Money is the number one stressor for many families out there. When I was in debt, it led to long nights of sleeplessness and nail-chewing. I didn’t see any way out of this until I started using some of these money management tips. They really changed everything for me!
Even if you make a good income and don’t have any debt, you can still find yourself out of money at the end of the month. Money management teaches you how to prioritize your spending and be wise about how you use any amount of money you have.
7 important tips for money management
Each of these money management tips is something you can do every day to completely change the way you view and use your money. It’s simple, doable, and life-changing!
1. Start preparing the budget.
A budget is single-handedly the most important way you can change how you manage your money. It’s the holy grail of these money management tips! Not only does it allow you to track your spending, it lets you prioritize where your money goes so you can pay off debt and start saving.
If you’re new to budgeting, you’ve come to the right place. Check out some of my budgeting basics to start crafting your own budget, or sign up for my account Free budget category To dive right in.
2. Automate savings and bill payments.
As a busy mom, I know how easy it is to forget to pay bills and contribute to savings. Fortunately, many accounts have systems that allow you to automate the movement of funds.
You can make saving a priority just by automating the movement of money from your checking account to your savings account. This can be as little or as much as you want. Every bit matters!
Likewise, automate as many bill payments as possible, so you never miss a payment. This can include everything from your credit card balance to your phone plan.
3. Set short- and long-term goals.
Money drain happens quickly. It’s easy to forget why you’re living on a budget or cutting expenses. You need a reason to remember why you’re making all that money, which is why it’s essential to set both short- and long-term goals.
Start with general goals like getting out of debt, achieving financial independence, or being able to retire one day. Then, you’ll break it down into actionable goals. For example, you could say that you will set aside at least $500 per month to cover your credit card debt!
Short-term goals are also important. This provides you with quick cash to start your fire! This could include saving for an upcoming vacation or even creating an emergency fund.
You want to make your goals realistic but also aim high!
4. Prioritize high-interest debt.
There are many different types of debt. High-interest debt is anything around 10% or higher. Most often, this includes debt from things like credit cards and personal loans. Meanwhile, you have low-interest debt like mortgages (about 3%) and student loans (2.75%-5.3%).
When paying off debt, you want to prioritize high-interest debts first. This is because interest accrues much faster than other debts. AKA, the debt will accumulate at a much faster rate than you can pay it off.
Meanwhile, you can live with low-interest debt for a long time while achieving other financial goals. This may also mean investing while you still have debt. Yes! You can read more about this in my guide to investing while in debt to see if it makes sense for your situation.
5. Use credit cards to your advantage.
Credit cards aren’t for everyone, especially if you struggle with impulsive spending like I once did. But when you learn how to use credit cards responsibly, they can actually be an amazing financial tool. I changed my spending on credit cards, and so can you!
On our recent vacation to Canada, we hacked our entire vacation using travel points we earned on our credit cards. I paid in full for airfare for four people plus a hotel in Vancouver! All because we knew how to use credit cards properly.
You can find all types of credit cards that offer travel incentives or cash back. Find the option that makes the most sense for your spending habits…but discourage it!
6. Check your bank balance every day.
There’s nothing worse than checking your bank account balance and being left in complete shock. How much do I have in my account now!?
It’s very easy to lose track of your spending. Even when you budget, you won’t have a good idea of how much money you’re actively using unless you make sure to check your account balance every day. It’s easy to do this by keeping your bank’s app on your phone. Check it in the morning when you do your daily social media check (I know you do!).
If you’re really struggling with spending and you’re new to budgeting, I suggest you keep a spending tracker. This is where you record all the expenses you make to keep up with your budget.
7. Choose the correct accounts.
Depending on your goals, you should have savings accounts to match them.
Besides a checking account for immediate spending money, you should also have separate savings accounts for drain money, retirement (such as 401(k) accounts and IRAs), your child’s college (529 plan), and long-term investing. I know some people who have up to 10 different savings accounts for each of their financial goals!
Don’t be afraid to shop around at different banks to find the right accounts for you. Some bank accounts will only charge a monthly fee for opening a bank account! Others may charge you fees if your balance drops below a certain limit. You can easily save money just by being careful in your choices.
That’s it! I guarantee that if you implement these seven money management tips into your daily routine, you will notice an immediate difference in how you view and handle your money.