14 Money Management Tips for Beginners

Anyone can improve their finances by taking them seriously and making informed decisions. Conducting a financial check-up on yourself every six months can help you stay on track and prevent problems before they get out of control. Once you complete your semi-annual review, try to follow some our top money management tips for beginners. These tips can help you get your finances back on the right track and help you prepare for the future.

1. Create a budget

Budgeting is a crucial money management skill. A budget helps you keep track of how much you’re spending so you can pay your bills, avoid debt, and save money. Not only will a budget help you manage your money more effectively, but it also provides peace of mind knowing you have a plan for your financial stability. 

Creating a budget starts by looking at your income and expenses. Calculate how much you pay for your bills each month, such as your mortgage or rent, utilities, food, transportation, personal care, debt, and entertainment. Combine these expenses and subtract that number from your monthly income to see how much you have left over. Allocate your income to essential expenses first. You can then prioritize savings and/or the repayment of debt depending on your financial goals. 

After you make a budget, you can start making small adjustments to your spending habits to ensure you’re not spending more than you can afford. Lastly, make sure to periodically update your budget, especially when your income and expenses change. 

2. Start tracking your spending 

It might seem tedious, but tracking your spending is an essential money management tip for those who are looking to improve their financial situation. Little things like coffee, lunch, and entertainment add up significantly over time. By monitoring your spending on a weekly, monthly, or yearly basis, you may realize that you are spending more than you think on unnecessary items. 

There are also several apps you can connect with your bank to automatically track your spending. Most budgeting apps separate your spending into categories for you, making it easy to see how much you’re spending in various categories.

Once you calculate how much you are spending in each category, identify areas where you can reduce your spending and determine what is necessary and what may be keeping you from reaching your financial goals. 

3. Use credit cards with caution

Many people pay for things with credit cards that they could pay for with cash or a debit card. Sure, there are rewards and cash-back credit cards out there that can sometimes make using those cards worthwhile. However, the reality is that many people find it challenging to manage their spending and their corresponding credit card payments effectively.

Even if you have good intentions of paying the balance off every month, it just takes one month where you let the balance carry over because money is tight. For some people, this one month it can quickly snowball out of control. Before you realize, you might have minimum balances due that consume most of your cash flow, forcing you to repeatedly rely on your credit cards. 

To avoid this vicious cycle, simply paying cash or using a debit card could potentially save you money every month. That extra expense that results when money is used to pay interest charges on any outstanding credit card balance can  add up significantly over time.

4. Use coupons

There’s often a bit of a stigma about clipping coupons. But, you don’t need to spend hours every week clipping out every last coupon you can find.

These days, the internet can be a great resource for finding coupons, making the process quicker and easier. If you think it isn’t worth it, think again. Simply using a handful of coupons on items you regularly buy anyway could save you $10 or more at the store per week. That might not sound like much, but that’s $520 or more a year in savings on the things you buy anyway. That amount could be applied to outstanding debt or be used to fund your retirement with an IRA contribution.

5. Set realistic financial goals

We all have aspirations, but there’s a big difference between dreams and goals. While many people dream of owning a home or having their own business, most people fail to do their research and find out how much these things actually cost. In order to set realistic goals, it’s important to know what you can really afford. 

For example, if you need a $50,000 down payment for a house, then you could set a target goal such as having a home in five years. Instead of focusing on the total down payment amount and potentially getting overwhelmed, setting a smaller goal of $10,000 each year makes it easier for you to meet your goal.  Once you set specific action plans, you can do what’s necessary to reach those goals. 

6. Consider paying down bills instead of vacationing

While we all like going on a good vacation, sometimes sacrifices have to be made in order to meet more serious financial issues looming that are causing you stress.

Some people spend thousands of dollars each year on vacations while still drowning in debt or having nothing set aside for retirement. One great way to get a vacation and pay down debt is to travel locally. You can still have a relaxing, memorable, and enjoyable vacation on a budget. Check out local attractions and explore what’s within a day’s drive from your home. You might be surprised at what you’ll find.

7. Make weekly deposits to a savings account

Most people have very little money set aside in savings. However, it’s important to have liquid assets in case emergency expenses come up or you experience a sudden loss of income.

Each week, you can set up weekly withdrawals from your checking account and put them into a savings account. This hands-off approach ensures consistent savings without needing to think about it or even actively manage it. It doesn’t take much before you will see your savings account grow. Just $20 a week will put $1,040 into your savings account a year.

8. Save up for large purchases

Whether you’re buying a car, fixing your house, or making any other expensive purchase, spend some time saving up first. If you need to take out a loan or use your credit card, you’ll have to pay interest, which inevitably increases your overall costs. 

If you’re buying a house or car, you don’t have to save until you can pay for it entirely in cash upfront, but the amount of interest you pay in total is directly related to your down payment. Therefore, the larger your down payment is, the more you can potentially save. 

9. Take a look at your subscriptions

Subscriptions can make money management difficult — especially if you don’t know you have them. One of our favorite money management tips is taking a look at your subscriptions to see how much you can save.

Individual subscriptions usually cost anywhere from $5 to $15 per month, which may not seem like a lot. The problem is that these subscriptions add up quickly, and they’re easy to forget about.

Check your bank statements or credit card statements, or use a subscription tracking tool to find out what you subscribe to and cancel anything you’re not actively using.

10. Plan for emergencies 

Although you never know what will happen, you can make sure you’re as prepared as possible for all of life’s twists and turns. Keeping an emergency fund is an easy way to make sure you’re ready for anything life throws at you — from medical bills to unexpected car repairs.

You can figure out how much to save by looking at your expenses. A good rule of thumb is to save between three and six months’ worth of expenses. The goal with this strategy is that you’ll be able to cover your monthly bills if you’re unable to work for a short period.

Being prepared is a crucial  money management skill to have. Saving for emergencies can be tough, but with a bit of planning, you can experience peace of mind knowing that you are ready for the unexpected. 

11. Pay your bills on time

When you’re learning how to manage money, forming good habits is key. If you’re not paying your bills on time, you may be falling into a detrimental pattern and wasting money in the process.

Unpaid bills typically come with late fees, which means you end up paying more than you initially owed. Unpaid bills that are sent to collections can also potentially affect your credit score, which can have a ripple effect by making it hard to get approved for mortgage or auto loans and credit cards that can be used in case of an emergency.

Create a calendar with all your bills or set reminders on your phone to make sure you’re paying everything on time. If you absolutely cannot  afford to pay by the due date, reach out to the company to minimize the damage. They might even be willing to offer a grace period or a payment plan.

12. Start investing

If you want to build generational wealth, investing is a great strategy. Investing allows you to grow your money over time through retirement accounts, stocks, bonds, and other investments.

One of the best ways to invest your money is to contribute to your employer-sponsored retirement plan. Try to contribute at least the percentage needed to receive the maximum employer match. If you’re self-employed, you can save for retirement by starting a SEP plan, a solo 401(k), a SIMPLE IRA, or a Roth IRA. 

Many investments are high-risk, so make sure you understand investing and create an investment plan that matches your risk tolerance.

13. Consider working with a financial advisor

Whether you’re planning for the future or deciding how to invest your money, there are a lot of difficult decisions to make. A financial advisor can help you make more informed decisions based on your financial situation.

Financial advisors can guide your investments and provide money management tips customized to your goals, helping you keep your finances in order.

Keep in mind that financial advisors aren’t for everyone. However, it may be worth considering a financial advisor if you need help sorting out your financial health or have big goals for the future.

14. Plan ahead for taxes

Taxes are key when it comes to money management. Whether you expect to owe taxes or plan on receiving a tax refund, planning ahead can keep you on track with your financial goals.

You may consider working with a professional if you feel like you’re in over your head. Tax experts can help you organize documents, ensure you find all the tax deductions you qualify for, and file your tax return to ensure you get the biggest refund. If you plan on owing taxes, an expert may also be able to help you stay on top of estimated taxes for future years and help you set up payment plans, if needed.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.

Do you have any money management tips for beginners, leave them in the comments!