Money is a huge part of practically everything we do, yet managing money is rarely taught in schools and knowledge is gained from those around us. While some people find it easy to manage their money, it provides quite a challenge for many others for a long list of reasons.
Learning about money management is important for everyone, whether you feel you’re managing your money well or not. We’ve all heard that it’s best to know your enemy, and we all know that poor or misguided money management can cause real, life-changing problems. This is why we’ve put together this list of top tips from some of the best financial minds on the planet – what do they consider the #1 piece of advice when it comes to managing our money?
1. Spend Less Than You Earn
Image Source: GotCredit
The most popular tip we received sounds very simple, but can be tricky. Thankfully, there are many different ways to go about achieving it and it all depends on your personal situation. Do you need to find a second source of income or do you simply need to adjust your lifestyle in some way? Keeping a diary of what you’re spending, and listing your expenses in categories can help you to see where you may be wasting cash, and show you how you can spend smarter.
The best tip that will serve you well throughout your life is to live a lifestyle that costs less than you make. This will allow you to fund everything from college for the kids, to retirement and housing for yourself, and everything in between. When financial shocks come - and they will - you will be in far better shape, and less likely to lose what you have gained.
- William Stack, Best-Selling Author at Stack Financial Services LLC
My number one money management tip is to live within your means. No matter how much or how little you bring in; if you spend more than that, you will eventually run out of money and perhaps sink into unmanageable debt. If you spend less than you earn, consistently, you will accumulate wealth.
- Sharon Marchisello, author of Live Cheaply, Be Happy, Grow Wealthy
You have to spend less than you make. It is impossible to build wealth without creating that financial margin. For some, that means they need to make more money. For others, they need to stop spending so extravagantly. Everyone can work towards improving this equation: income - expenses = financial margin.
- Jacob Lumby, Founder at www.cashcowcouple.com
2. Have More Than One Source of Income
Many people assume that having more than one source of income means having to get another job, and while this may be an option for some, for others it will not. However, a second source of income can come from somewhere else, such as an investment, from selling items or services online or even through taking in a lodger. Having another source of income ensures that you will still have a small income should the worst happen, and it can also help you to achieve tip #1 above.
My #1 money tip: Taking up a side hustle to supplement your regular income. The sharing economy, for example, has ample and flexible opportunities to help you get started. Driving for Uber/Lyft for example, to picking up an extra gig on platforms such as Taskrabbit or WeGoLook. It'll not only help you develop micro-business skills but also bring in much-needed income to push your financial goals along.
- Glenn Carter, Personal Finance Blogger www.thecasualcapitalist.com
Always have more than one income stream. Even if you have a stable, full-time job, having additional income from a side hustle or freelance work can provide peace of mind and extra income you can put towards retirement savings or investments.
- Marc Roche, Co-Founder at Annuities HQ
3. Keep Track of Your Money
Without budgeting and knowing what your income and outgoings are, there’s no way you can successfully identify areas where you can make improvements, and planning ahead becomes nigh-on impossible. Rather than being afraid to check your bank balance, wouldn’t it just be easier to know exactly what was happening so that you avoid any nasty shocks in the first place? It may not be the most exciting thing in the world, but once you are in the habit of keeping an eye on and guiding your cash to the right places, everything else on this list will get a lot easier.
Creating a budget is the easiest way to take control of your money and make sure you spend the correct amount. It is not about how much you make, it is about how you spend what you make. In my journey to pay off debt and save for my first home I lived on a budget that correlated with my goals.
- Phil Risher, Founder at Young Adult Survival Guide
The most vital component of any money management strategy is ensuring line of site on in-going and outgoing expenses to see where efficiencies can be made. Once a firm budgeting plan is in place, then you're in a much stronger frame of mind to a) know where you're needlessly spending money over a prolonged period of time and b) start putting more money aside for the things that really matter in life.
- Andrew Rodgers, Zurich Life
4. Educate Yourself
Image Source: Sebastien Wiertz
Becoming more knowledgeable about money management doesn’t have to consist of a boring slog through banking jargon, nor do you need a qualification in finance to fully understand it all. A good way to start is to simply begin reading a range of money blogs regularly. You’ll soon start to pick up on themes and ideas which you can implement in your own life. Nothing has to change overnight – learning and making changes over time will help you to be more successful in your goals. Find financial bloggers who you’re interested in and make sure you read at least one from your own country, so that any banking/saving information is relevant.
Get financially educated! This is extremely important because financial education is not taught in school. There are plenty of free videos, courses and articles you can find online to help you navigate the ever evolving financial world. It’s up to you to be aware of how to create financial freedom.
- Michael Tamez – Life Coach and Financial Blogger
5. Make Things Easier
Being more hands-on with your finances doesn’t have to take over your life, and it doesn’t have to take up a lot of time either. Where possible, you should streamline your finances so that some things are done for you, such as certain bill payments. Direct Debits and Standing Orders can be set up from your account to ensure bills and other important payments are paid on time. As long as you are aware of your income and outgoings and you know when to expect billing, this method can work well alongside your budgeting needs.
I like to automate all my finances and recommend my clients do the same. All my bills are on autopay, my credit cards are paid off in full automatically each month, and my savings contributions are pulled from checking automatically each month. This frees up time from managing all this manually and also results in greater, consistent savings.
- Ken Melotte, Pesident at Melotte Financial Advisors
6. Save What You Can
Once you’ve managed spending less than you earn – no matter how little the amount is you have left over – you should look to save your money. There are a number of ways you can save; with ISAs, investment accounts, pensions etc. and the best way for anyone is likely to be a mix of different methods, depending on their goals and needs. For instance, if you want easy access to your money for emergencies, you would not choose to invest it in a fixed-term account but one which allowed withdrawals without a waiting period. It doesn’t matter if you can save £3, £30 or £300 – the point is that you save something.
You should start saving as early as possible, so you can take full advantage of compounding to grow your wealth.
- Steve Miller, Founder at DebtMD
7. Keep Your Mind on the Money
Keeping your finances in mind whenever you make a decision, or when you’re out and about and you feel the urge to spend, can go a long way in helping you manage your money more easily. When money is causing you stress, it is often easier to push it to the back of your mind than to deal with the negative emotions. By simply being aware and considering your finances more often than you currently do, you can minimise the effect it has on your stress levels and prevent it from becoming problematic in the future. In other words, be aware of your finances in order to take control of them.
My top tip for Money Management is this: Be fully conscious with your money. Know your income and your expenses. Take the minute needed to actually review your bills. Ask yourself this question before you buy anything - Do I really want this? We are so busy with our lives that we just act on autopilot and end up spending way more money than we need to or want to. By being fully aware of the choices we are making, we automatically make better financial decisions.
- Tammy Johnston, CEO and President at The Financial Guides
My number one money management tip doesn't have anything to do with numbers, investing, taxes, or other commonly discussed financial topics. My biggest suggestion is to keep in mind that almost every decision we make is, at least on some level, a financial decision. The choices that we make are, or at least should be, reflective of the things that are most important to us. Make sure that the choices you make are aligned with your unique goals and values. After all, money is only useful insofar as we put it towards creating our ideal lives. Dying the richest person in the graveyard is not a financial goal!
- Steven Fox, Founder at Next Gen Financial Planning
We received some excellent advice and tips from financial experts all over the world, and these are just a few of the more popular responses. Implementing these principles will help you to gain more control over your money, but there is also a lot more information and resources out there ready for you to discover. What works for one person may not be tailored to fit another, so do plenty of research and find what works for you.