Making Money Management Simple

Do you sometimes feel like you were out of school the day your teacher focused on money management? You’re not alone; just run a quick Google search and you’ll find a variety of stats showing just how many people feel they don’t know how to do this well.

Though the phrase “money management” might make your stomach flip, it truly doesn’t need to be complicated. In fact, going back to the basics is not, well, basic. It can actually be extremely effective.

Here are the top three tips to help you get a better grasp on your financial situation so you can make more informed decisions about where and how to spend your money.

Financial Goal Setting: Where to Start

 1. Budgeting: The needs vs wants debate

Oh, the “b” word. Everyone talks about how important it is to set a budget and stick to it. After all, who doesn’t want to find a way to be able to spend responsibly while still saving money?

Our guidance is to get clear on your needs vs. wants. A good place to start is by making a list and checking your monthly expenses. Do you need to pay rent or your mortgage? Yes. Do you need to have a subscription to Apple TV+, Hulu, Disney+, Amazon Prime Video and Netflix? Probably not (that’s a want).

A budget shouldn’t create stress. It should give you spending parameters so you can avoid financial stress later. This is why you need to be clear about your needs vs. wants.

Once you’re clear on your priority expenses, you can explore what to do with your available funds. This is the part where we encourage you to think about creating a savings plan so you can think about those short-term and long-term goals. Savings can not only help you hedge against unexpected expenses, but it also allows you to think about making larger purchases that you may not have previously thought were possible.

Finding the Right Type of Savings Account

 2. Managing debt and payoff plans

Nowadays, you can accomplish most of your personal banking online. And even though digital deposits can seem immediate — a lot of online banking apps allow you to deposit checks directly through your phone — the bank may still take some time to process the transaction. Be mindful of these lag periods if you have any expenses coming up, especially if you have the payments set to be automatically withdrawn from your account.

To that point, be aware of payoff plans and repayment terms. You don’t want to be caught flat footed if an automatic payment you budgeted for is now a few dollars more due to a variable interest rate.

3. Know your credit score

As an adult, your credit score is the only grade that really matters. Checking it early and often will ensure that some unexpected demerit — like carrying a large credit card balance or incurring substantial debt — will not impact your ability to apply for a loan or affect the interest rate you pay on your credit cards.

So how can you keep an eye on it? There are three major credit agencies that each offer one free credit check every year. That means you can check your credit for free at least three times every year. Bonus: Some credit agencies let you check your credit once per week, something that went into effect when the pandemic first hit.

Establish a healthy relationship with money

Money management doesn’t need to be a pain-inducing conversation.

Understanding your wants vs. needs, being aware of your debt and payoff plans, and knowing your credit score is a great start to forming a healthy relationship with money. In fact, by following these three steps, you give yourself better insight into your purchase habits, so you can set realistic short- and long-term financial goals.