In this new article you’ll learn how to manage your money better.
Getting a handle on your finances doesn’t have to feel overwhelming. In fact, once you take the first few steps, it becomes surprisingly manageable. You don’t need to be a financial expert to make smart money decisions—you just need to be consistent, aware of where your money goes, and a little bit strategic.
How To Manage Your Money Better:
1. Start with What You Know: Your Reliable Income
Before you even think about what you can afford, you need to know what’s guaranteed to come in each month. This means calculating your regular paycheck(s), any steady freelance or side gig income, and any other sources that are consistent and dependable. Leave out tips, commissions, bonuses, or side hustles that vary—those are unpredictable and shouldn’t be used as the foundation of your budget.
For example, if you earn \$3,200 every month from your full-time job and \$400 from a long-term part-time tutoring gig, that’s your starting point: \$3,600. If you end up making an extra \$150 from selling some items online or getting an unexpected freelance assignment, that’s great—but treat it like a bonus, not part of your plan.
This approach makes your budget stable. When the unpredictable money shows up, it feels like a reward rather than a crutch.
2. Know Where Every Dollar Goes
Most people underestimate how much they spend until they actually track it. Whether it’s \$7 lattes, random online purchases, or subscription services you forgot you had, the little things add up fast.
Begin by logging every single expense—yes, every single one—for at least a month. Use your bank and credit card statements, and don’t forget about cash purchases. If you buy a sandwich with cash, jot it down or snap a photo of the receipt.
There are plenty of tools to make this easier. Apps like Monarch, YNAB (You Need a Budget), and Goodbudget let you connect your accounts and categorize your spending automatically. For example, you might discover you spent \$240 last month on takeout—more than your grocery bill.
These tools give you insight, not judgment. Once you know where the money is going, you can start making smarter decisions about it.
3. Sort Spending into Three Buckets
When you look at your monthly expenses, split them into three categories: fixed, essential, and non-essential.
- Fixed expenses are the same every month—things like your rent or mortgage, car payments, and insurance. These are predictable and easy to plan for.
- Essential but variable expenses are necessary, but the amounts can change. Think groceries, gas, electricity, or medications. You can’t eliminate these, but you might find ways to cut them back (like meal planning or carpooling).
- Non-essential expenses are everything else: takeout, streaming services, new clothes you don’t need, impulse Amazon buys, etc. This is where most of your overspending probably lives.
Suppose you notice you’re spending \$60/month on three different streaming platforms and another \$50/week on coffee runs. That’s nearly \$300 per month on things you could reduce or eliminate entirely without affecting your basic needs. You don’t need to cut everything, just trim the fat.
4. Do It Every Month—No Exceptions
Budgeting isn’t a one-time fix—it’s a habit. The only way to stay in control is to keep reviewing and adjusting. Your income might stay steady, but your spending likely won’t. Life changes—new expenses pop up, goals evolve, and priorities shift.
At the end of each month, sit down and look at the numbers: What came in, what went out, and where it went. You don’t need fancy software—just open a spreadsheet or grab a notebook. Write down your total income and break your expenses into the categories you’ve created. Seeing it all side by side helps you make decisions with confidence.
Maybe you overspent on dining out but spent less than usual on gas. Or maybe an unexpected vet bill threw everything off. That’s okay—adjust for it next month. The goal is not perfection; it’s awareness and progress.
Over time, you’ll start to notice patterns. You’ll begin to predict your spending, make more conscious choices, and maybe even start saving more than you expected. And best of all, you’ll stop feeling like your money controls you—and realize you’re the one in charge.
5. Figure Out What’s Left After Covering the Basics
Once your fixed and essential expenses are taken care of—things like rent, electricity, phone, groceries, transportation—it’s time to figure out how much you actually have left to work with each month. This is the money you can put toward your goals, your hobbies, or just enjoying life a little.
Start by writing down your guaranteed income. Then subtract your non-negotiables: housing, utility bills, basic groceries, insurance, debt payments, and transportation. Let’s say your monthly take-home pay is \$3,500. If your fixed and essential expenses add up to \$2,600, that leaves you with \$900. That \$900 isn’t just “extra cash”—it’s your financial runway. It can fund your savings, your weekend plans, and anything else you care about that doesn’t fall into the “need to survive” category.
Understanding that number gives you control. It becomes your personal allowance—the part of your budget you actually get to make choices with.
6. Divide That Remaining Money Intentionally
Now that you know what you’ve got to work with, the next step is to make a plan for it. If you don’t give your money a job, it tends to disappear—\$20 here, \$40 there, and suddenly you’re back to paycheck-to-paycheck.
That remaining \$900? It needs direction. Start by deciding how much you’ll save or invest, and how much you’ll use for personal spending.
A good baseline is 10% of your income going to savings—enough to build momentum without feeling painful. That could be emergency savings, retirement contributions, or even chipping away at high-interest debt. For the \$3,500 example, 10% is \$350. If you can push it to 20% (\$700) or even 30% (\$1,050), you’re not just surviving—you’re preparing for the future in a serious way.
Use the rest on what makes life enjoyable. Maybe it’s dinner out with friends, a concert, a pottery class, or setting money aside for a weekend trip. This isn’t about restriction—it’s about balance. Save some, enjoy some.
7. Create a Budget That Fits You
Budgeting doesn’t mean cutting all the fun out of your life. In fact, a well-built budget reflects who you are. It protects what matters to you while helping you avoid spending on things you won’t even remember next month.
Let’s say you love great food. Budget for that—but maybe cut back on streaming services or the random gadgets that clutter your drawers. Or maybe you’re saving for a family vacation—cut the impulse coffee runs and overpriced snacks, and that plane ticket starts looking a lot more realistic.
Being honest with yourself is key. What do you value most? What can you go without? When you walk into a store or scroll online, ask: “Does this help me reach a goal, or is it just a distraction?” Train yourself to pause before buying. If you wouldn’t spend full price on something, don’t buy it just because it’s 30% off.
A good trick? Track your spending for a week and highlight every purchase you barely remember making. Those are the ones you can cut without missing them.
8. Use Credit Cards Like a Tool, Not a Crutch
Credit cards can be helpful, but they can also destroy your finances if you treat them like free money. If you’re swiping without a plan, it’s easy to rack up a balance that takes months—or years—to pay off.
Use credit only for things you already budgeted for. If you know your monthly grocery bill is \$300, using your card for groceries is fine—as long as you have that \$300 in your account and you pay it off that month. That’s responsible credit usage.
Don’t sign up for a card without reading the fine print. Know the interest rate, late fees, and minimum payment rules. If you carry a balance of \$1,000 and your interest rate is 22%, you’re throwing away hundreds of dollars a year just for borrowing.
Try to pay off your full balance every month. If that’s not possible, always pay more than the minimum. And don’t get carried away with multiple cards. One is usually enough to build credit without overwhelming yourself. Finally, keep your balance under 30–40% of your credit limit—anything higher starts to hurt your credit score and becomes hard to manage.
9. Shop with Purpose, Not Emotion
Shopping just to pass the time or chase a dopamine hit is one of the fastest ways to sabotage your budget. If you want to manage your money well, you have to shift your mindset around spending.
Before you buy anything, ask yourself: Do I really need this? Will I still care about it in a week? If not, walk away. You can always come back later if it turns out you actually do need it.
For example, avoid “just browsing” trips to the mall or opening shopping apps when you’re bored. Those are setups for impulse spending. When you do need to buy something—groceries, clothes, gifts—make a list before you go. It’ll keep you focused and less likely to grab things you didn’t plan for.
And please, don’t fall for the “It’s on sale!” trap. If you weren’t already planning to buy it, you’re not saving money—you’re just spending it differently. A \$200 jacket marked down to \$120 is still \$120 out of your wallet.
Shopping with intention keeps you in control. Every dollar has power. Spend it like it matters—because it does.
10. Always Do Your Homework Before Major Purchases
Big purchases are not the time to go with your gut. Whether you’re buying a car, a laptop, a home theater system, or even booking a luxury vacation, a few hours of solid research can save you thousands—and a lot of regret.
Let’s say you’re in the market for a used car. Instead of walking into a dealership cold, start by looking online. Read reviews from real owners, compare models in your price range, and get familiar with what a fair price actually looks like. Tools like Kelley Blue Book or Edmunds can help you figure out a car’s market value. Set a firm budget before you ever leave your house and stick to it—salespeople are trained to upsell, and emotional decisions can lead to unnecessary debt.
Compare offers from at least two or three different places. If you find a better deal elsewhere, don’t be afraid to bring it up. Many retailers will match or even beat competitors’ prices if you ask. The same strategy applies whether you’re buying a sofa or shopping for a fridge. Patience pays off—especially if you can wait for sales during seasonal promotions or clearance periods.
11. Buy in Bulk—But Only If You Use What You Buy
Buying in bulk can be a great way to cut down your grocery and household expenses, especially for items you use regularly. Think toilet paper, pasta, rice, dish soap, or canned goods. These are things that don’t spoil quickly, and buying them in larger quantities usually means you’re paying less per unit.
But beware: buying more doesn’t always mean saving more. If you toss half of what you buy, you’re just wasting money. Before you stock up, be honest about your habits. Do you really eat five pounds of spinach before it wilts? Do your kids actually like that giant box of cereal?
A smart way to shop is to look at the unit price—the small print on the shelf tag that tells you how much you’re paying per ounce or per item. This helps you compare products quickly and spot the best deals, even when packaging sizes differ.
Also consider teaming up with a friend or neighbor to split bulk purchases. You’ll still get the discount without worrying about storage space or waste.
12. Use Cash and Envelopes to Control Overspending
If sticking to a budget feels like a constant battle, try going old school: use cash. At the start of the month, withdraw the exact amount of money you’ve budgeted for specific categories like food, gas, entertainment, and personal spending. Put each amount in a labeled envelope. When the envelope is empty, you’re done spending in that category until next month.
This method works because cash is tangible. It forces you to be more mindful about your purchases. Swiping a card feels effortless; handing over physical bills makes the cost feel real.
If you find it hard to resist temptation with cards in your wallet, leave them at home. Save them for emergencies or planned purchases only. You’ll be surprised how quickly your impulse spending goes down when you’re using real money.
13. Build an Emergency Fund to Protect Yourself
Unexpected expenses are a fact of life—whether it’s a job loss, a major repair, or a health emergency. That’s why having an emergency fund is one of the smartest financial moves you can make.
At the very least, aim to have enough money saved to cover three months’ worth of essential living expenses. If your monthly rent, bills, and groceries come to \$2,500, your emergency fund goal should be at least \$7,500. If possible, build it up to cover six months or more. That’s your financial cushion, your breathing room when life throws something big your way.
This isn’t money to use for vacations, new TVs, or sales. It’s peace-of-mind money, sitting quietly in a separate savings account, ready only when you need it most.
Start small if you have to. Even setting aside \$50 a week can build up to over \$2,500 in a year.
14. Get Clear on What You’re Saving For
It’s a lot easier to save when you know what the money is for. Whether it’s a summer vacation, a new car, a wedding, or sending your child to college, assigning a purpose to your savings gives you motivation—and a plan.
Make a list of your short- and long-term savings goals. Next to each one, write down the total amount you’ll need and the deadline. Then divide that amount by the number of months until your goal. For example, if you need \$6,000 for a vacation next summer and you’ve got 12 months to save, that’s \$500 a month.
Some goals are seasonal. Start setting aside holiday money in June or July. Saving \$75 a month for six months gives you a \$450 cushion for gifts and travel—without the stress of last-minute debt.
For big life events—like college for your kids—it’s never too early to start. Even if you can only contribute a little each month, the time factor is on your side. Set up a separate account for each major goal to keep your savings organized and less tempting to touch.
With clear goals, a monthly target, and some discipline, you’ll start to see real progress—and enjoy the satisfaction of watching your plans take shape.
15. Start Investing in Your Future as Early as Possible
The sooner you begin investing, the more powerful your money becomes. That’s thanks to compound interest—the magical snowball effect where your money earns interest, and then that interest earns more interest, growing faster the longer it stays invested.
Let’s say you invest \$5,000 per year starting at age 25. By the time you retire at 65, assuming an average return of 7%, you’ll have around \$1.1 million. Now imagine someone who waits until they’re 40 to start, and they invest four times as much—\$20,000 per year. Even though they’re putting more money in, they’ll end up with less than \$900,000 by age 65. That’s the power of time.
Even if you can’t afford \$5,000 a year, start with whatever you can. Contributing just \$100 a month into a retirement account like a Roth IRA or a 401(k) gets you in the habit—and builds real wealth over time. As your income grows, increase your contributions accordingly.
16. Balance Paying Off Debt with Building Savings
A lot of people think they need to choose: should I focus on paying off my debt or saving money? In most cases, the smartest move is to do both. By splitting your efforts, you protect yourself from future emergencies while also shrinking what you owe.
Let’s say you have student loans with a low fixed interest rate. Paying the minimum on those loans allows you to redirect extra funds into a high-yield savings account or a retirement plan where your money earns interest over time. You also get tax advantages—up to \$2,500 in student loan interest can be deducted on your taxes each year, which softens the financial blow.
The exception is high-interest debt, especially credit card balances. If your card is charging you 20% interest, that’s a hole you want to climb out of fast. In that case, aggressively paying off the debt for a few months makes more sense than saving. Once it’s gone, shift your focus back to building up your savings.
17. Treat Bonuses and Raises as Fuel for Your Future
Getting a raise or bonus feels like winning a little lottery—and your first instinct might be to celebrate with a big purchase. But if you’re serious about long-term financial health, there’s a smarter play: bank that money.
If you were living comfortably before the raise, continue living at the same level and stash the difference. For example, if your paycheck increases by \$300 a month, commit to funneling at least \$250 of that directly into your savings, investments, or retirement accounts. You’ll barely notice the change in your daily life, but your future self will be grateful.
Bonuses are another golden opportunity. Let’s say you receive a \$2,000 end-of-year bonus. Sure, treat yourself a little—maybe \$200 for something fun. But put the rest toward long-term goals: max out your IRA contribution, pay down a chunk of debt, or top off your emergency fund. The idea is to make windfalls work for you, not disappear through spontaneous spending.
18. Take Full Advantage of Employer Matching Programs
If your employer offers a 401(k) match and you’re not using it, you’re leaving free money on the table. Many companies will match a percentage of your retirement contributions—often 50% or 100% up to a certain amount. For instance, if you contribute 5% of your salary, they might add another 5%. That’s essentially an instant 100% return on your money.
Ask your HR department or benefits manager about your company’s matching policies. Some workplaces even offer additional incentives, like matching contributions to college savings plans or discounted stock purchase programs.
Once your money is in a retirement account, leave it there. Early withdrawals often come with penalties and taxes, and you lose the growth potential that makes investing worthwhile in the first place. Your retirement fund should be a one-way street—money goes in and stays there until you’re ready to use it decades down the line.
Summary:
Managing your money well isn’t about being perfect with every dollar — it’s about building smart habits, making conscious choices, and staying consistent over time. Whether you’re just starting out or trying to improve your financial situation, focusing on clarity, control, and long-term goals can make a huge difference. Here’s a practical breakdown of how to take control of your finances:
Here’s a summary of how to manage your money better based on this chat:
1. Know Your Income and Expenses
- Start with your guaranteed monthly income—only count what you’re certain to receive.
- Track all expenses carefully using apps or spreadsheets, and categorize them into fixed (rent, loan payments), essential (groceries, utilities), and non-essential (entertainment, subscriptions).
2. Calculate What’s Left
- Subtract fixed and essential expenses from your income to find your discretionary money.
- This leftover amount becomes your budget for savings, debt repayment, and lifestyle spending.
3. Budget with Purpose
- Allocate your remaining funds between savings/investments and lifestyle spending.
- Aim to save at least 10% of your income, though 20–30% is ideal if possible.
- Build your budget around your actual habits, but be ready to cut costs where it won’t hurt (e.g. unused subscriptions, eating out too often).
4. Use Credit Wisely
- Only charge what you can afford to pay off in full each month.
- Keep balances below 30–40% of your credit limit.
- Always understand your card’s terms—interest rates, fees, and minimum payments.
5. Shop with Intention
- Avoid impulse buying by sticking to shopping lists and questioning each purchase.
- Research large purchases in advance and compare prices.
- Set firm spending limits before shopping for big items like cars or electronics.
6. Spend Smarter on Essentials
- Buy non-perishables in bulk to save long-term.
- Learn to read unit prices to spot better deals.
- Only buy what you can realistically use—waste undermines savings.
7. Use Cash to Control Spending
- If budgeting is hard, withdraw your monthly spending money in cash and divide it into categories (envelopes).
- Leave cards at home to avoid temptation.
8. Build an Emergency Fund
- Save enough to cover 3–6 months of essential expenses, or more if possible.
- This fund is for true emergencies only—job loss, medical bills, etc.
9. Set Clear Saving Goals
- Define what you’re saving for—vacations, a new car, holidays, retirement, or college—and calculate how much you need to save each month to hit your goals.
- Start early, especially for long-term goals like retirement or your kids’ education.
10. Invest Early and Consistently
- The earlier you invest, the more compound interest works in your favor.
- Even small contributions in your 20s can outperform larger contributions started later in life.
11. Balance Saving and Debt Repayment
- Don’t ignore savings while paying off debt—both are important.
- Focus on eliminating high-interest debt first, like credit cards, while maintaining minimum payments on other loans and saving where you can.
12. Put Extra Money to Work
- Use raises, bonuses, and unexpected income to boost savings or pay off debt.
- Don’t let lifestyle creep eat up financial progress.
13. Maximize Employer Benefits
- Take advantage of employer matches for retirement accounts like 401(k)s—it’s free money.
- Avoid early withdrawals from retirement funds to preserve long-term growth.
This plan focuses on awareness, discipline, and long-term thinking. It’s not about being perfect—it’s about being intentional and consistent with your money.
