you are starting from, you can’t make forward progress. Take a few minutes each day to budget your income.
Are you overspending? What are your spending habits? Are you right on track?
It’s important to know so that you can make the necessary changes.
It may not seem exciting to check your bank account daily, but it only takes a short while. Use an app or spreadsheet to quickly examine your financial situation and get back to normal.
Automating your finances can also help to make your life simpler.
6. Cut back on your expenses
As you learn to manage your money, begin by reviewing your expenditures. Look for any expenses that you can eliminate from your monthly budget.
Saving just $20 by omitting an unnecessary expense can lead to savings of $240 for the year.
Here are a few ideas for cutting back could include work lunches, a box subscription, or cable service. Cutting your spending is one of the best ways to conserve money.
7. Take a look at your income
It might seem like an obvious point, but you should know exactly what you will win. So take a moment and calculate your after-tax income, not just your gross earnings. You’ll be able to more accurately budget with this price.
If your financial situation is disappointing, then you should consider picking up a side hustle. A worthwhile work-from-home job can fit into your schedule and help you boost your income significantly.
Another way to increase your income is to discuss your salary with your manager. Don’t be afraid to show your desire for a pay raise by discussing relevant statistical data. You never know what they can provide.
8. Create a plan to pay off debt
Debt is a large financial burden. Not only will it affect your present budget, but also your future savings.
Take your debt seriously and make it a priority to pay off as you ask, “how can I manage my money properly?”
Consider different debt settlement strategies and choose one that’s right for you. Don’t let debt stand in the way of your financial goals. Create a debt reduction plan to address it today.
9. Understand your credit score when learning how to manage your money
Your credit score is a three-digit number that can have a huge impact on your finances. Lenders are willing to provide loan applicants with excellent credit records better loan terms and lower interest rates.
Applying for large loans such as a mortgage often results in a large interest rate discount.
Take action to raise your credit score. Begin by reviewing your credit report to check for any mistakes and use credit monitoring services to ensure that a recent mistake is never repeated.
Other ways to raise your score include making on-time payments and keeping your credit use rate low.
A good credit-builder account helps you rebuild your credit and help you avoid taking on new debt!
10. Build an emergency fund
The best way to manage your money is to anticipate the unexpected. Emergency funds can be especially useful. Unfortunately, life throws expensive expenses your way when you least expect it.
These unexpected expenses usually happen in conjunction with unpleasant actions such as a hospital visit or job loss. You never know when a medical emergency will occur, but you can have extra cash on hand by preparing for such events ahead of time.
Put aside a portion of your income to use as your emergency savings fund.
Many financial planners suggest saving money for emergencies for three years to six months. However, this will depend on your risk tolerance. If you would like to get even greater savings, you can add more money to your emergency savings account.
Keep a separate savings account for your emergency fund. Otherwise, it can be all too easy to spend these funds.
When an emergency occurs, you do not have to worry about the financial aspect of the situation. Instead, you can address the situation at hand. It’s worth it to keep this in mind later.
11. Plan for large expenses
While other expenses can be difficult to predict, you can plan for others months ahead of time. For instance, you may be expected to pay a large premium for insurance at the outset, which could cause you to spend several thousand dollars.
Instead of looking for money to cover the bill, create a sinking fund.
You can set aside each paycheck for these huge expenses so you have enough to pay them. This is where budgeting comes in very useful. You can add these funds to your budget and never worry about large future expenses again.
You can also use automated deposits to put in many of these big expenditures without exerting any extra effort.
12. Shop around for big purchases when discovering how to manage your money
When shopping, be sure to shop around. It may cost a good deal of time, but you will save a great deal of money, and it will teach you about money management.
For example, when searching for a car, you’ll want to look at multiple cars and compare prices. Don’t just settle on the first quote. Make sure that you are receiving a good deal, as the savings can add up quickly.
13. Contribute to your retirement
Cultivating money now may seem like a waste of time. After all, you’re not going to be retiring for a very long time. It is crucial that you start saving for retirement as soon as possible.
Participate, even as a first step, in any employer-sponsored retirement plans. Be sure that any matching funds are taken advantage of by your company.
If you’re not fortunate enough to receive matching funds, contribute to a Roth IRA (Personal Retirement Account) instead. Contribute with your income each pay period to hit your retirement saving goals every year.
14. Start investing (a big part of how to manage your money)
Managing your money is vital, but making it work to your advantage is even more critical. If you want to build lasting wealth, investing is a crucial first step.
Investing over a long period of time may lead to great returns and is one of the best ways to manage money. You can grow your wealth slowly as you invest more every year.
15. Compare insurance options
Be prepared to pay a lot of money for your medical insurance. So check your insurance options every year.
You may be able to find a better price on insurance by shopping around at different providers.
When you are purchasing insurance, take a moment to confirm that you are sufficiently covered. Along with health insurance and car insurance coverage, consider renters insurance, homeowner’s insurance, life insurance, and disability insurance.
You may need to purchase additional coverage for your insurance policy deck to optimize your safety. It is necessary to know what insurance coverage you need.
16. Find your reason
Managing your money will require some time and effort. So at some point, you may feel inclined to give up or say, “I don’t want to handle my money anymore!” It is completely understandable to feel this way.
The best way to avoid personal finance burnout as you manage your money is to find your cause.
Why are you choosing to learn how to manage your money? Why are you taking action to put yourself in a better financial position?
Some common reasons are eliminating oppressive debt, becoming financially independent, and spending more time on the things that light you up.
Whether you are traveling for vacation or work, make sure you have a reason why you are traveling. Take the time to understand your why. Question why you want more money is more than just seeking more funds.
17. Build up knowledge on how to manage your money better
The more you know about finances, the better off you will be. Really, greater knowledge of finance can never hurt you. You may be able to use any new facts you learn about to improve your personal finances.
Fortunately, there are many resources. Podcasts and books are excellent resources.
One great book to begin with was written by our own founder, Bola Sokunbi: Clever Girl Finance: Ditch Debt, Save Money and Build Real Wealth.
Find useful sources that teach you how to manage your specific financial situation. Remember that others have gone through similar experiences; find stories similar to your own. You can save a good bit of money with helpful suggestions on how to maximize your budget.
18. Find an accountability buddy
A best friend can serve as an accountability partner. Find someone with shared financial goals. You can check in with one another on a weekly or monthly basis to report your progress.
Having a friend who understands your finances is beneficial. Our society has decided that it is taboo to discuss finances. You don’t talk about (it) in casual conversation.
With the help of a fiscal sponsor, the rubble can be cleared away. You are free to discuss your personal finances and share your challenges along the way. You may be surprised at how much a friend can help.
Not only will you have more fun, but you will also build a lasting friendship with the volunteer.
19. Give back
As you get back on your feet financially, you can begin sharing your good fortune with others. Whether you want to set aside money or time, you can help out a great cause. Contribute one of your budget categories to renouncing.
Properly managing the money you have allows you to give time and money to causes you care about.
Even if you can only help spread your new knowledge of personal finance, that could still be a valuable contribution to someone who needs it.
Take action and learn how to manage your money!
It is not necessary to manage your funds, but you must get started. Don’t let your finances spiral out of control before you are able to adequately handle them.
One of the best ways to save money is to maintain a consistent routine with your finances.
Make wise financial decisions today. Use these financial tips over time. Don’t get overwhelmed; just work one step at a time.
Remember, managing your finances isn’t difficult. It will only take a little time and work to get your funds under control.
As you manage your money, explore the topic further by learning about your relationship with money and how to prepare your finances.
