If you are asking yourself, “How can I manage my money smartly?”, best believe that you are not alone.
From students, young adults, to adults, seeking proper money management tips is a common concern. And that’s not so surprising when you consider that organising your finances impacts every area of your life.
It determines whether you will live a wholesome life or not, because like it or not, money rules the world.
So if you are thinking about it, you are doing the right thing.
The question, however, is: how do we make sure we put our finances in order so we can be successful with our money?
The answer is simple: we must learn how to manage money better, and this is what I discuss in this post.
Follow along for tips on how to manage your money wisely.
Smart Money Management Tips to Manage Money Better
1. Create a Budget
I don’t think a list of personal money management tips will be complete without budgeting. In fact, if you ask me, it should always be first on the list.
If you’re not budgeting, you’re basically playing a guessing game with your money.
Trust me when I say that you don’t know where your money goes. You might think you do, but without a budget, you don’t; you just think you do because you can see one or two things you succeeded in buying.
If you don’t believe me, try tracking your spending. Different platforms can help you with that. A good one I use recently is Slice, a simple platform to know where your money is going.
You will be surprised how those little daily expenses – takeout, subscriptions, impulse buys – quickly add up.
But that is why a budget is necessary; you get to plan for all these little expenses anyway, giving you more control over your money.
A budget is just a fancy name for a plan. It helps you tell your money where to go instead of wondering where it went.
Budgeting often sounds overwhelming to a beginner, but it doesn’t have to be. Don’t overthink it; all you have to do is write down what you earn, what you spend, and what you should be spending.
Now, of course, this is a simplified definition of what a budget is. A budget typically should contain your needs, bills, savings and wants (if you can afford it). Although I always suggest putting something down for entertainment, because you deserve to treat yourself after working.
However, if you are in debt, entertainment might need to take a back seat or be grossly reduced until you are free.
For instance, you might need to eat in more rather than ordering, so you can have enough to sort out your debt.
Basically, your budget will depend on your income and financial state.
But usually, the 50-30-20 rule of money is applied to budgeting. The 50-30-20 rule recommends putting 20% of your money toward savings, 30% toward wants, and 50% toward needs. Your savings will include building an emergency fund and investments.
Like I said earlier, your wants might be reduced if you have a debt to settle. Also, you can reduce the percentage of money you put towards wants to put that towards investments or a retirement fund.
Also Read: Wise Reasons to Save Money for the Future
2. Live within Your Means
The right advice really is to live below your means; that is why financial experts tell us to increase our savings when our income increases rather than increasing our lifestyle.
However, even if you live within your means – especially if you don’t have debt – you can still reach your financial goals.
If you have debts, then you should definitely live below your means.
But whatever the case, the point is to stop trying to match Instagram lifestyles. Just because your friend is booking vacations every other month doesn’t mean you need to swipe your card to keep up.
You cannot afford to live paycheck by paycheck.
I understand some people have to because they earn too little – more on that later – but if you don’t fall into that category, you shouldn’t live like you are.
You must be intentional about your money and make sure you are making decisions that your future self will thank you for.
Also Read: How to Live Within Your Means
3. Build an Emergency Fund
I mentioned earlier that you should use some parts of your savings to build an emergency fund.
After you’ve done that, you can put the rest into the usual savings account.
But an emergency fund is necessary first because life loves surprises, and not always the good kind.
You can be hit with a job loss, medical bill or even a car repair that can swallow your savings. That’s why planning ahead for emergencies is important.
It serves as your safety net if life throws you a curveball.
The best practice is to aim for 3–6 months’ worth of your usual expenses. And you can start small if you need to. Even $50 a month adds up over time.
Trust me, future you will be grateful.
4. Build a Retirement Fund
Retirement is something many people don’t consider because it might feel far away, but the earlier you start saving, the better.
Not only is having a retirement plan a good strategy for managing your money, but think of it as a way to take care of your older self.
Like all financial tips, you can start small. Invest in short-term plans for faster benefits, but also invest towards long-term goals for your retirement.
Even small amounts invested consistently can grow into something big thanks to compound interest.
Also, if your job offers a pension or retirement plan, jump on it. If not, look into personal retirement accounts.
5. Invest
I heard somewhere that investment is the best way to create wealth, not savings. Savings is great, but investing is where your money starts working for you.
From experience, I know that investment can be overwhelming; sometimes, it sounds like Mandarin to an English speaker.
However, you don’t have to worry because you don’t have to be a stock market genius to get started.
You can start with the basics: mutual funds, real estate, or even beginner-friendly investment apps.
Many fintech companies now have streamlined ways to invest without worrying about the confusing stock market; do some research and leverage them.
The key to investment is to start early and be consistent.
6. Get Insurance
I had a medical condition recently that ate deeply into my savings. Before then, insurance didn’t seem like something I needed now.
However, that experience taught me how important having insurance is.
I understand that no one likes paying for something they hope they’ll never use, but trust me an insurance is a lifesaver.
Having that coverage means one emergency will not wipe out all your savings.
So, make sure you get it for your health, especially, then the home and car as well.
It’s one of those things you may not appreciate until you really need it.
7. Increase Your Income
I mentioned increasing your income earlier because you shouldn’t be living paycheck to paycheck all your life; it’s not a sustainable way to live.
So, if you are not making enough for your needs and you keep having overdue bills – not because you are spending recklessly, but because your income doesn’t cover it – then you need to increase it.
If you have the skills to negotiate for better pay or look for a better job, consider that.
If not, now is the time to sacrifice to get those skills. If it will require you to enrol for a night or weekend class that you can attend after work, you need to do that.
Some of these tips for money management will not apply to you if you don’t have enough for it. I mean, it will be difficult to save or get an emergency fund when you can barely feed yourself in a month.
So, you need to think of ways to increase your income. And you need to start now, don’t waste time any longer waiting for the perfect time.
The perfect time will never come; the perfect time to do something is now.
Also Read: Reasons You Are Not Making Progress in Your Career
8. Avoid Debt
As much as you can, you need to avoid debt; it is a trap that is often difficult to get out of.
That is why I personally don’t like the idea of getting loans for liabilities.
I understand getting a loan for a business that will bring in profit to pay back the loan, but for a car or even a house is just not something I advise, except you make enough to settle it quickly.
But my advice will be to wait and save towards the things that you can’t afford to pay for in full now.
Delayed gratification can save you years of stress, because debt is often easy to fall in, but hard to climb out of. And the less debt you have, the more freedom you gain.
9. Prioritise Paying Back Debt
If you are already in debt, you need to make a plan to tackle it.
I already mentioned it earlier, but it is worth repeating: one of the tips for managing money smartly is to prioritise paying off debt.
If you need to greatly reduce entertainment and your wants to pay off your debt, do that. But either way, you must have a deliberate plan; it is not something you leave to chance.
You can start with high-interest ones like credit cards, or go for the snowball method and pay off the smallest debt first.
Whatever the case, find what works for you and your financial situation.
I need to add that paying off debt effectively will require making sacrifices; so don’t expect it to be super convenient or comfortable, or you will always remain in that cycle.
Be motivated by the freedom you will enjoy later when you pay the price now.
10. Automate Savings
One of the fundamental principles of money management is to save now, spend later. What I do when I get my paycheck is to pay my tithe, put my savings into the required account, pay off all necessary bills and then spend the rest.
Trust me, out of sight, out of mind works with money, too. When the money is out of your reach, you will make do with what you have.
However, this is easier said than done, so the best way is to automate your savings.
Most financial companies or money management apps help with this. All you need to do is set up a particular amount to transfer from your income account to your savings account at a particular time every month – the best time is a day after you get paid.
That way, you won’t have to rely on willpower, and your money starts growing without you even thinking about it.
Final Thoughts
Being successful with money is not always about being the richest in the group; it is largely about being smart. And being smart with money is all about habits.
Culture good money habits; start small, stay consistent, and give yourself grace when things don’t go perfectly. And you will be shocked at how much progress you will make in a year.
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