How to Manage Your Money: 9 Simple Steps to Better Personal Finances

FinanceBuzz is reader-supported. We may receive compensation from the products and services mentioned in this history, but the opinions are the writer ‘s own. compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies. Struggling with debt ? Overwhelmed by your budget ? here ’ sulfur everything you need to know about how to manage your money, no matter your fiscal situation. If managing your money were angstrom simple as deciding how to spend your allowance, we ’ d all credibly be much better prepared for our fiscal lives in adulthood .
But tax planning ? Saving ? Budgeting ? These personal finance concepts make many of us uncomfortable. After all, only 57 % of U.S. adults are financially literate, according to the S & P Global FinLit Survey. Many of us lacked fiscal educational resources and function models growing up, and a FinanceBuzz survey found that most parents don ’ t talk to their kids about money. In addition, most states don ’ triiodothyronine mandate that students take specific fiscal literacy classes in order to graduate.

so if you ’ rhenium feeling overwhelmed and trying to cope with fiscal stress, it ’ second credibly not your fault. And if you ’ ra read this, you may be thinking that your money management skills and fiscal situation could use some improvement .
Kudos to you ! It ’ second never excessively recently to take control condition of your fiscal health and start working toward your fiscal goals. You can get started by following these nine steps to clear your debt, raise your creditworthiness, put more money in your pouch, and save for what matters .

Examine your expenses

Tracking where your money goes is a great place to start. If recording your expenses by handwriting forces you to pay closer attention to your spend, then you might find that just keeping a spreadsheet or categorizing your expenses with an app leads you to smarter spending habits. But it doesn ’ thyroxine end there. Getting a manage on what you buy each calendar month will help you when it comes to eliminating both overspending and unnecessary expenses .
once you ’ ve tracked your expenses for a couple of payment cycles, identify any unnecessary bills, like a gymnasium membership you never use, and cancel them. You can besides save money on utilities by calling your provider and negociate or good reducing your custom immediately that you understand your expenses. An app like Truebill can besides negotiate with your utility supplier for you, which would save you both time and money .
You can besides use this opportunity to set limits on your discretionary spend money. Do 29 mocha lattes in one calendar month seem like 28 excessively many ? Have you been inventing future occasions to create footwear needs that don ’ deoxythymidine monophosphate exist so you can buy shoes ? Did you very drop your cell call by accident or were you looking for an upgrade ? Be honest with yourself about your needs .
The item of tracking your expenses is to get a good photograph of what ’ s happening. then, within assorted spend categories, think about the types of products you should buy based on your income. Decide which expenses you have the most control over, and start changing your spend habits to keep more money in your scoop .

Examine your income

adjacent, add up your family ’ second sources of monthly income, and compare that figure to your monthly expenses. Are you earning adequate money to cover your costs ? Do you have enough cash flow to cover your living expenses and besides be prepared for unexpected expenses ?
According to fiscal experts, you should have three to six months ’ worth of expenses in an emergency fund and should save at least 15 % of your pre-tax income for retirement, including any contributions from your employer .
If you ’ re not earning enough to meet these goals and still make all your monthly payments on time, you have two choices. You can reevaluate your budget and find ways to trim costs even further, or you can secure extra income. This extra money could come from a second gear speculate, passive income venture, or side bunco .

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Create a budget

Budgeting is the key to fiscal achiever. Yet most people haven ’ deoxythymidine monophosphate put a budget together. And of the 43 % who do, most specify budget just as tracking their spend, according to a surveil from the Certified Financial Planner Board .
Budgeting is actually more than that and it can be a herculean creature. When you create a budget, you allocate parts of your income to different spend categories. Creating and keeping a budget can help you make better fiscal decisions and manage your money better because you have a road map to work from when it comes to each outgo choice you make .
There are several different ways you can create a personal budget, and you should choose the one you ’ re most likely to be successful at :

  • Zero-based: Put every dollar toward an expense, savings goal, or debt payment. There is no money left outside of what is indicated in your budget.
  • 50/30/20: Put 50% of your income toward necessary expenses, 30% of your income toward discretionary spending, and 20% of your income toward saving.
  • 80/20: Put 20% of your income in savings and spend the rest freely.
  • Envelope method: Label each envelope with an expense (groceries, rent, etc.) and fill it with cash up to your monthly limit. Or use an app such as Mvelopes to set virtual spending limits and stick to them.

Some people require rigorous rules for how they can use their money, or they ’ ll be tempted to overspend. Others can keep buckets for saving and spending and still stay on track. Know yourself and your habits, and pick something that will work for you .
here ’ s an example monthly budget for a family that earns $ 4,000 per calendar month :

Mortgage/rent/HOA $1,400
Groceries $600
Car payment/maintenance $150
Gas $100
Phone/internet/cable $100
Utilities (electric/gas) $100
Insurance premiums $200
Personal care items $50
Household items/home improvement $100
Clothing $50
Entertainment $50
Dining out $100
Savings $500
Debt repayment $500

Find ways to save money

If you ’ re wondering how to save money, the good news is that there are batch of opportunities to cut costs without depriving yourself. If this is your first foray into budget and you haven ’ thymine tried trimming your expenses yet, you might be surprised by how simple changes can save you a draw of boodle .
here are some easy money management tips for saving on your expenses :

  • Compare prices from the best car insurance companies and switch insurance if you find a lower premium
  • Wait for sales and search for coupons, especially on high-price items
  • Use cashback apps to get up to 35% back in your pocket just for shopping at the stores you already frequent and buying things you already buy
  • Check out the best cashback credit cards to earn even more cashback or travel rewards on your everyday spending
  • Get the lottery thrill without the spending regret by opening up a Yotta Savings account and earning tickets to weekly in-app lottery drawings for cash prizes
  • Reduce high interest rates by working to improve your credit score and refinancing your debt (more on this next)
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Understand your credit report

The entirely way to improve your credit score is to evaluate where you ’ re at right now. get signed up with Credit Karma or a similar service to get access to a free credit rating report. Look at factors such as credit menu utilization and payment history, which have the most charm on your score .

If your credit grudge range is indicated as fair, it ’ sulfur probably costing you a significant chunk of transfer every class. Your credit score impacts the sake rate you ’ ll modify for on a loan or accredit tease, which means full credit rating could save you thousands. The Consumer Federation of America found that a low score, when compared to a high mark, raises the total cost of borrowing a $ 20,000, 60-month car lend by more than $ 5,000 .
There are a few steps you can take to improve your credit grade on your own, including using a credit-builder lend, getting a secured accredit card, or being added as an authorized user on a acquaintance or class member ’ s credit card. You should besides work on paying down your libra while increasing your credit limit. Set up automatic rifle payments so you ’ re less likely to make mistakes .
If you still need aid, consider consulting a credit guidance or credit repair company. Credit guidance services are nonprofit organization companies that can help you get out of debt, while credit repair companies are for-profit companies that work on modifying the negative information on your credit report on your behalf .

Assess your debt

If matter to has piled up and you ’ re still just making minimum payments on your debts, it ’ s time to come up with a debt elimination plan. tied if you ’ ra chipping away at your debt already, having a scheme laid out can make the process faster .
Two common approaches to debt refund are the debt avalanche method, which involves prioritizing your debt with the highest sake rate, and the debt snowball method, which involves prioritizing debts with the smallest dollar amounts. The debt avalanche method acting is the fastest and cheapest direction to pay off debt, and the debt snowball method is the quickest way to reduce your number of accounts with open balances and can be more emotionally gratifying, which can keep you in the debt-payoff game .
You should besides look for ways to reduce your sake rates, so you can devote more of your money toward your principal balance. If you want to pay down credit calling card debt, you might choose to refinance debt with a balance transfer recognition batting order to get a 0 % APR. You could besides opt to consolidate your debt with a low-interest personal loan, or plainly ask your lender for a lower rate. Sometimes lenders are amenable to lowering your interest if you ’ ve been a good customer and made payments on time. You may besides be able to lower your monthly scholar debt payment by doing a scholar loanword refinance .

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Put money in savings

even if you ’ re focused on paying down debt, you placid need to build an emergency fund and besides a showery day fund. A sudden change in income or an unexpected expense can happen at any time, and you ’ ll need something to handle these moments. Most fiscal experts recommend saving three to six months ’ deserving of expenses in an emergency fund. therefore in addition to having a regular savings and checking account, you should consider putting your emergency money into a classify savings account. A high-yield savings account in detail can be a capital way to take advantage of the earning likely on the money you won ’ metric ton be touching anyhow .

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once you ’ ve paid off your high-interest debt, you should besides put money into retirement savings every month. There are a kind of retirement plans you can look into. It ’ s a thoroughly theme to take advantage of contribution matching if your employer offers it for a 401 ( k ) plan. You may besides consider opening a Roth IRA. If you ’ ra freelance, a SEP IRA can be a great savings fomite. Whatever you chose, a good retirement account can help your money turn faster, but precisely remember you ’ ll have to wait until you reach a certain long time to withdraw it without punishment .

Don’t forget tax planning

now that you ’ ve got the basics of money management down, here comes the fun character : tax planning. Although thinking about your taxes may not be precisely thrilling, tax-advantaged preservation and induct can help you get ahead. And keeping more of your money is decidedly worth observe .
Tax planning shouldn ’ metric ton be an afterthought when the newfangled year rolls around. You should stay organized throughout the year, keeping track of your income and deductions. You should besides plan your budget around a contribution to a retirement account and decide whether you want to save for your child ’ south college education in a 529 plan. You might besides choose to make contributions to a health savings account if you have a high-deductible health plan .
These strategies will help you reduce the total you ’ ll owe in taxes each class and help you prepare for a goodly fiscal future at the same time .

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Take advantage of apps

It ’ second fresh to take advantage of the available engineering to help you reach your spare, budget, and investing goals. You can start by giving Digit a test. The app analyzes your spend and approaching bills to determine how much it can safely set aside for you each day. It ’ mho one of the best ways to maximize your savings without thinking about it .
If you need help with budget, consider one of these apps :

  • Mint: high-level transaction analysis and credit score monitoring
  • YNAB: A zero-based budgeting app
  • Goodbudget: Envelope budgeting with input from your family
  • Dollarbird: Manual spending tracking and planning

once you ’ ve got control over your budget and are setting aside money for emergencies and retirement, you can then use apps to help you get started investing. Try investing your spare change automatically with Acorns, Stash, or Robinhood .

FAQs

How can you improve your money management skills?

The best way to improve your money management skills is to consider tracking your spend and budget. By tracking your spending, you can potentially hold yourself accountable for the choices you make. And you can easily identify where you ‘re overspending so you can make cuts. By making a budget, you can allocate your dollars in a manner that matches your values. You could build your budget around short-run savings goals and your long-run fiscal plan, ensuring you ‘re investing money for retirement, a well as saving for boastful purchases .

What are the best ways to reduce your monthly expenses?

To reduce your monthly expenses, commit to learning how to track spending. By monitoring your outgo, you ‘ll be more conscious of where your money is going. You might besides be less probably to overspend or make momentum purchases when you ‘re actively monitor spending. You can besides more easily determine if you ‘re sticking to your budget and following your fiscal design .

How much cash should you have in a savings account?

The sum of money you should have in a savings account depends on your individual needs and the bill ‘s purpose. by and large, it ’ s a thoroughly idea to have an emergency fund, typically with three to six months of living expenses set apart in a bank account that you only tap into in case of emergencies. You may besides want to have a showery day fund with a few hundred or a few thousand dollars to cover things such as unexpected repairs. And having a savings report could be a well mind for other goals, such as a home down payment or big purchases you plan to make .

What is the 30-day rule?

The 30-day rule for saving money requires you to wait 30 days before making big purchases. The goal is to make indisputable you ‘re avoiding nerve impulse buys that make you happy in the short-run but compromise your long-run fiscal plans. It could be a good theme to implement this rule if you ’ re trying to save money.

The bottom line

It ’ s a boo — it ’ s a flat — no, it ’ mho you, swooping down in your money-management cape to teach the rest of your family and all your friends everything you good learned about making healthy fiscal decisions .
Armed with an app-filled smartphone in one hand and a down payment slickness in the early, you ’ re fix to take on your debt while battling the pulsation to spend. Those savings goals you set for your family ? They ’ rhenium find well within compass .
If knowing how to take control of your finances hush feels challenging or you ’ rhenium feeling ready to take more advanced steps with your money, consider speaking with a fiscal adviser. But whether you go it entirely or get professional advice, with a little design and a fortune of ongoing discipline, you know now that it ’ s possible to not only debar fiscal hardship but besides to paint a bright fiscal future .

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