How do I stop being so bad with money? Learn my strategy for how to get better at managing money, and you’ll never ask that again.
How to get better at managing money – this could really be the title to my website (though it’s not nearly as cool of a name as Frugal Confessions, that’s for sure).
Because if you boil down what I do for a living?
It’s showing you how to better manage your money.
In a way that sparks incredible financial change to you and your family’s lives.
Getting better at managing your money can take you:
- From debt hangovers to paying for vacations/holidays ahead of time
- From living paycheck to paycheck, to have a natural buffer built into your accounts
- From daydreaming about something big you want in life, to actually working towards it with a goal date in mind
Are you ready? Let’s get crackin’!
What is Money Management?
It’s helpful that we’re on the same page with what’s all involved in money management.
SO, here’s how I define money management:
Money Management is the collection of decisions you make and the actions you take with the money you have in order to get the best possible outcome (both immediately, and in the future). These decisions include how to spend it, how to save it, how to invest it, how to protect it, and otherwise, how to use your money.
Sound good? Let’s move on.
How to Get Better at Managing Money
I’ve interviewed lots of people over the years and one thing has become crystal-clear to me: they never learned how to manage their money.
Formally, that is.
You’ve probably seen others manage their money, and your parents certainly tried their best. But chances are really good – given the lack of financial education in our country – that you just kind of fell into managing your money life.
And while you’ve done the best you can up until now, you know there’s more to this managing money thing.
You’ve been around the block a few times, and you know that if you don’t learn to control your money, it controls you.
I’m here to guide you through the process of managing your money not just to survive, but to thrive.
To start to be able to design your life on your terms – just like my husband and I have gotten to dabble in designing our lives (hint: I may be a work-at-home-mom, but I’m still not earning a full-time income. The reason I’ve been able to raise our almost-three-year-old? Is because we know how to manage our money. Imagine what choices YOU can make once you nail this as well? I’ve got chills just thinking about it!).
Here’s how I’m going to help you get better at managing money:
- Figure out where you are right now
- Learn about money management strategies & tips to use
- Take action on strategies and tips
- Track to see what’s happening at a daily, weekly, and monthly level
- Reflect on what did or did not work
- Make tweaks
1. Assess Your Current Financial Picture
We’re not looking to judge your finances in this step. After all, almost everyone has made one of these common financial mistakes (if not 5, 6, 7+).
Instead, we’re looking to:
- Give you a baseline, so that you can tell if you’re improving or not
- Understand what specific areas of your personal finance need help
Getting everything out in the open (to yourself, at minimum) is truly the Number 1 step to this entire process of learning how to manage your money better.
All the bells and whistles. All the pimples and uglies (you might want to check out how to get your finances in order).
There are two things I want you to do to get a bigger-picture of your money management and financial situation.
#1: Take the “How Am I Doing Financially” Questionnaire
I take you through the entire process of grading the different areas of your financial life – your Net Worth, FICO score, Debt, Home Equity, Retirement Planning, and Estate Health – in this free How am I doing Financially Kit.
Go through it, and give yourself a grade for each category (there are ranges to guide you).
Psst: Want the electronic version of this? Sign up for Personal Capital’s free dashboard, associate your bank accounts, and they’ll pull in all of this information and much more. I’ve been using it for years, and love it! Then, take the guidance and ranges from the free How Am I Doing Financially Kit, and see how you’re doing.
#2: Make a List of What You Feel Needs Work
Oftentimes, we really do know what is and is not working.
So, take 10 minutes to sit down and write out a list of things not working for you, financially, right now.
It could look something like this:
- I never have cash left towards the end of my pay cycle, so I’m waiting for the next paycheck every time – super annoying
- My debt payments every month are out of control
- We’re spending wayyyy too much at the grocery store
- It feels like I should be earning more at this point in my career
If you just do the two steps from above, you’ll be in good shape.
But ultimately, as you get better at your money management, you’ll want to know the following:
- Your total household income
- Your total household monthly expenses
- Your total debt loads, and how much they cost each month
- Your net worth
- What your money management system looks like
Pssst: Need some help with the story that your financial statements are actually trying to tell you? I say screw the financial statements…and answer these 3 questions instead to reveal your financial wellbeing.
2. Learn Solid Money Management Strategies
Now you know where your current finances are at…so, how do you get them to where you want them to be?
Let me show you some solid money management strategies that you can pick from to take your money management skills from ho-hum, to ninja-level.
Brush Up on these Money Management Skills:
- Get a Bigger Picture: Stop looking at your money from a paycheck cycle, and look at it from a one-month point of view (use one of these free printable monthly budget planners, and free how to manage your money worksheets to do that).
- Switch Your Spending Method: One way to quickly get your money in check is to go to a cash-only spending method. You can use these free printable cash envelopes to help with this.
- Choose a New Budget System: I’ve got 23 personal budgeting methods for you to choose from. Pick one that sounds like you, and give it a try.
- Plan it Out on a Daily and Weekly Scale: Commit to using a weekly budget sheet for the next 2-3 months (here are 11 free cute budget worksheets) (here’s how to fill out a budget sheet).
- Make Better Financial Decisions: Learn the 7 rules to make better financial decisions.
- Work on Your Money Mindset: Use these money mindset exercises to go from a scarcity to an abundant mindset around your money.
- Track Spending, Daily: Use one of these daily spending logs (all free) to track your spending on a daily level. You’ll be amazed at the patterns you can pick up on.
- Set Up an Aggregate Money Management App: Set up a free dashboard that aggregates EVERYTHING – all your assets, your liabilities, AND your investments – into one snapshot to give you a quick view of exactly how you’re doing financially anytime you’d like it. I personally use Personal Capital, and have for years. They’re a free wealth management system, and the information they give you is priceless (not to mention makes you smarter with your money because you known crazy things like the amount of fees you’re paying across all accounts and investments).
- Link Your Financial Accounts: Everything needs to be linked up to your Checking Account for automation (next). You want to have your checking account linked to your savings account. You want to have each of your credit cards, your mortgage, student loans, and other debt accounts linked to your checking account. You want to have your investment accounts associated to your checking account.
- Set Up Automations: Automate absolutely everything you can. Automate your bill payments for your creditors/mortgage/student loans/etc. Automatically withdrawal money into your savings each month. Direct Deposit your paycheck into your checking account. Set up automatic investments into your retirement accounts. Automate, automate, automate. Psst: got debt? Check out — should I automate or manually pay my debt off?
- Learn how to Track Your Portfolio: I have this entire guide on how to use a free tool to track your portfolio and give your 401(k) plus other accounts a portfolio check up.
- Get Your Investing Questions Answered: Here are free ways to get your beginner investment questions answered.
Psst: Feeling like you need to dive deeper into a particular part of money management? You’ll definitely want to check out one of these free money management classes and courses.
3. Take Action on Money Management Strategies and Tips
This is a short, but probably the most important, section.
Pick something from above, and TAKE ACTION on it.
You can read personal finance articles all day long…but if you don’t ever actually take action on at least one of the tips? Then you’ll be in this exact spot one month, one year, and one decade from now.
Hint: does this feel daunting? Then here’s what I want you to do: pick a new strategy to try on for just one paycheck cycle. If it doesn’t work? Well, you’re onto the next one.
4. Track What’s Happening with Your Money
You need to see evidence of movement – either in the right direction, or in the wrong direction.
Seeing the evidence will bring awareness, and you can adjust (or know that you’re on the right track, and have the motivation to keep going).
Here are several different ways to track what you’re doing, financially:
- Track Your Spending: You can use these free daily spending logs to start tracking your spending. Another option? I've noticed that my free cashback and gift card earning apps actually tally my monthly spending. Score! I use iBotta and Fetch.
- Track Your Net Worth: I personally use Personal Capital, the free app, to track my net worth. I've been doing that since before my son was born (he's about to start Kindergarten!). Here's why it might be important to track net worth.
- Track Your Budgeting: Get my personal free budgeting monthly worksheet here, with a tutorial on how to fill out a monthly budget sheet and an area to track how you do.
- Track Your Income Levels: Are you moving up in your career? Is your income keeping pace with inflation (rising cost of everything)? A really simple way to track your income over the years is to log onto mySocialSecurity, and go to “review your full earnings record now”. Mine goes all the way back to 2001!
5. Reflect on What Did and Did Not Work
At the end of a period of time – choose one week, one paycheck cycle, or one month – you want to look back over your tracking and see what has changed.
Did things work better, stay the same, or work worse?
Questions to ask yourself:
- How did I feel about my money using this new strategy?
- Was I able to do something more with it, like save more, pay off more debt, get to the next paycheck and still have some money left?
- Did I feel more in control, about the same, or less in control doing things this way?
- What questions do I have about my money that I need to research or ask someone?
For example, let’s say you moved from a credit-card-spending to a cash-only-spending system.
You created printable envelopes, a paycheck budget, and filled your envelopes for the week.
You tracked your spending using the outside of each envelope (plus, you could just see if there was any money left and subtract that from what you started with, which is all on your budgeting worksheet).
You would want to reflect on how you did at the end of each week.
Here’s what you came up with:
- You felt more in control of your money, because you could clearly see what was being spent, and from what category (not to mention, how much you had left until the next paycheck)
- Since you were spending everything on a credit card before, it was hard to fill your envelopes because you’re still paying last month’s credit card bill off. You need to research how to get help with this (but are hopeful that once you get that credit card payment paid off, it’ll be much easier to fill your envelopes).
- You don’t like have to go into the convenience store to pay cash for gas, so you’re considering a hybrid spending strategy you read about.
- You’re a little worried about carrying around so much cash, and so you’ve started looking into the Qube cash envelope budgeting app to help get around this.
- You had money leftover in your entertainment envelope, but went over on your grocery budget. You’ll need to go back and few months to see how much you spend on groceries, and adjust this on your next budget worksheet that you fill out.
6. Repeat the Process
The repeat part? Is how you’re going to get better at managing money.
You need to take the lessons you learned from the previous money management actions you took, and use them moving forward.
Not only that, but choose tweaks and/or something new to tackle and do that for the next budget/paycheck cycle.
Over, and over, and over again.
Until managing your money comes second nature to you, and you start to realize you’ve built money confidence.
It’s a beautiful thing.
One more thing I’d like to address.
How Do I Stop Being so Bad with Money?
Here’s the thing: you don’t just stop being bad with money.
You have to work your way out of it. It’s a mish-mash of learning new strategies, changing your money mindset (and your mindset about your abilities), setting up a money management system that works for you, making some changes with your next budget cycle, and then seeing how they work. Then, you tweak as you go. Eventually, you gain confidence in your ability to manage money.
The confidence comes in the doing. Trust me!
Well, that’s my process for how to get better at managing money. What’s your first step you’re going to take? I’d love to hear about it in the comments below – maybe you’ll inspire someone else to move the needle forward, too! And remember, this is a life-long process. In fact, you can read a bit about my own journey in this life lessons about money article I wrote.
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