6 Tips and Tricks for Managing Money Better

Some discipline, a positive outlook, and a few smart habits can make the difference between living paycheck to paycheck with a knot in your stomach and looking toward your financial future with confidence. Here are the six steps to take toward money management mastery.

1. Make a Budget

Understanding one’s financial situation is the first step toward improving it. Creating a budget is straightforward and the best way to put things into perspective.

Start by tallying all your income streams – your salary, side hustles, investments, etc. Then, total your monthly expenses. The difference between them will reveal whether you're saving or losing money each month and help guide your next steps.

2. Set Financial Goals

Bringing in more money than you spend is a solid foundation, but it's not a good motivator. Adopting positive money management habits and making sacrifices becomes easier with goals in mind. Saving up for retirement should be among them. Still, short-term and casual goals like paying for your next vacation off in full before going on it are equally encouraged.

3. Tackle Your Debt

Borrowing money can temporarily get you out of a financial bind. However, predatory lending practices often lead to long-term obligations that stifle your financial outlook. Becoming debt-free is challenging and can take a while.

There's nothing wrong with scoring a few small wins first to keep your motivation up. That's the whole premise of the debt snowball method. Paying off the smallest balances frees more money to tackle the large ones. Depending on your circumstances, it might be better to focus on clearing your credit card debt first since it accrues the most interest.

4. Build Up an Emergency Fund

Less debt means you can finally focus on building wealth, and an emergency fund should be your first step. Each month, put some money towards an emergency savings fund. Save up for at least three to six months of expenses before focusing on other areas.

The peace of mind an emergency fund creates is more than worth it. On the one hand, you can deal with unexpected repairs or even job loss without taking on new debt. On the other, you’ll be in a position to pursue a better job or expand other money-making ventures without the risks impacting your liquidity.

5. Protect Your Financial Data

Since so many financial transactions happen online, good digital hygiene is a vital money management skill. For example, you wouldn't want your banking and investment apps, bill-paying platforms, etc., to have the same or easily guessable account details.

Use a password manager for your OS to easily set up strong, unique passwords for all your financial and other crucial accounts. Password managers for Windows, macOS, and other operating systems are widely available.

This way, you don't have to remember them all, yet you ensure account security, especially if you activate two-factor authentication for each account.

Where and how you manage your finances online is also a factor. For example, logging into bank accounts while connected to public Wi-Fi might expose your credentials if someone is monitoring the network. Never share sensitive information or access crucial accounts unless you get the best VPN and activate it.

Doing so will encrypt the connection and prevent anyone from prying into your internet activity or using your credentials to commit financial fraud.

6. Take Advantage of Free Wealth-Building Opportunities

You may not be aware of all the freebies that can help you get ahead. Inquire whether your employer offers 401K matching and max out your contributions to reap the benefits. Likewise, using credit cards can be a great way to build up your credit score and secure points or cashback rewards if you can pay them off in full each month.