Money Management Tips

Milvionne Chery Copeland, WalletHub WriterApr 4, 2025

Milvionne Chery Copeland, WalletHub Writer
Apr 4, 2025

Good money management skills can help you spend wisely, save for the future, and achieve your financial goals. Common sense goes a long way, but you also need to learn how to make a budget, track your spending, save for the future, build credit and more. Below, we will run down the money management tips you need to know.

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1. Make a Budget

Making a budget can help you manage your money strategically, so you have enough for the things that you need and any financial goals you want to achieve, such as saving up for a down payment on a house or having enough money to retire.

To successfully make a budget, you will need to:

Calculate your income: Add up all your sources of income so you know how much you get paid every month.

Track your expenses: List what you spend your money on every month.

Set goals: Determine what you want your budget to accomplish.

Choose a budgeting strategy: Figure out how you want to organize your budget. You can choose strategies like the 50/30/20 rule, envelope budgeting, or zero-based budgeting, for example.

Review your budget regularly: Set time aside every week or every month to review your budget, so you can track your progress toward goals and make sure you’re not spending more than you planned.

Learn more about making a budget.

2. Track Your Spending

It will be difficult to manage your money if you don’t know where it is going. That is why tracking your spending is an important part of money management. Tracking your expenses can help you determine whether you are spending more than you earn, as well as help you identify areas where you can reduce spending.

Ways to Track Your Expenses

Review your bank and credit card statements. You can analyze these statements to make sure you are not overspending.
Use a spreadsheet. Programs like Microsoft Excel and Google Sheets let you group similar transactions or sort expenses by price or retailer. You may need to spend time manually entering the information, though, if your bank does not allow you to export your transactions into a spreadsheet.
Download a budgeting app. Budgeting apps like WalletHub can let you sync your financial accounts so your expenses are automatically tracked and you don’t have to spend time entering them manually. WalletHub in particular uses AI to clean up your transactions to make them easier to read.

Learn more about tracking your expenses.

3. Set Financial Goals

In order to manage your money strategically, you need to identify what you want to do with it. The most basic goal is to pay for your necessary living expenses, but beyond that, you’ll want to determine some short- or long-term goals. Some examples of goals include buying a house or car, paying off debt, or saving for your child’s college education.

SMART goals incorporate elements that make it easy for you to track your progress and make it more likely that you will achieve your objectives. SMART is an acronym that stands for:

Specific
Measurable
Achievable
Realistic
Time-bound

Learn more about setting budget goals.

4. Build an Emergency Fund

Planning for unexpected expenses is an important part of money management. According to a WalletHub survey, 45% of people are not confident they have enough money to cover an unexpected expense. That same survey also found that 33% of people are willing to take out debt to pay for a major unexpected expense. An emergency fund is money you set aside to pay for these types of expenses, so you don’t have to take on unnecessary debt.

Experts say your emergency fund should have three to six months’ worth of your living expenses. This can help cover unexpected expenses, such as a big medical bill, or unexpected events, like losing your job.

5. Invest for Your Future

Investing can help you save money for the future. Investing adds the benefit of compounding, which is when you reinvest your returns and earn dividends or interest on that money in addition to your principal investment. Setting up and contributing to an investment account can help you build wealth to pay for long-term goals, like starting a business or retiring.

The average rate of return for investing in the S&P 500 is 10%. For a savings account, it is currently 0.41%. If you were to invest $10,000 in the S&P over 25 years, you will have nearly 500% more money than if you were to put the same amount of money in a savings account.

6. Build Your Credit

Your credit is an important part of your overall financial health. Good credit makes you more likely to get approved by lenders. It can also help you get a low interest rate, which will make any debt you take on less expensive to pay back. In addition, your credit may play a role when you are trying to rent an apartment or get a new job.

Tips to Build Credit

Pay your bills on time: Making late payments on your credit cards or loans can have a negative effect on your credit.
Use credit cards wisely: Credit cards help build your credit, but don’t max out your credit cards as that can increase your credit utilization ratio. A high credit utilization ratio is bad for your credit. It’s recommended to keep it below 30%.
Avoid having too many credit inquiries: A hard inquiry happens when you apply for new credit, and it can ding your credit score temporarily. Numerous hard inquiries in a short period of time will hurt your score the most.
Monitor your credit: Regularly checking your credit score and report can help you spot inaccuracies quickly and limit any potential damage to your credit. You can also sign up for free credit monitoring to automatically get notifications for suspicious changes on your credit report.

To learn more, check out WalletHub’s guide about building credit. WalletHub also provides a personalized credit analysis that can help you improve your credit score.

7. Manage Your Debt

The way you manage debt can say a lot about how you manage money in general. Not being able to pay back your debt means you are not in the best financial situation. Having too much debt that you cannot pay back can also damage your credit.

The best way to manage debt is to have a plan to pay it back. Unfortunately, 46% of people don’t have one, according to a recent WalletHub survey. There are different strategies you can use to manage your debt. But no matter what strategy you choose, you should always make the minimum payment on all your debts.

Avalanche method: Debts with the highest interest rate will cost you the most in the long run, so you want to put extra payments toward the debt with the highest interest rate first. Once you pay that balance off, you then move to the debt with the next highest interest rate.

Snowball method: You will put extra payments toward the debt with the smallest balance first. Once that debt is paid off, you’ll tackle the debt with the next smallest balance.

You can learn more about the dos and don’ts of paying off debt here on WalletHub. WalletHub also offers personalized debt pay off plans that can help you find the cheapest and fastest way out of debt.

8. Use Technology to Your Advantage

Technology can make managing your money easier and less time consuming. There are tools that allow you to automate tasks, such as setting up automatic payments for your credit cards to avoid forgetting and paying a late fee, and apps that can automatically track your spending and alert you to overspending or fraudulent charges.

Apps like the WalletHub app can also monitor your credit and personal information for any suspicious activity. Keeping your identity safe is essential for sound money management these days.

How to Learn Money Management

Take a Course

Currently, only 10 states in the U.S. require a personal finance course for high school students, according to Next Gen Personal Finance. If you did not take a course to teach you money management in high school, there are courses you can take online from companies like LinkedIn, Khan Academy, and Udemy.

Use an App

There are many apps available that can help you learn how to manage your money. For example, the WalletHub app can make it easy for you to check and analyze your spending when you enter your transactions manually or sync your financial accounts, so you can learn about your money habits. WalletHub also provides tips on how to build your credit and shows you what you can do to improve your overall financial health.

Read Guides or Watch Informational Videos

There are guides and videos online that can walk you through things like how to invest, save money for retirement, and create a budget. WalletHub has many educational guides and questions & answer pages that explain various financial topics in detail.

Review & Experiment

Whether it’s a budget, your investment portfolio, or your plan on how to achieve your financial goals, reviewing and analyzing your strategy allows you to learn what works and what doesn’t. It also gives you an opportunity to try out different strategies for things like budgeting or investing if your current strategy is not working.

Talk to a Professional

There are many people, like financial advisors and budget coaches, that can teach you the fundamentals of things like investing, budgeting, and managing your debt. They usually charge for their services, but there are some nonprofits, like the National Foundation for Credit Counseling and Operation HOPE, that offer their services for free.

Learn more about how to develop financial skills.

Money Management Tips FAQ(9 questions)

Editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. Please keep in mind that it is not a financial institution’s responsibility to ensure all posts and questions are answered.

Upvotes

How do I set budget goals?

Milvionne Chery Copeland, Writer

To set budget goals, you'll need to determine what you value most and what you want to accomplish in the future, then consider how you can use your financial resources to make those things happen. You'll need to prioritize which objectives to focus on first based on importance and create a spending plan that will enable you to accomplish your goals. For example, if you want to save for a trip, figure out the total amount you will need for the trip and how much you will need to save every paycheck to meet that goal.

After that, you should monitor your progress over time to make sure you're still on track. You should also give yourself an incentive to keep working on your goals. For example, if you are saving for a trip, you could agree to buy yourself a new outfit once you have saved up half of the money you need for the trip. You can learn more below.

How to Set Budget Goals

1. Determine what you want to achieve.

Whether it's traveling, getting out of debt, or having enough funds to cover emergency expenses, think about the things you want to do and why. For instance, you might decide to build an emergency fund because you want to make sure you have money to cover unexpected expenses, or you could choose to save up for a new car because you constantly have to take your current car in for repairs.

Some examples of things you might want to do include:

Create a budget
Build an emergency fund
Save for retirement
Save up for a down payment on a house
Buy a car
Take a vacation
Pay off debt

2. Consider your financial situation.

Analyze your income, your expenses, and your overall financial situation, including how much debt you have and whether you are living paycheck to paycheck, to get a sense of how quickly you can accomplish your goals. This will help you group what you want to accomplish into short-term and long-term objectives.

Short-term: These are goals that you plan to accomplish within weeks, months, or a few years. They can include things like building an emergency fund to cover at least three months' worth of your living expenses or saving up for a vacation to take in the next six months.

Long-term: These are goals that will take you at least several years to accomplish and involve long-term planning, such as retiring or building a college fund.

You should also prioritize your goals by importance, so you know which ones to tackle first. For example, if you are living paycheck to paycheck, you may want to prioritize building an emergency fund to cover something like an unexpected car repair bill.

3. Create SMART goals with milestones.

Big goals are easier to reach when you set up smaller, more-manageable building blocks or checkpoints. For instance, if you want to save up for a car, you should create milestones like saving up half of the down payment within three months and the rest within six months.

This is part of making a SMART goal, which stands for:

Specific
Measurable
Achievable
Realistic
Time-bound.

These elements can make sure your goal is reachable given your financial situation and the resources you have available to you. Taking the SMART approach also increases the likelihood that you will actually achieve your goal, by encouraging you to create a detailed roadmap for how to pull it off.

4. Adjust your budget to factor in your goals.

See how you can incorporate your goals into your budget. For example, if you are trying to save up for a car, you should analyze your income and monthly expenses to see how much you can allocate to saving for this specific expense every paycheck.

You may also have to identify areas where you need to cut down on spending in order to free up money to put toward a new car. If it turns out it is not realistic for you to save enough money from your paycheck or reduce your spending enough on your current expenses, you may have to adjust your goal. For instance, you may decide to buy a used car instead of a new car or get a lease instead of buying outright.

5. Monitor your progress.

Review your budget regularly to check your progress toward your milestones and overall budget goals. If you are not making as much progress as you hoped, you can adjust your plan to do things like allocate more of your paycheck to savings or reduce spending in other areas of your budget to come up with more funds.

6. Reward yourself for completing milestones.

It's a good idea to reward yourself with something you like whenever you reach a budget milestone. This should be something small that doesn't cost a lot of money, such as a cookie from a bakery or treating yourself to a pedicure. It will encourage you to keep going until you reach the final goal.

To learn more, check out WalletHub's guide on how to make a budget.

Upvotes

What are the benefits of budgeting?

Tina Smith

Pay your bills, save for emergency and future

View more answers

Upvotes

What are the best ways to save money on a tight budget?

Milvionne Chery Copeland, Writer

Some of the best ways to save money on a tight budget include avoiding impulse buys, using free budgeting tools, comparison shopping, negotiating bills and automating your saving. These steps prevent you from paying more than you have to and help you save money for more important things.

Make a Budget

Best Ways to Save Money on a Tight Budget

1. Avoid impulse purchases

Buying items that you don't need on a whim...

Upvotes

I have a monthly budget to estimate my expenses. What are good ways to make sure I stick to this budget? Would a savings account help?

North Capital

First of all, congratulations on being mindful of your monthly expenses/savings. If it doens't already, your budget should include your income as well as your expenses. Once you have totalled each of those against each other, see what you're left with. Assuming your expenses are below your income, can then decide how much of the excess you want to save, and how much you'll allow yourself to spend on miscellaneous items.

Let's say after you...

Upvotes

How do I teach my teens about money management?

Adam C. Harding

There are several different ways to get teens involved in managing finances and preparing for the future. These are widely documented so I'll just focus on my favorite method to approach this situation: opening a Roth IRA for them.
Opening a Roth IRA for your children can not only be a fantastic tool for their own retirement plan, but it can also be a great way to train them about deferring gratification and the importance...

View more answers

Upvotes

What is a money manager?

Kirk Chisholm, Wealth Manager

There are multiple meanings for "money manager". In essence it is a person who manages money. This could be a financial advisor, mutual fund portfolio manager, a hedge funds manager, or some other similar job description. You can also do this on your own. You do not need a money manager, many people do it themselves. However many people choose to use a financial advisor because they cannot or don't want to do it themselves....

Upvotes

What is a budget coach?

Milvionne Chery Copeland, Writer

A budget coach is someone who can teach you the basics about budgeting and help you create a budget to manage your finances and achieve financial stability. They can also work with you to make a step-by-step plan to accomplish goals such as paying off debt or buying a house.

A budget coach can be a single person or a company. Some (including non-profits) may offer services for free, but most budget coaches charge...

Upvote

How do you make your money go further?

Milvionne Chery Copeland, Writer

To make your money go further, you should stick to a budget to control your spending, look for ways to reduce the cost of your everyday expenses, and avoid impulse purchases. You should also take advantage of free resources like your local public library or a Buy Nothing group to get items for free. In addition, you can put some money into a high-yield savings account and invest some of your money so you can...

Upvotes

How do you make good spending decisions?

Milvionne Chery Copeland, Writer

To make good spending decisions, you will need to create a budget, track your expenses, and learn how to distinguish between needs and wants. You should justify every expense by asking yourself whether it's a must-have, considering any potential consequences, and confirming you can't get the item for less elsewhere. Making good spending decisions can help you shop smarter and prevent you from overspending.

How to Make Good Spending Decisions

Make a Budget

...

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