I don’t know many people who start their adult life knowing how to be good with money.
More likely those who are good at managing their money get great guidance at an early age and something just clicks. Unfortunately most of us are guilty of wasting money for quite some time.
I didn’t start out life being great at managing my money. Like you I have had to work hard at learning how far my money went and find out the hard way how to be good with money.
I don’t think handling finances wisely comes naturally to most people, which is a shame because learning how to be smart with your money and manage it is absolutely key to being able to choose how your financial life pans out.
If you can learn to manage money wisely early on in your adult life, then just think about all those basic money management mistakes that you won’t make!
- Paying for a holiday on your credit card and not paying off the balance in full
- Buying a brand new car when your old one works just fine, it’s just not so new
- Taking 6 months to pay off Christmas debt
- Living beyond your means and racking up debt
So what made money management and budgeting click for me? How did I learn how to be smart with my money and stop making those financial mistakes?
And more importantly, what can you do to learn how to get good with your money?
Learning how to manage money effectively
The first thing that happened was that I became a teenage single mum. Having a child brings responsibility into your life whether you like it or not.
Becoming responsible for another human being didn’t help me learn how to manage money effectively overnight but it sowed the seeds.
Being on welfare benefits without any credit cards or loans makes you learn how to budget your money whether you want to or not.
But I took out my first credit card when I went back to work after maternity leave and maxed my limit so proper money management not yet learned.
My money situation got to the point that my 18 month old daughter only had 3 sets of day clothes, that was when I knew I couldn’t continue as I had been.
She had so few clothes because I couldn’t afford to buy any more. Because I wasn’t spending my money wisely, I just spent my money without thinking. At. All.
I knew getting into YET more debt wasn’t the answer so something had to change.
(This post contains affiliate links. If you click on a link and make a purchase, I may make a small commission at no extra cost to you. As an Amazon Associate I earn from qualifying purchases. You can read more here)
10 ways for how to be good with money
1. Your money mindset
I decided it wasn’t acceptable for my daughter to only have 3 changes of clothes. And if I was going to change that, then I knew I had to stop saying I can’t save money like it was really true.
I needed to learn how to manage my money better. To learn how to manage my bills and save money, so I could clothe my daughter and plan our financial future.
For you to start the same process, this first step is crucial. You need to change your money mindset.
It’s an uphill task learning how to get good with money if you don’t focus on how you view money deep down.
It might require some soul searching. You may have to try and unlearn some deep set money habits, but change is the key to your future wealth.
And you can do it.
For more in-depth guidance on developing your healthy money mindset take a read of the advice in these helpful books on the subject. They really helped me to be more smart with my money.
2. Create A Budget
I know, I know, you don’t like budgets. But believe me, budgets do work if you make them to suit your circumstances.
My first budget wasn’t great but it was the first time I had actually looked at what I was getting paid and what my financial commitments were.
Looking at my money and planning it according to what I was paid was a massive first step forward. For the first time I knew where I stood. It wasn’t great but my money was no longer an unknown.
Creating a budget that works for you is one of the best tips for learning how to manage your own finances effectively.
Don’t fight it, learn how to budget it. It will totally make a difference to how you deal with your money.
3. Allow fun money
What can often be forgotten when you are trying to be better with money is that you still need to enjoy life and be able to live.
If you budget every penny so there is nothing left for fun, for chocolate or an impromptu after work drink, then you risk budget failure.
No matter how tight your budget, no matter your debt, build in a little fun money that you allow yourself to spend guilt-free on whatever you want. Just $20 a month will make a world of difference to you.
Fun money can be the difference between sticking to your budget while you focus on debt pay off and blowing it out of the water because you feel too restricted.
I found out the hard way that I needed some money for chocolate, no matter how good my intentions were each month.
Allow yourself that small amount of cash because we are all human and we all need a little flexibility (and chocolate) in our lives.
4. Get savvy with groceries
When I looked through my bills I was shocked at how much I spent on food. Given there was only me and a baby I was spending so much!
The number one problem was that I wasn’t just buying groceries, I was buying takeaways. Far. Too. Often.
One week I went to the fish and chip shop 4 times in a row, seriously! Not healthy, not low cost and actually not that nice.
With my tight budget I knew I couldn’t afford those takeaways, not even once a week. And I needed to focus on buying cheap foods, not ready made more expensive meals.
I wasn’t a great cook (still aren’t in truth) but I worked out how to cook at least 7 meals made from cheap ingredients and stuck to those.
I started experimenting with generic brands because I had naively assumed premium brands meant nicer tasting. Wrong!
Some I couldn’t notice any difference at all, some I tasted the difference but it wasn’t bad, just different.
Buying as many generic and value brands as possible is one of the best ways for you to make substantial savings on your grocery spending quickly. Without being the best cook!
Planning your meals a week ahead and then buying only the ingredients you need is also a great way to drive down your spending on food.
Plan simple meals that you feel confident in cooking and batch cook them to save time and money.
You may also like:
5. Stick to cash
I didn’t earn much but I had already maxed one credit card and was worried I wouldn’t be able to trust myself if I relied on debit and credit cards. So I went cash only for all my spending that wasn’t paid via direct debit.
Using the cash envelope system is so helpful when you need the extra focus of seeing the money you are spending. It’s that much harder to hand over your cash than to swipe or tap your card.
Try using the cash envelope system for 2 months for spending on things like:
- household items
- fun money
Once you feel able to manage your money better you can switch back to card payments, especially if you are able to earn rewards for using your cards.
But only if you are able to pay off the balance in full every month.
6. Cut monthly bills
Creating a budget, using cash and reducing your grocery bill are good managing money tips to get started with.
But of course being smart with money doesn’t stop with those three, you have bills and monthly expenses that are ripe for analyzing and reducing.
For me it started with something so basic, I switched to a monthly travel ticket for work, I’d been buying weekly tickets previously.
And why was I buying weekly when the monthly ticket saved me 20% straight away? Because I had not learned how to be good with money, sigh.
This one change made me realize that I really could save money in other places.
Go through all your bank statements and bills with a fine tooth comb to get a full picture of what you are paying out each month.
Depending on where you live you may be able to switch energy providers or negotiate with your existing company to get a better rate.
Do you use all your data and minutes on your cell/mobile phone plan? Move to a lower priced plan if not.
Are there any subscriptions you are paying for that you don’t make the most of? Dump them.
Vehicle and house insurances – never automatically renew, seek out a better deal, companies give their best rates to new customers, not repeat ones.
It pays to shop around when it comes to home and auto insurance but you don’t need to make multiple calls or plug your details into a dozen websites. Gabi is an online advisor who compares all your insurance options to find you the right policy, in under two minutes.
They compare multiple quotes from 20+ top insurance companies, saving you $720 on average. Click here to get your quote in two minutes and see how much Gabi can save you.
7. make extra money
Providing for my baby and paying for full time childcare gave me very little wriggle room in my budget.
Because of the debt I had built up I had no money for clothes, for savings, or the safety net of an emergency fund. There was no way of earning extra money from the day job, so I got a 2nd job working weekend evenings.
I’m showing my age here but this was before that days of being able to make money online because the internet was still in it’s infancy.
Now you have so many different ways to make money fast.
I had to get a job in a bar to make extra cash but now there are some great work from home jobs out there which are perfect when home is where you need to be.
What I love about the internet is being able to find out about new things and find free training to get you started.
If you want a work from home job why not check out the following FREE courses:
Become a proofreader – sign up for this FREE 76 minute workshop to find out more
Become a Virtual Assistant – grab your copy of this FREE ebook detailing 150+ services you can offer as a VA
Freelance writer – download this FREE list of 200+ writing niches to identify what you can get paid to write about
Selling on Amazon – sign up for this FREE email course on everything you need to know about selling on Amazon
Become a transcriptionist – sign up for this FREE 7 lesson mini course on how to become a transcriptionist
8. Start Saving
Part of my money epiphany and the catalyst to changing my mindset was realizing that my daughter was relying on me to protect her and provide for her.
To do that I needed to not only learn how to be good with money, I needed money in the bank. I needed an emergency fund to cover us for unexpected expenses that I couldn’t plan for.
I also needed general savings for things I could and should plan for and to start investing for our future.
When you are on a mission to manage your finances better you need to factor in savings and investments as a priority. They help you sleep at night and stop your worrying about money.
They help you make plans for you future and stop life’s curve balls from derailing your plans. Savings are the bedrock of effective money management and investments give you a solid financial future. You can start small and build slowly.
My secret tip: Get comfortable with the idea of investing by using a really fun app called Acorns. It’s the modern equivalent of your coin jar as it rounds up every purchase to the nearest $1 and automatically invests this spare change.
Acorns is a really simple way to dip your toes into investing, and save money, without even thinking about it. I think the best part is this hands off automated service costs as little as $1 a month.
Acorns automated roundups make saving and investing unbelievably easy, you’ll be pleasantly surprised how quickly your spare change accumulates.
9. Follow the 30 day rule
What’s the 30 day rule with money got to do with the best way to manage money? The 30 day rule is a technique to help you plan your spending and ensure you don’t spend unnecessarily.
At it’s core the 30 day rule is basically a guideline where you wait 30 days before buying anything substantial that you have identified as wanting to buy.
It doesn’t work for groceries but people usually suggest using the rule for bigger ticket items, perhaps those costing $100 or more.
For more information have a read of my post about the 30 day rule.
10. monitor your spending
Creating your budget is an essential step in your money management plan, but how do you know whether your budget is working? And how do you know when it’s not?
Waiting a month to look back is not ideal, because you could have gone very wrong by then.
Monitoring your spending on a weekly or daily basis is a great way to really understand what is happening to your money.
A simple spreadsheet or a spending tracker is all you need. Make a note of every time you spend, the date, amount and what you bought.
Each week add up what you have spent in each budget category and compare to your overall budget.
Doing this weekly gives you early warning of overspending and time to scale back so your budget is not blown by the end of the month.
11. create money goals
Most people work better and achieve more when they have targets to aim for in their jobs. The same goes for your money, create financial goals to aim for and watch yourself strive and stretch yourself to achieve them.
Goals for your money can be short term, long term and anything in-between. Financial goals such as paying off debt, funding a house deposit down payment, paying for a vacation with cash.
Make your goals SMART (Specific, Measurable, Achievable, Realistic, Time-bound) so you know the target amount, the end date and how much you need to save each paycheck.
These then become part of your budget – put theses savings into a separate account as soon as you are paid so you are not tempted to dip into them. Plan your budget around your goals.
How to be smart with money
Of course I didn’t become great at managing my money overnight. Knowing that I needed to do so helped me when I got things a bit wrong.
Because of course I didn’t become money wise straight away, it took time and it took effort. I knew I needed to know more about money in order to be better at managing it. Information is power as the saying goes.
I developed my financial knowledge by reading articles about money management and personal finance books I took out of the library. Some books can be a bit dry, but I learned a lot by reading a variety of books.
If you want to increase your financial knowledge, but don’t want to be reading dry, boring books then try these 3. Not only do they give great information, they are interesting to read.
Do what works for you to get the power of information in your hands. I hope all of the above tips really help you in your quest to learn how to become good with money.
Be reassured, it’s takes practice to get on top of your money but you absolutely can do it.
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
Come and follow me on Pinterest for more money saving hints and frugal tips!
Last Updated on 22nd July 2021 by Emma