How to manage money better than you currently do?
Let’s be honest, managing your money can seem downright hard sometimes can’t it?
Especially when you are struggling to manage it right now.
Trying to do something you have failed to do previously is always hard.
That’s why it helps when someone comes along and says; do this, this and this and you’re good.
And that is what I am going to do.
I am not here saying you will be a financial wizard by the time you finish reading this.
No, but you will know what you need to do, today, that will help you become better at managing your money.
And you will continue to improve as you continue to follow these ideas.
How To Manage Money Wisely
When you are money wise, you have full knowledge of your money.
What you earn, what you spend, what you save.
And you ask yourself the right questions.
You don’t focus on asking how can I get this thing cheaper. You focus on the more important question, can I afford this?
Because, being realistic, you won’t be able to afford everything.
And I know other people around you might look like they can afford everything because they’ve got it.
But 99 times out of 100 I bet they have bought a lot of their stuff on credit.
Which means they’ve got debt.
You can have anything you want, but you can’t have everything you want.
The key to learning how to manage money wisely is knowing what you can afford and what you can’t.
Of course you will still be wanting to get the best price for anything you do buy.
But you know that you are not going to buy what everyone else is buying just because they are.
You buy what you can afford, after setting aside money for the important things in your life like retirement, savings, emergency money and the like.
Related post: What To Do When You Are Completely Broke: 7 Key Actions To Take
Come and follow me on Pinterest for more money saving hints and frugal tips!
10 Things To Do To Learn How To Manage Money Better
1. Create Your Money Mindset
Your mindset is your secret weapon.
You can do anything you want when you put your mind to it.
Pay off debt, lose weight, get fit.
These all require a strong mindset, a determination to achieve that goal.
Your money mindset is key to your personal money management.
Because when you are determined to manage your money then you have the right mindset to make it happen.
How to create your money mindset?
When you know why you want to manage your money, why you want a strong money mindset, then this helps you achieve it.
So ask yourself, why do you want to get better at managing your money?
Do you have debt you want to pay off?
Retirement to think about?
Or are you just fed up of lurching from paycheck to paycheck without any real plan on how you are going to spend your money so it’s all gone before you had a chance to decide?
When you know exactly why you want and need to be in control of your money, you can focus on that.
It helps you create good money habits.
It helps you make difficult money decisions.
Related post: 7 Simple Ways To Build A Powerful Frugal Mindset
2. Have Smart Financial Goals
Financial goals are crucial to your future money success.
They give you something to aim for, something to be willing to sacrifice something else for.
Financial goals are as big or as small as you make them. House deposit, retirement savings, cash for a new car, money for college.
All of these could be your financial goals.
But smart is how you get to achieve them. Smart being:
- Specific
- Measurable
- Achievable
- Realistic
- Timebound
No point having a financial goal of saving $40,000 in one year if you only earn $35,000. Not realistic is it?
So create your financial goals and make them smart. They can still be stretching.
3. Cut Unnecessary Spending
What counts as unnecessary spending?
Anything that you didn’t need to buy but chose to do so anyway.
So it will be different for each of us.
I no longer work in an office so buying a skirt perfect for office wear would be unnecessary, even if it was just the most lovely thing ever.
Unnecessary spending is also the spending that you do almost unconsciously because you’ve developed a habit to spend.
So picking a coffee and muffin on the way to work, because you have always done it. Having a meal out on a Friday night, just because.
These could be classed as unnecessary.
What will dictate for you personally, what is unnecessary is what your money can afford.
If you cannot afford to buy a coffee and muffin every day then it’s not only unnecessary, it’s going to create debt.
Look at what you are spending your money on.
Look at what you can actually afford.
Then decide what is necessary and what is unnecessary, stop buying the unnecessary things.
4. Save for Big Purchases
Big purchases, like a vacation, new house, new car, new refrigerator, do not need to be bought with a loan or put on your credit card.
These are all items that you know at some point you are likely going to have to purchase.
So plan for these purchases by creating a sinking fund for them.
Put money aside every month (in a different account) and use that money when, and only when, you have a big purchase that you planned for, finally happen.
5. Have Fun Money
No matter where you are with your personal money management, planning for some fun money each week or month is essential for both your mental well-being and your wallet.
What is fun money?
It’s guilt free spending money.
Getting to grips with managing your money better may well mean you have less money to spend.
Because you are finally starting to pay off debt and save for the future.
And if times are tight or your debt is high, this could mean you have very little flexibility in your budget.
Fun money becomes very important when times are hard.
Without it you run a real risk of giving up on your new money management plan and then you are back to square one.
It doesn’t have to be much, even just $5 will make a difference.
The key is, it is yours to spend without any justification to yourself or your partner.
I’ve always spent mine on chocolate!
6. Embrace Frugal Living
According to Collins Dictionary, the word frugal means: practicing economy; living without waste and being thrifty.
Interestingly, in American English frugal is described differently: not wasteful; not spending freely or unnecessarily; thrifty; economical.
So basically the same thing – phew!
When you live frugally, you learn not to waste money – which is a great skill to have when you are looking to manage your money better.
It’s not that you don’t spend any money, you do, but you are careful with what you spend your money on, don’t spend unnecessarily and get value from what you do you spend.
Start your frugal journey by joining the free frugal foundations framework email course today
7. Create a Budget
This should be right at the top of the things you should do to manage your money better.
But I’ve deliberately dropped it down here because I know how many people dislike the word budget and are more likely to switch off than accept that a budget is what they need.
But you do need a budget.
A budget is simply a plan for how you are going to spend your money and ensure all your commitments are covered.
Commitments like loan repayments, utility bills, food costs etc.
This is not the post to teach you all about budgeting.
But head over to my post on how to budget your money and you will find simple, detailed instructions on how to create a budget and a downloadable budget pdf to help.
8. Get On The Same Page As Your Partner
Skip this if you are currently single – or maybe not if having a partner is something that might happen in the future!
When you are part of a couple, money can become more of a problem if it is not carefully managed.
Partly because there could be 2 of you earning, so more money to manage, and partly because we humans are just really bad at talking about money.
Some people don’t even know what their partner’s earn!
If you are going to be great at your personal finances you do need to be on the same page as your partner.
You will want to have joint financial goals.
You’ll want to agree on what to save up for, whether it’s a new refrigerator or a new car.
How to do this? By talking about money, regularly, with your partner.
Money (problems) is the 2nd top reason that couples divorce, so the more you talk about it, the less of a problem it will be.
But do try to keep these talks positive and fairly short.
I cannot tell you how many times my husband and I ended up in an argument because we talked about money too much.
Something always happens, one of you will say something that irritates the other.
So keep money talks short, but have them often. Like weekly.
9. Track Your Spending
To create your perfect budget and keep it that way, you need to know where your money goes.
Believe me when I say you never spend it exactly the way you think you will.
When you track your spending, all you are doing is noting down every time you spend your money and on what.
Analyzing your spending shows you where your weak points are, where you overspend, where you can cut back.
What unnecessary things you might be buying.
Knowledge is power – know what you are spending so you have the power to make changes as you need to.
10. Good Personal Money Management
It doesn’t matter whether you are looking at how to manage money in your 20s, your 30s or your 60s.
You can always become good and get better at your personal money management.
The more good money habits you have, the better you will be at managing your money, personal, joint, family or wider.
When you create a whole set of money habits, you will find yourself actually spending less time thinking about your money.
Habits help you get your money on a more automatic system.
Savings are automated.
Bills are automated.
You automatically update your budget regularly, without thinking.
Good personal money management is about having a system set up that works for you.
You could manage your money with an app, spreadsheet or pen and paper.
It’s your money, how you manage it is up to you.
All I ask and suggest is that you do manage it.
How Can I Improve My Money Management Skills?
Take the time to learn about your money. Follow these tips. Read about personal money management. Ask questions of others.
How Can I Be Better With Money?
Start by ensuring you do not spend more than you earn. Create a budget and stick to it.
What Is The 50 20 30 Budget Rule?
The 50 20 30 budge rule was designed to make your budgeting easier by using percentages to allocate your money.
50% on things you need, 20% on repaying debt and saving for the future and 30% on things you want.
Please note I do not agree with this rule as 30% on wants when you have debt is not good!
More Money Managing Tips
The above 10 ways are exactly what you need today to learn how to manage your money better.
But you don’t need to stop there.
There is so much more you can do to manage your money.
You can:
- Consolidate your debt – finding a better, lower interest rate so you can pay off the debt faster
- Get others involved to share the fun of managing your money
- Lower your bills to ensure you are getting better value
- Automate your savings so the money is out of your account as soon as you are paid
- Check out your credit report and make it better
- Stop doing the lottery and thinking you are going to win it, save the money instead.
Managing Your Money Better
When you manage your money better you will be able to create and achieve your money plan.
You will be able to manage your money such that you have:
- An emergency fund
- Savings building nicely
- You are paying off debt or are debt free
- You are saving for retirement
- Credit cards paid off in full every month
- Consistency with your money – you know where you stand
These might seem unobtainable today but in time, a short space of time, they won’t be.
When you learn how to manage your money better, all of these things will be things you not only can achieve, but you DO achieve.
How To Manager Money Better Through Frugal Living
I mentioned before that embracing frugal living is one of the ways that can help you to learn better money management.
Sometimes though it can difficult to know where to begin. That’s why I have created a free 5 day email course to help you build strong frugal foundations.
Why not sign up and see how much better you become with your money management skills?
Last Updated on 4th April 2023 by Emma
