Money management tips for every household
According to CNBC, 64% of Americans live paycheck to paycheck, but you can break out of that pattern. When you understand how to manage your money, you can work toward saving and investing it to achieve everything you want in life, financially and personally.
The only way to achieve financial stability is to actively build your savings and invest wisely to make your money work for you. When it comes to achieving your big goals, it’s all about money management.
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What is money management?
Money management is a business strategy that gives you the most return on your income and involves tracking, utilizing a spending plan, saving, and investing your paychecks in a way that yields the highest output.
Money management is an essential skill for every person on the planet. Why? Your overall wealth has more to do with learning how to manage your money than how much you make. Whether you make $100,000 or $1 million, developing your money management skills will empower you to achieve financial freedom and retire comfortably.
The good news is that you don’t need to be a math whiz or a millionaire to understand tips to manage your money. At its core, money management is about changing your mindset and creating good habits.
The top money management principles
Learning how to manage your money better starts with mastering your relationship with it. In Tony’s best-selling book, Money: Master the Game, he lists seven steps to financial freedom. These strategies include:
- Realizing what the ultimate power is. Many people think that power is money, but that’s not true. Money is powerful because we assign it that power. Instead, focus on achieving your peak state and adopting empowering beliefs to change your relationship with money.
- Understanding that 80% of wealth is psychology.
- The wealthiest people in the world don’t make their money from a 9-5. They learn how to turn obstacles into opportunities and see every failure as an opportunity to grow.
- Becoming financially literate. Understanding how to read financial statements and common vocabulary is essential for wealth-building.
- Goal-setting and obtaining the tools you need to achieve your goals.
- Using the law of attraction and leaning into the idea that what you focus on, you attract. Using the law of attraction can bring new opportunities your way.
- Being the creator of your own life. Once you know how to manage your money, you can live by your own rules.
Financial freedom means something different to everyone. To find true success, you have to define it for yourself. Set goals that you want to achieve so that you can track your progress and see your success. Whether you use a financial advisor or read books on financial literacy, you need access to specific tools to succeed. Learning how to manage your money takes time and effort.
Remember these principles on your financial journey, and when you feel uneasy or unsure, think back to these principles of money management.
Tips to manage your money
To make it easier to understand how to manage your money better, we’ve put together four practical tips on how to manage your money:
1. Create a spending plan
Tracking your spending is money management 101. In today’s digital world, tracking your spending on your phone using various apps is easy. Whatever you choose, follow these tips:
- Make time to enter your numbers: Tracking your spending won’t work unless you take the time daily to record your spending. Ideally, you’ll do it right after you make a purchase. At a minimum, you must set time aside at the end of each day to enter your spending.
- Categorize your purchases: Typical categories include rent and utilities, other bills such as car payments or student loans, entertainment, and food. Break your food category into groceries and eating out; groceries are necessary, but eating out is not. Also include additional categories like charitable donations or pet supplies.
- Get detailed: Save your receipts. Record information like where you went out to eat or what exactly you bought on that shopping trip. Can you go somewhere cheaper? Did you really need your purchases? Keeping track of the details is the first step to cutting back and practicing smart money management.
Once you establish your spending habits, you’ll know how to use your spending plan and where to cut back. Use the same categories to track your spending and set a monthly limit.
2. Cut back
When it comes to how to manage your money, the smallest savings can make a big difference. Here are some common areas where you can save on your monthly spending:
- Eating out: This includes restaurant meals, takeout, and delivery. A recent study found you save about $16 per meal by cooking at home. Bonus: You’ll eat healthier, too.
- Subscriptions: How much do you really use each of your streaming subscriptions? Can you cut one out or cut back to a cheaper tier? Don’t forget about other subscriptions like news or online gaming.
- Cell phone bills: You need a cell phone, but do you need unlimited data? Do you really need the latest iPhone model, which you’re probably financing through your service provider? Take a look at your bill and see where you can save.
- Cable and internet: Like your cell phone bill, your internet bill will have some hidden things you don’t need. Think about scaling back to a lower Mbps (megabits per second) to lower your bill and cut out cable altogether.
The best money management technique you can learn is how to save. Even if you cut back enough to save just $100 a month, you’ll be in a better position than when you don’t save anything. To start establishing a better financial foundation, make a savings goal part of your monthly spending plan and stick to it. Better yet, dream big. Your savings goal will be easier to achieve when there is a purpose behind it. Why are you working so hard? Do you dream of owning a home or traveling the world? Zero in on your wants, then create habits to help you get there. When you’re having trouble with how to manage your money, cutting back can be challenging. Here are some tips to help:
- Set SMART goals: SMART stands for Specific, Measurable, Achievable, and Realistic goals within a specific time frame. Setting SMART goals provides a roadmap to success and a way to measure your progress. And as Tony says, “Progress equals happiness.”
- Find your purpose: Saving money for something bigger than yourself can drive you to cut back. Whether you want to provide a better life for your family or be able to give back to charity, linking your purpose to saving money is essential.
- Visualize your goals: Goal visualization is proven to work, which is why so many successful people use it. Start your day with a 10-minute session to feel refreshed and determined.
As you create your savings goal, include plans to pay off debt. Credit card debt and unsecured loans are likely eating up a lot of your income and negatively impacting how much you can save for the future. When you have large balances with high interest, you can’t develop an effective money management plan without taking massive action. Start attacking your debt using these three tips:
- Use the debt snowball technique: This technique entails paying off your smallest debt first and then using that money toward the next bill. Keep going until you clear all obligations. As you check off your loans, you’ll feel good about your progress, gain momentum, and become excited about knocking debt off your list.
- Don’t add to your debt: If you can’t pay cash, you can’t afford it. Avoid taking out new loans or using your credit cards while working on your money management plan.
- Negotiate better rates: You can often call your credit card companies and ask for lower interest rates. You can also move balances to new cards with low introductory rates, which allows you to pay more on the principal and pay off the debt more quickly.
As you leave debt in the past and watch your savings account flourish, you take strides toward building the unshakable future you envision for yourself and your family.
If you’re contemplating purchasing that dream vacation, fancy car, or a new house, take a step back and reconsider. To advance beyond merely managing your money and towards building wealth, the crucial first step is to invest your money. After all, what’s the point of money management if not to achieve financial independence? Here’s how to get started:
- Throw out misconceptions: Investing isn’t just for wealthy people. The truth is, you can start investing right now with whatever amount of money you have. You can start investing in real estate with as little as $500 to $5,000. Thanks to the power of compounding, even $1 per week becomes $1,067 in 20 years.
- Get educated: Compounding is just one financial term that educated investors need to know. Use online resources and people in your network to learn about financial terms like expense ratios and no-load mutual funds. Educating yourself will also help you avoid pitfalls like hidden fees and untrustworthy financial advisors.
- Get professional help: Tony Robbins has many financial advice podcasts and articles to get you started. Want to go all in? Wealth Mastery events will surround you with vital information to help you achieve your money management goals.
Manage your money to build a better life
You can’t build the extraordinary life of your dreams when you’re stuck living paycheck to paycheck. Rather than being stressed about financing your dream life, learn how to manage your money better. Controlling the financial portion of your life makes you better equipped to take on new challenges, brave any storm, and create the life you truly want.
Want to learn how to manage your money better?
Interested in learning more about building a secure financial foundation, understanding the psychology of wealth, and creating an unshakable future?