The Beginner’s Guide to Managing Your Money Better

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Are you trying to start managing your money better but not sure how? Maybe you are tired of living paycheck to paycheck. Or maybe you are overwhelmed with your debt and unsure how to start paying it down.

Perhaps you want to start living below your means to save for your future and work toward financial freedom.

Whatever your reason for your desire to take action with your money situation, I am here to help!

I totally get where you are coming from because I have been there. I was in a ton of debt, overwhelmed, and had no clue how to change it.

I graduated college with almost $40,000 in student loans and credit card debt. Then I bought my first brand new car, which looking back, I really couldn’t afford. I met my husband, who also had a boatload of debt.

We got married and bought our first house together. We had close to $80,000 in debt when we started our lives together, not including our mortgage.

Sounds like a great start in life, huh?

When our first mortgage payments started rolling in, I quickly realized that I knew absolutely nothing about managing my personal finances. The only thing I knew how to do was write out a check and balance my checkbook (aside from using a credit card and paying the bill, of course).

High schools (at least where I live) do not teach kids how to manage money, like how to create a budget, set financial goals, reduce spending, develop a healthy money mindset, avoid lifestyle inflation, start an emergency fund, or even save for retirement.

It’s almost as if I was supposed to make lots of money mistakes so I could (eventually) learn from them and then try to figure out how to change my ways to stop making those nasty mistakes.

Why can’t a high school class teach kids all that stuff? I know that could have saved me a lot of stress and anxiety. Maybe we wouldn’t have started our lives together, buried under a crazy amount of debt.

But…

I would not have realized my true passion if that didn’t happen. Before I got into all that debt, I thought finance was boring.

Back then, I was gung ho about becoming a healthcare professional. I had blinders on, and all I could see in front of me was helping people recover from illness and disability.

Don’t get me wrong, I love working in healthcare, but going into debt got me started on a new personal obsession. Little did I know this personal obsession with getting out of debt and working toward financial independence would take over my world.

I’m not a finance professional, and don’t pretend to be one. Much of what I know is self-taught through reading and studying books, magazines, and blogs.

So even though I do not have a college degree in finance, I have figured out how my family can live below our means, pay off a boatload of debt, and have the money to live what I consider a very comfortable lifestyle even while raising two kids.

You don’t have to be an expert to figure out how to live within your means. All you have to do is educate yourself to learn some actionable tips to get yourself started in the right direction.

I’m here to show you that anyone can accomplish their goals through dedication, hard work, and being intentional with their money. No finance degree is needed!

Ready to get started managing your money better? First, here are some tips to help you be more successful in managing your money. Then, keep reading for frequently asked questions about how to manage money.

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Money Management Tips for Success

Here are a few important money management tips to help you be more successful with managing your money.

#1 Educate Yourself

The number one way to set yourself up for success with managing your money is to learn everything you can about personal finance. Being knowledgeable about money basics will help you to make good decisions when it comes to your money.

You could strive to read one new article or blog post on personal finance per day to help you to broaden your knowledge base.

Or, if you enjoy reading books, check out some of these top personal finance books to help educate and motivate yourself:

The book that started my obsession with personal finance is Smart Couples Finish Rich by David Bach. I highly recommend it if you and your spouse or partner start at square one with your finances as we did.

Knowledge will help to empower you to make better decisions, which will, in turn, manage your money better.

#2 Get Your Finances Organized

To set some financial goals for yourself, you have to know where you are starting from. Getting your finances organized so you can clearly see what you need to do to get yourself on the right financial track is so important.

Take some time to get all of your statements together. Figure out your assets and debt totals to set realistic goals for yourself.

Create simple spreadsheets to track your debt, bills to pay, and savings. Or write everything down and keep it organized in a notebook or binder.

Keeping everything organized will make it much easier to pay bills on time.

Related post: How to Organize Your Finances, Even if You are Naturally Disorganized

If you need help getting your budget organized, you can download my free budget binder printables. Here is a preview:

Free budget binder template with categories

Here is what it includes:

  • Budget Binder Cover Sheet
  • Monthly budget worksheet to get your expenses organized
  • Monthly budget template
  • A large list of budget categories/expenses to help you not forget anything

If you would like these budget printables, you can download them here.

#3 Get Real With Yourself and Get in the Right Money Mindset

When someone refers to a money mindset, they are referring to the thoughts and feelings you have in relation to your money. These thoughts and feelings are what guide and influence your behaviors with how you use your money from day to day.

I like to use positive and negative terms to describe someone’s money mindset because it is easier to understand.

Other financial people use the words scarcity and abundance to describe a person’s mindset. A scarcity money mindset is when someone feels like they never have enough money and always feel stressed and scared of not having enough.

An abundance money mindset is when a person feels that they have enough or will be able to have enough to feel at ease and have a sense of security with their money situation.

Whether you use positive/negative or scarcity/abundance to describe your mindset, it’s important to figure out where you stand. If your thoughts and feelings lean toward the negative/scarcity side, you might have some work to get yourself in the right frame of mind to work on those goals.

This is because it can be difficult to stay on track or get back on track when you have a bump in the road if you haven’t mastered your money mindset.

Related post: 10 Ways to Develop and Keep a Positive Money Mindset

#4 Set Goals

Goal setting is an important part of managing your money. If you don’t have goals to work towards, how will you know what to do with your money? Your goals help guide your decisions on how you should manage your money.

But setting goals can be tough! It’s hard to know if what you hope and want to accomplish in a certain time frame is actually realistic or not.

And setting realistic goals is important to keep yourself motivated. As you start to feel the success of meeting your goals, the momentum helps to keep you going to keep achieving your short-term and long-term goals.

The SMART goal method is a popular method for goal setting. This was developed by George Doran, Arthur Miller, and James Cunningham in their 1981 article “There’s a S.M.A.R.T. way to write management goals and objectives.”

Being specific with what you want to accomplish, setting measurable goals that are achievable and realistic, and setting a time frame to reach them will give you a helpful start to creating goals that will work for you.

Related post: 3 Steps to Help You Set Financial Goals and Avoid Failure

#5 Track Your Spending

Knowing where your money is going is important in adapting your spending habits and routines. You could create a simple spreadsheet (or use pen and paper) to track the amount of money you are spending in all the expense areas of your budget.

To track day-to-day spending, save your receipts and tally them up for the day or the week to make it easier to keep track of. Once you fully understand where your money is going, it makes it easier to modify your spending habits to manage your money more easily.

#6 Reassess Your Progress Frequently

It will be hard to successfully improve how you manage your money if you aren’t constantly reassessing where you stand. How would you know if you are moving your financial situation in the right direction?

It’s important to know if your budget is working, how much money you are putting away in your savings accounts, your debt totals, and your asset totals at all times. Then you can make changes appropriately that help you stay aligned with your financial goals.

Common Questions About Managing Your Money

How do I create a budget?

Creating a budget that works for you and your family can take trial and error. First, you will want to list all sources of your income. Then list all the fixed expenses you must pay monthly, like your mortgage or rent, utilities, insurance, etc.

You may include what you want to deposit into a savings account under your fixed expenses. That way, you are putting money in savings before spending it on the things you don’t necessarily need but want.

Try not to forget anything in your fixed/necessary expenses! Subtract your necessary expenses from your income to see what you have left over.

The money left over is what you will use for the non-essential things you want to buy, like eating out, personal care, and entertainment. You will have to cut back on these budget categories if you have difficulty living below your means.

Related posts:

How do I reduce my expenses to save more money?

If your monthly expenses are higher than your income, you will have to take a good look at every expense to decide if there is a way to lower the expense.

For example, if your electric bill has been super high, think about how you are using your electricity. If you have a furnace or central air that runs on electricity, try adjusting the temperature in your home so that it is not running as much during the day and/or the night.

Another idea would be to lower your cable bill by canceling it altogether and subscribing to a less expensive service or looking at your plan to see if you could enroll in a cheaper option.

Related Post: 20 Ways to Save More Money Every Month

A large line expense in many people’s budgets is the money spent on groceries. There are many ways to save on your food budget, including meal planning. Meal planning takes some work, but you will reap the benefits by saving money on your food budget.

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Finding ways to lower your expenses can take some time and work, but it could definitely help you live within your means. Living below your means is crucial to meeting your financial goals and achieving financial wellness.

How do I live more frugally?

Living frugally is a lifestyle choice that can help you live within your means. Many people confuse living frugally with being cheap. Living frugally is when you intentionally save your money instead of spending it on things you don’t really need.

You buy what you need and will use that will add value to your life, and nothing more. You look for deals on the things you want to buy and do research, so you do not overpay for things.

But if something will add a lot of value to your life and make you happy, you will spend your money on it. Being intentional with what you are spending your money on is key.

On the other hand, being cheap is when you go out and buy the least expensive thing because you don’t want to spend your money. The item is usually of inferior quality and ends up breaking or not lasting very long, causing you to buy another one. There usually is not much thought or planning put into the purchase.

Some examples of how to live more frugally are shopping for quality clothing at second-hand stores, using coupons, buying food in bulk and freezing it into smaller portions, and buying a used car instead of a brand-new one.

You can download my frugal living checklist if you want some help living a frugal lifestyle. It includes worksheets to develop a frugal living plan, a huge list of frugal living tips, and a frugal living tracker to track your frugal wins.

Here is a preview:

Frugal Living Workbook

You can download the frugal living checklist and tracker here.

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How do I avoid lifestyle inflation?

Keeping up with the Jones and lifestyle inflation is real! It is happening all around us, all the time.

Whether it is buying a new car when you get a promotion, putting in a pool because your neighbor just got one, or spending money on the newest gaming system because it’s the “in” thing that year, lifestyle creep can break your budget and put a halt to working toward your goals.

Lifestyle inflation makes it extremely difficult to get out of debt, save money, and meet financial goals. When you start spending more and more money on your living standards as your income increases, budgeting becomes increasingly difficult, and the next thing you know, your budget no longer works for you.

How do I stop living paycheck to paycheck?

Living paycheck to paycheck is so common in the United States. So common, in fact, that somewhere between 50%-78% of Americans were living paycheck to paycheck before the pandemic, according to an article in The Washington Post. This number is astounding.

If you are part of this statistic, I’m here to tell you that you can break the cycle. As I said earlier, living within your means is not easy today.

But, if you want to break the cycle, you must get motivated and determined to make it happen. Buckling down on your budget, starting an emergency fund, spending less money, and finding ways to increase your income will help you get started in the right direction.

Related posts:

How do I decrease my money-related stress?

Are you losing sleep at night because you are anxious or worried about your money situation? It is no secret that money issues can cause major stress in someone’s life.

Getting yourself on the right financial course will do wonders to decrease your stress level. If you are stressed out, it’s important to find a few ways to relieve your stress that work for you.

Some activities that can help you destress include exercise, journaling, talking to a friend, listening to music, doing yoga, or meditating. The important thing is that once you figure out what helps you destress, start incorporating that activity into your daily life.

Related Post: 5 Effective Tips to Deal with Financial-Related Stress

Final Thoughts on Managing Your Money Better

If you are overwhelmed with your money situation and don’t know where to begin with getting your money under control, sometimes it is helpful to take a step back and start at square one. By getting everything organized, getting in the right money mindset, setting some goals, and tracking your spending, you can get yourself off to a great start.

Focusing on your budget and decreasing your monthly expenses to live within your means are key to reaching your money goals. Plus, finding ways to make extra money will help you meet your goals and achieve financial wellness more quickly.

But don’t forget to celebrate the little successes along the way to keep yourself happy and motivated!

Managing your money better is not about depriving yourself. It’s about adapting how you use your money to live your best life.

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Managing Your Money Better: 6 Tips for Success
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