Managing Money 7 Tried-and-True Tips for Managing Money

by Karen Gibbs | March 06, 2023

When it comes to financial success, it's important to fully understand and manage your finances on a regular basis.

It starts with determining your goals. Are you saving up for something big — tuition, a new car, a wedding? Maybe you want to get a jump on building up a future nest egg. Or, just looking to slow down spending after a big out-of-pocket month.

Whatever the reason, once you name it, you can begin to take steps toward improving your financial wellness. Try out a few of these tried-and-true money management tips and start making the most of those hard-earned dollars.

1. Make a budget

Begin by making a plan or a budget to keep spending in line with income. For most people, income is a fixed figure; determining expenses, however, takes a lot more work. Start by recording how every dollar is spent. It sounds over the top, but it’s the only way to know exactly where your money goes each month. Here are two ways to approach this:

  • Make a list. Go the traditional route and list all your expenses, even the smallest purchases like a coffee, and record it in a notebook. Or, be creative and make a bullet journal. You'll be able to see how easily — and quickly — expenses add up.

     

  • Go digital. Take advantage of technology and try mobile banking to track your spending by using an app or online tool. These tools can organize and categorize your purchases to make managing money easier.
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Start by recording how every dollar is spent.
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2. Set savings goals

Don’t know how much you should have in savings? Most financial advisors recommend accruing an emergency account of $1,000 and a nest egg that covers three to six months of expenses. It sounds challenging, but setting savings goals is possible if you put your mind to it.

Saving for the future? While you’re plugging away at these savings basics, don’t forget to sock something away for future dreams like a wedding, a house or a vacation. Take a page from the playbook of people with super saving practices. And ease into new habits, like automatically depositing a portion of every paycheck into savings.

Saving for retirement? Consider setting up an individual savings account (IRA) or contributing to your company's 401(k). Both 401(k)s and IRAs offer tax benefits, either when you contribute or withdraw money. Note: There are usually penalties for early withdrawal. 

3. Diversify savings

It's important to maintain a traditional savings account and build-up an emergency or shorter-term goal fund. Pro tip: Give accounts names like “My Next Car” to motivate you to sock away funds and keep goals top of mind.

It's also smart to diversify saving methods, too. Consider low-risk, higher interest savings options such as CDs or money market accounts. These earn more than a regular savings account while still offering access to cash. Compare the pros and cons of CDs and money markets to select what’s best for you.

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4. Take full advantage of a 401(k)

If your company offers a 401(k) plan, take advantage of it — it's never too early to start planning for retirement. Not only do contributions reduce your taxable income, but companies also often match 3% to 6% of employee contributions, in effect, doubling your savings. The key is to invest early in your career and often to make the most of compounded interest. And, as you near retirement, be sure to check in for a 401(k) tune up.

Another way to put money away for retirement: work with your bank to set up automatic deposits for a certain amount or a percentage of your paycheck into a savings account or an IRA.

5. Seek the help of a financial advisor

Consider consulting a professional for a financial checkup. Financial advisors can help you establish long- and short-term savings goals, develop plans to pay down debt and offer advice on improving credit scores. They can advise you how to roll over 401(k)s, consolidate accounts, diversify investments, change selection of stocks and help with long-term financial planning. Choose a fiduciary who is not affiliated with any investment entity or ask for advice at your bank, credit union or brokerage.

6. Get a handle on credit and credit cards

A high credit score is more than a bragging point, it’s a financial necessity. Your credit score — a number that represents the information contained in your credit history — is checked by renters, lenders, utility and cell phone companies, among other businesses. Understanding how credit works is key to bringing your financial picture into focus.

One way you can build credit is by applying for a credit card and demonstrating responsible credit card use. Evaluate the terms and conditions of a credit card reward program as well as the costs associated with that card before choosing to apply or when reassessing current cards.

Consider credit cards where you earn something each time you use it. These include cash back cards, travel rewards cards and points-based rewards cards. You can put rewards toward reaching a goal, like a vacation or gift cards.

Female financial advisor in discussion with a woman at her desk in an office

7. Manage spending wisely

What kind of spender are you? Selfless, spontaneous, secure, planned? Once you understand your spending profile you can minimize excessive spending and ramp up your savings.

Resist the urge of impulse purchases that can break your budget and save for them instead. Start whittling away at those interest credit cards and loans. Take a page from the startup world and look to bootstrap your spending for a few months or embark on a spending fast for a week or two. When you buy only what you need, you’ll be surprised at how much you can sock away.

You work hard for your money. That’s why it makes sense to be just as focused when it comes to managing it. Follow the above tips and you may discover that there’s as much satisfaction in saving money as there is in spending it.

Budgeting Saving Credit
Karen Gibbs

is a New Orleans, LA-based freelance journalist who specializes in lifestyle and finance articles both online and in print.

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.