7 Easy Money Management Tips You Can Start Today

One common misconception about building wealth is that you have to save a large chunk of your income monthly.

Although it does help, building wealth isn’t about saving a large portion of your income, but being consistent with practicing easy management tips that can help you stretch every dollar you spend.

Whether you’re just starting out on your financial journey, trying to pay off bad debts, or building your savings account, these seven money management tips will get you started and help you to achieve your financial dreams.

7 Easy Money Management Tips You Can Start Today

1. Track Your Spending: Be Accountable For Every Dollar You Spend

Keeping track of your money makes you accountable for every dollar you earn and helps you to repurpose and redirect your money if you’ve not been spending rightly.

You will be amazed at how much money you spend on non-essentials like coffee runs, takeouts, and subscription services that you don’t use.

I track every dollar I spend using an ‘expenses book’ where I record my daily expenses (spreadsheet or budgeting apps will work just fine, depending on your preference); at the end of the month, I categorized my expenses into essential needs like rent, utilities, food, and transport, and non-essential wants like dining out, entertainment, and shopping.

With this simple exercise, you too can track and monitor where your money is going, helping you to identify wasteful spending that causes leakage in your finances.

Read Also: 10 Financial Hacks to Save Money on a Low Income

2. Use Budgeting To Repurpose Your Money

One of the best ways to block financial leakages by preventing wasteful spending is budgeting.

With budgeting, you can be sure that you are spending your money on the right things, prioritizing savings, entertainment, and debt repayment. This will give you control over every dollar you earn and spend.

Follow the budgeting tips to help you create a realistic budget using the 50-30-20 rule:

• Add up your monthly income, including your salary, freelancing, bonuses, tax refunds, and other income sources.
• List out, cost, and add up your monthly expenses, categorizing them into essentials and non-essentials.
• Subtract your expenses from your income. A positive balance means you’re spending within the confines of your earnings, while a negative balance leaves you with more expenses to cut out. If your income is low, bare-bones budget cutting out non-essentials will help you manage your income effectively without getting into more debt to fund your living expenses.

The 50-30-20 rule shares your income by allocating 50% of your income to needs; 30% to wants; and 20% to savings and debt management.

Read Also: 9 Practical Budgeting Tips for Easy Money Management

3. Build an Emergency Fund to Prepare You for the Unexpected

Sudden situations that arise out of the blue, like sudden car breakdown, natural disasters, medical bills, or job loss, result in unplanned expenses that leave you with no choice but to get yourself into debt.

Hence, the need to build an emergency fund to cater to such unplanned situations.

To build an emergency fund, aim to save up to 6 months of living expenses.

For example, if your total expenses for the month total $3000 on your budget, then have a goal of saving up to $18000 for the next six months.

Do not be overwhelmed by the figure; rather, you can choose to make small and consistent moves towards saving for emergency funds.

These few tips will help you achieve your goal of building an emergency fund:

• Save your emergency fund in a high-yield savings account titled ‘emergency fund’ for a quicker buildup
• Save extra income from side hustles, tax refunds, or bonuses at work in your emergency fund account
• For consistency, automate direct savings into your emergency fund account.

Read Also: How to Easily Manage Money as a Married Couple

4. Cut Unnecessary Expenses

Unnecessary spending is like a leaky boat that can sink the ship if not blocked early enough.

That said, unnecessary spending, if not identified and blgrococked, can prevent you from achieving your financial goal of saving for rainy days, building an emergency fund, planning for retirement, or building your portfolio.

The tips below will help you identify and cut out unnecessary spending:

• Review your bank statement and credit card statements for recurring charges, unused or forgotten subscriptions, and impulse buys.
• Cancel multiple streaming subscriptions and memberships you rarely use. For entertainment subscription, consider a family package to help you cut costs
• Cook your meals at home to limit dining out and meal delivery
• Use a grocery list to do away with impulse shopping and stick to your budget
• Brew your own coffee; invest in a quality coffee maker to cut down on the cost of daily lattes
• Use coupons and discount codes to shop

Read Also: How to Set Financial Boundaries with Friends and Families

5. Save Consistently

You will most likely end up being inconsistent and not saving enough when you have the chance to, if you choose to delay saving for the last.

Prioritize yourself by paying yourself first. Saving is how you pay yourself for the hard work you do.

You can automate direct transfer from your pay account to an entirely different account. Also, you can try out a fun saving challenge by saving every week of the year. For instance, you can start with $10 for the first week, $20 for the second week… and $520 for the last week of the year.

Cumulatively, you would have saved $13,780, which would be enough to start an investment portfolio with the consideration of investing in your future.

6. Avoid Bad Debt: Borrow Wisely, Not Carelessly

Borrowing or getting into debt for the right reason is not bad, but can even be a smart move.

For example, getting a mortgage or business loan can be a smart way to build wealth.

On the other hand, high-interest consumer credit resulting from spending on credit cards, borrowing to buy a new car, luxury gadgets, or paying for vacations is a bad move that drains wealth.

Giving it a closer look, if you spend $4000 @ 20% yearly interest, you would have accumulated an additional $800 in debt in just one year.

Here are some tips to help you avoid bad debt:

• Pay off credit cards in full and avoid accumulating extra charges
• Avoid “buy now, pay later” schemes
• Know your interest, understand the fine print before signing for a loan
• Don’t co-sign a loan
• Delay major expenses, use a 30-day rule for large non-essential purchases, and a 24-hour rule for small purchases.

Read Also: 9 Financial Habits of Women Who Are Never Broke

7. Build Your Credit Score the Smart Way

Do you have a good credit score? With a good score to your credit, you can get easy loan approvals and access low-interest loans, which, if well managed, can help you achieve your financial goals.

It also makes it easy for you to rent an apartment and boosts your chances of getting certain jobs based on trust.

Here are a few tips to help you build your credit score:

• Pay your bills early to avoid late payment, which can hurt your credit score and also attract late fees.
• Keep your credit usage low, usually below less than 30%, to prove that you’re responsible at managing debts
• Maintain a long-standing credit history to boost your credit score. Be consistent and don’t be in a rush to close a credit account.
• Apply only for credit you need to avoid too many hard inquiries.

Conclusion

These easy money management tips have proven that money management does not have to be hard or perfect; all that matters is taking consistent action towards your financial freedom.

Start today by tracking your expenses, building an emergency fund (even if it’s $20 at a time), saving, and investing.

Read Also: How Do I Pay Myself from My Small Business?