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7 money management tips
Managing money may feel challenging when grappling with a variety of financial decisions, like budgeting for daily expenses, saving for major purchases like homes or cars, or planning for retirement.
The good news is that learning money management skills can help make a big difference in achieving these goals, whether starting early in life or well along one’s financial journey.
Why money management matters
Responsible money management and financial literacy are steppingstones to building a secure financial future. Taking control of money lays the foundation for different stages of financial planning.
Exercising financial responsibility and focusing on things like budgeting and saving can help people achieve major life milestones, such as buying a house or planning a family. And while different people will have different goals depending on their own circumstances, money management remains key to helping build secure financial futures.
7 money management tips to get started
There's no one-size-fits-all when it comes to money management. So, it’s important to consult experts for personalized advice on financial planning, since everyone's financial journey is a little different.
However, these seven money management practices can be a good place to start.
Create a budget and track spending
Using budgeting tools to create a personal budget and track expenses gives a clear picture of where the money goes each month, potentially facilitating smart financial decisions.
For example, people may allocate their after-tax income using the 50/30/20 budget rule:
- 50% to necessities like rent and groceries
- 30% to wants such as dining out and entertainment
- 20% to savings and debt repayment
To simplify expense tracking, use budgeting apps that automatically categorize expenditures, track upcoming bills, and provide alerts when nearing budget limits.
Automate and build savings
Setting up an automatic savings plan using savings apps is one way to regularly set aside money without having to remember each time. This strategy, also known as "pay yourself first," helps grow your savings by automatically transferring a portion of the paycheck into a savings account, like PayPal Savings.1
Automating personal finances also simplifies money management by reducing the stress of manual tracking.
Pay off debt
Becoming debt free opens financial resources for other life goals. Consider effective debt-repayment strategies, such as:
- Debt snowball. Tackle smaller debts first to build momentum.
- Debt avalanche. Prioritize debts with the highest interest rates to save on interest.
Responsible credit card use helps avoid debt by ensuring spending doesn’t exceed payback capabilities. Remember to always spend within one’s own means and avoid purchases that will accrue a balance and lead to interest charges or growing debt.
Build an emergency fund
An emergency fund can act as a financial safety net to deal with unexpected situations like medical crises or sudden job loss. Having money in an emergency fund may help to avoid taking on debt during challenging times, potentially keeping financial plans on track.
Save on everyday expenses
Adopting smart spending habits for managing household expenses helps stretch the budget further. Here are some frugal living tips to help budget and save:
- Use coupons to save on purchases or earn other rewards, like cash back on groceries.
- Combine rewards, which includes stacking multiple coupons and promo codes.
- Choose cost-effective alternatives over premium brands.
- Shop with cash back apps when possible.
Learn about getting cash back with PayPal.
Stay informed and educated
Building financial literacy can help to achieve long-term financial security. Utilize informational resources, like the PayPal Money Hub, online courses, and newsletters, to make smart money decisions and proactively adapt to changes in economic conditions.
Utilize money management tools
Money management tools simplify finances by automating and streamlining tasks, such as setting budgets, monitoring spending, calculating interest, and saving money.
By using money management apps, such as the PayPal app, individuals can easily manage recurring bills, split bills with friends and family, and automatically transfer money into savings accounts.
Start building a financial future
Adopting responsible financial habits — such as creating a budget, automating savings, managing debt, and using personal finance resources — can help pave the way toward a secure financial future.
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