Last Updated: February 2, 2023
How to be good with money is one question that most people tend to ask themselves.
Whether you’re just trying to get the most out of your salary or want to better manage your debt, there are a lot of tips that can set you up for great success.
In this article, we’ll be focusing on the wide variety of methods to learn how to think about, manage, and positively apply the use of money.
Included topics we’ll be taking a closer look at are:
- Savings accounts
- Debt management
- Additional sources of income
- Credit score
And much more.
Educating yourself on how to be good with money is helpful for young adults, first-time savers, and even those with previous experience. There’s always a few new tricks you can learn when dealing with money – keep reading to find out how you can use the best ones!
What Does It Mean to Be Good With Money?
Managing money is complicated. There are several ways to define what being ‘good with money means. Most people mention at least one of these traits:
- Knowing how to save
- Understanding where to cut costs
- Having good cash flow experience
- Always having a backup plan
- Responsible for managing debt
- Keeping a good credit score
- Having a plan for retirement
- Possessing good leadership skills
In general, it’s easy to know what smart financial decisions are when they are directly compared to common poor financial decisions. Some examples of that are:
- Continuing to spend wastefully
- Using your credit card too often (leading to a bad credit score)
- Lacking a budget (or not sticking to one)
- Accruing too much debt
- Neglecting fiscal responsibility (bill payments, missing housing costs, or using retirement savings)
- Taking on too many loans
Specifically, some signs that you spend wastefully include:
- Excessively spending
- Having a low credit score
- Not sticking to a budget
- Missing bill payments
- Possessing no plan for retirement (or savings in general)
If you find that you’re ticking any of these boxes, it’s good to start thinking about budgeting.
Thankfully, that’s what we’re here for!
To start, you should ask yourself what spending money wisely should look like. One of the most helpful pieces of advice is to always consider your salary.
You want to be putting in at least a third or a fourth of your monthly salary into a savings account.
You should also be making sure you create a budget and stick to it!
It’s important to ensure that you set up your bills so that you can accurately manage your money – for consistent monthly payments, try automating your withdrawals to occur on specific dates.
You should also consider investing. Allocating funds can help you earn more interest on any savings you have than leaving them in a bank account — this is one of the most useful tips you’ll find out there.
You are your fund manager, so creating an emergency stash for tough times is essential. When saving money, focus only on essential spending, treating yourself only when you know you have a surplus in savings. This will help ultimately teach you the value of money.
How to Learn to Be Good With Money
While most people may think that money management comes naturally, the truth is that it’s a skill just like any other. Some may be better at saving than others; sometimes, it has to be learned through experience.
Thankfully, there are tons of helpful tips that can help you think about money differently, getting the most out of your monthly salary. Some of the best courses of action are:
Paying down your debt
Debt, credit card payments, bill repayments, and managing your credit score are important. Before taking on any additional debt, make sure you can budget repaying it, including any possible interest that may accrue on the debt. Always do your research in choosing the best personal loan offer for your financial situation t, as you may incur interest if you fail to pay it off. It’s important to note that once you’ve acquired any debt, you have a fiscal responsibility to repay it.
When you set up your budget, focus on paying off your debt first and foremost, making sure not to spend wastefully until you do.
Creating a budget
Budget management skills are essential for getting the most out of your savings. Having to constantly think about budgeting helps encourage stronger financial—and lifestyle—decisions, enabling you to secure future retirement savings, monthly purchases, bill payments, and housing costs more effectively.
Remember to always use your card statements to help create a budget. There is no time to start budgeting like the present, and good financial skills only work better with commitment.
A ‘must spend is something you always need to start budgeting for. They are essential costs that you consistently encounter each month.
- Card payments
- Housing costs
Also, remember that any item considered essential spending should be included in your monthly budget. Learning how to manage financial responsibilities means determining what your ‘must spends are, day-to-day and then including them in all financial plans
Encouraging healthy spending habits
Sometimes, spending cash well provides as much t learning as knowing where not to spend. When you want to spend, think of the answers to these questions – is there a cheaper option? Can you make do without it? What is the value of the thing you’re buying? Can you use it to help supplement income? Have you done the right amount of research before buying? Following spending tips like these helps you become set up for practical spending skills.
How to Think About Money
Figuring out how to be good at saving money always starts with your mindset.
When it comes to spending money, being conscientious is ultimately rewarding – it not only means that you have more cash for discretionary purchases, but you also diminish some stress with an emergency fund. Simply put, the more money you have from saving, the more ways you get to treat yourself.
The value of money changes over time. By saving as much as you can, you’re continuously investing -it’s just as important, though, to know how you can invest your money by turning it into profit.
It’s imperative to start viewing money differently to see changes to your finances. Think about the things you value most in your life; now think about which of those mentioned are dependent on your finances.
For example, imagine an appliance you currently own: are you happy with the current barbecue you have, or would you prefer a different one? Is this purchase a matter of necessity? You can apply this logic to every other spending decision as well. Should you spend more now on something for this reason, or can you save and buy something of better quality later down the line?
Once you start framing monetary decisions around this point of view, you’ll be a lot closer to your financial goals.
People will often change the way they think about how they use their money, or how they’d like to acquire it, once they know what goals they’re aiming to achieve.
Some other “how to be good with money” tips regarding your mindset have to do with:
- The type of goals you set for yourself
- What financial security looks like to you
- What success means to you
- Any future retirement plans
How to Manage Your Money When You Don’t Have Any
From John D. Rockefeller to an average person, money works the same regardless of salary!
If you’re someone who has to wonder how to manage your money when you don’t have any, don’t worry! There’s a lot that you can do.
Supplementing income by finding another job
While working several jobs may not be ideal, the truth is that it’s a great way to earn more. While part-time jobs are ideal for supplemental income, freelancing can be just as effective.
This additional income will ultimately increase your budget for:
– More purchases
– Better bill management
– Higher essential spending
– Handling any extra housing costs
There are loads of websites you can look at to find another job, although social media and word of mouth tend to offer a lot of part-time work.
Starting a garage sale
While this may be an easy way to earn cashback on unwanted goods, don’t rely on it as another source of income – that would be considered poor money management, as results are unpredictable.
However, if you’re in a tight spot for cash or looking to quickly supplement income, a garage sale can help. If you’ve previously spent wisely on quality goods, you’re likely to get cashback on the items you sell.
If you’re thinking of taking out a loan, be sure to set up your bills and create a budget first. If you have a bad credit score, however, avoid any loans at this point – focus exclusively on making better money decisions.
Many companies offer bad credit personal loans with guaranteed approval. While these may sound ideal, tread carefully, as these loans often end up costing an exorbitant amount of money. Ultimately, be sure to pick a loan that works within your salary range to ensure that you can handle paying back the debt. You should also be looking at the interest rates attached to the loan to make sure that you are still within your budget.
Using a credit card
Credit cards may be easy to use, but they do come with monthly credit card payments – nothing in this world is free! Your credit score determines, among other things, how much credit you may have available to use.
Important: use a credit card for essential spending only to avoid spending wastefully! You can use credit cards to supplement income in an emergency, but just always remember to stick to good spending habits. Be certain to make your bill payments on time, and don’t accrue too much debt. You can shop around to see some of the best-secured credit cards on the market and what rates and amounts are offered.
What Are Other Important Areas of Money Management?
Only two things in life are guaranteed: death and taxes. Taxes are an unavoidable aspect of fiscal responsibility, although there are ways to have what you owe on your taxes reduced.
When filing, look for any rebates, investment options, or charities you were involved in to help reduce your annual tax rate. Learning how to manage your finances includes accommodating taxes, and reducing your taxes owed helps with saving.
If you’re trying to find ways to increase your amount of assets, investments are a good way to spend money wisely.
Even if you’re not a well-trained or experienced investor, there are several simple investment platforms these days that can offer you more interest on your investments per month than a savings account can.
Like another job, investments, when done right, can help supplement income and are a good form of cash flow management as they allow you to generate cashback. If you aren’t sure where to put your money, talk to an investor or fund manager for some guidance.
Managing debt is an essential fiscal responsibility for good budgeting, and is one of the necessary money management skills you’ll need for financial independence. When you create a budget to manage any debt, your bill repayments are one of the first things you should factor in.
Any debt should be marked as essential spending, and you should manage all other purchases concerning these debt repayments. As previously mentioned, it can help to supplement income to pay off any debt, but try not to rely on credit card payments to pay it off.
Banking and saving
Saving is one of the most useful skills to have. Different banks offer various interest rates on savings accounts; look around for one that is on the higher side of interest rates to get you the best cashback on your account. This is the opposite of loans: for those, you want lower interest rates.
Speaking of your credit score, your savings and investments help determine that number just as much as the amount of debt you owe, so don’t spend wastefully and be sure to save often. Spend wisely and think about your emergency fund as well. If COVID-19 has taught us anything, it has proven how important an emergency fund can be!
Planning for retirement
Even if you’re on the younger side, thinking about any retirement savings is important. After all, everyone will reach retirement age later in life. It’s considered a good idea to set up a retirement account early and start saving for it as soon as possible.
The more you start budgeting for your future retirement, the more money you will have to use when the time comes. Additionally, it can also double up as a type of emergency fund.
Budgeting is a core element of managing funds and one of the best money habits you can acquire. Budgeting means allowing your cash to certain areas for a purpose, which creates stronger beneficial fiscal routines. Once you have a good grasp on a savings rhythm, you’ll be able to make conscientious purchases by always thinking about your savings, which in turn demonstrates fiscal responsibility.
Create a budget and determine how much you make from your salary and what you take home per month when you don’t spend wastefully. By focusing on essential spending and learning how to spend wisely, you can save enough for a future retirement account and still enjoy nice things.
What Are Some Benefits to Being Good With Money?
Having excellent money skills will greatly improve your quality of life, present, and future. It’s imperative to spend money carefully to get the most out of your salary.
Never take money for granted! It’s a luxury that many don’t have access to. Start treating yourself like you’re your fund manager and you’ll soon have enough cash for things you’ve always wanted, from a large screen TV to a trip to Seychelles.
Being able to focus specifically on spending habits can help you manage your debt, deal with outstanding credit card payments, and increase your retirement account tremendously. When you create a budget, you’ll understand why being wise with money makes such a big difference in your day-to-day life.
In conclusion, you must change the way you think about money to really unlock your full financial potential. Being frugal doesn’t have to mean being cheap – it just means cutting down on wasteful spending while focusing on essential spending.
Ultimately, the easiest way to achieve financial freedom olive the life you’ve always imagined is by generating more income. Always keep the following in mind:
- Managing any card payments
- Keeping your unopened bank statements
- Paying off debts
- Focusing on budgeting
- Opening a retirement account
Trust us, you’ll thank yourself later in life!