15 Easy Money Management Tips For Beginners (Improve Your Finances)

Last Updated April 13, 2024 by Davina Kelly

Looking for simple money management tips for beginners? Managing your money isn’t complicated, but it can seem that way in the beginning.

Once you understand the basics and implement the right strategies, managing your money will become easier.

In this post, I will share the best tips to help you budget, increase your savings, and make more money. 

This post is all about money management tips for beginners.

Best Money Management Tips For Beginners

1. Audit Your Finances

When you are first starting to manage your money as a beginner it is important to understand the state of your finances. Once you understand this you will know which areas you need to improve.

For example, are you currently living paycheck to paycheck? Do you have any savings? Are you in debt? These are the types of questions you want to ask yourself.

I recommend going through your finances with a fine tooth comb. Check all of the accounts you have open including current/checking accounts, credit cards, savings accounts, etc.

Check the balances you have on each one and if you are no longer using them you should transfer your balances and close them down.

If you have any credit cards ensure you make a note of any outstanding balances and when they are due.

Review Your Current Spending Habits

Understanding your spending habits is very important, it tells a story about the way you manage your money. 

To check you can log into your bank account online and review your bank statements. I recommend reviewing 3 – 6 months to get a good overall view of your spending. 

When you review your bank statements you want to pay attention to how you are spending your money. For example, are you spending on shopping? Coffees? Takeaways? 

Also, check if you are paying your bills on time, any late charges you are incurring, and your balance at the end of the month.

Once you have completed this you will have a clear understanding of the areas you need to focus on improving. 

2. Create a Budget

Having a budget is a great tool for managing your finances. A budget is essentially a plan for your money. For me, I always need a plan, whether it is for a goal I want to achieve or for what I am going to do for the day. So having a budget for my finances is key.

Your budget will allow you to plan how you will spend your money. This way when you get paid you will know exactly where your money needs to go. A budget will also allow you to map out a clear plan to reach your financial goals.

How To Create a Budget Plan

Creating a budget is simple maths, income – expenses = net income. From your net income, you can then pay off debt, save, or invest.

Income

Your income is the main driver of your budget. This will dictate how much money you have to spend and save.

Make a list of all of your income streams and the frequency. For example, if you are paid a salary monthly write down which date you will be paid and how much you are expecting.

If your pay varies you can estimate or use an average.

Expenses

Next, you want to make a list of all of your expenses. This includes all of your bills and essential and non-essential expenses. Let’s break this down.

Essential expenses

Essential expenses are the expenses you need to survive.

• Rent/Mortgage
• Utilities
• Insurance
• Medical
• Groceries
• Transportation

Non-essential Expenses

Non-essential expenses are your fun expenses that you can survive without.

• Subscriptions (Amazon & Netflix)
• Eating out
• Shopping
• Beauty maintenance

Once you have listed all of your income and expenses, what you do with the rest of your money is dependent on your situation. Most people make it a priority to save, but if you have a lot of debt paying them off will be more important.

If you have consumer debt like credit cards, I recommend making it a priority to pay it off. You could still save if you can afford to, but the focus should be paying off your debts.

You can write all of this information in a budget planner or you can use Excel or Google sheets. I recommend the latter as you can customise it and update it without having to cross things out.

The most important step in your budget is reviewing your progress. You want to do this regularly to ensure it is working and that you are on track. I will get into this more a little later.

You can put your budget together using the free printable budget and expenses tracker I have included below.

3. Set Goals

Another great money management tip for beginners is to set goals for your finances. Having goals will keep you motivated on your journey.

The goals you set need to be smart. But most importantly they need to be specific, measurable, and timely. 

It’s not enough to just set a goal to save money. A better goal would be, you want to save $5k in 12 months. This goal is specific and timely. You can make it measurable by including the amount you need to save each month in your budget.

For example, to reach your goal of saving $5k in 12 months you would need to save $416.66 each month. When you review your budget each month you will be able to see whether you achieved this or not. 

When you are first getting started you can keep it simple. If you don’t have any savings you could set a goal to save using the guidelines above. But make it realistic for you and your circumstances.

4. Create A Finance Routine

The most important tip when it comes to managing your money is reviewing your progress. I recommend creating a routine to review your budget regularly. You can do this weekly or monthly. 

During your finance routine, you will do the following things:

Update your budget

You will go through your bank statement for the month or the past week and input all of your actual numbers. Input how much money you received and how much money you spent in each category.

Reflect On Your Progress

Once you have updated all of your numbers for the period it is important to reflect on how you performed. Ask yourself these questions. Did I spend the way I intended to? Am I happy with my results? Is there anywhere I can improve?

These questions are important as they will lead to the next step.

Update Your Budget For The Next Month

Now that you have updated your budget and are aware of your progress you need to update your budget for the next month.

When you are planning for the next month you need to ensure you include anything you have coming up. 

For example, if you are travelling you will spend more so you need to include that. Or if you are expecting a bonus you want to plan how you will use that extra money.

This is the power of having a budget. It allows you to be one step ahead and plan how you want to spend your money in advance. 

The best budget is one that is agile and that you can stick to. You can create a budget at the beginning of the year which I recommend doing, but things will change. 

You could start making more money, or your rent could increase and you will need a new plan to manage those changes. If you keep your budget up to date you will be able to factor in these changes. 

Having a finance routine may seem like a lot but it doesn’t take long at all. Once you start doing it regularly it should take you around 30 minutes.

To make it more enjoyable you could create a vibe when you do it. You could have your favourite drink, light a candle, and listen to some calming music. 

5. Increase Your Income

When you are managing your money there comes a point where you need to find ways to increase your income. Making more money will give you more options and it will help you reach your financial goals faster

When I first began managing my money I found this part hard, as when I thought about increasing my income I thought you had to get another job or start a business. These are great options, but they are not the only options. 

Simple Ways To Increase Your Income

There are some simple ways you could increase your income using what you already have. I have listed some of them below.

Sell unwanted clothes on eBay

You could declutter your wardrobe and sell and sell any unwanted clothes that are in good condition on eBay or Vinted. I have a post going into more detail about this, you can read it here.

Offer Services

We all have skills, so if there is something that you are really good at you can offer it as a service. For example, if you are good at bookkeeping or digital marketing you can offer this as a service and get paid for it.

Freelance

You can use whatever skills you have in your full-time job and offer them as a freelancer. For example, you could be a freelance writer or web designer.

As For A Raise:

Another way to increase your income is to ask for a raise if you have a corporate job. Sometimes I feel like this is often overlooked. You work hard at your job so you should be compensated fairly.

The cost of living is rising so your salary should increase to reflect that. This will allow you to continue to be able to afford to maintain your lifestyle. 

When you ask for your raise I recommend having evidence to show why you should get a raise. For example, if you get feedback from colleagues thanking you for helping them solve a problem you could show that as evidence to support you. 

6. Grow Your Money

Once you have mastered the basics of managing your money you want to put your money in places to grow.

When inflation and the cost of living rise this gives your money less buying power. This means $100 doesn’t have the same value it did a few years ago. 

For example, if you went grocery shopping you wouldn’t be able to buy as many food items as you did before because the items are more expensive.

To combat this you need to find ways to make your money grow. For your money to grow in value, you need to purchase assets that will grow in value or give you a return. For example, the stock market or a property.

There are many ways to do this. You could put your savings in a high-interest savings account. This way your savings will grow in value from the interest you accrue.

You could invest in the stock market. As a beginner, I would recommend starting with index funds. 

Index funds are diversified, passive, low risk and carry low fees. I have a post that will walk you through how to get started step by step. Read it here.

I know that investing can sound scary, but I promise it isn’t as complicated as you may think. The most important thing you need to do is understand the basics which I explain in my post and be consistent.  

7. Create An Emergency Fund

A top tip for managing your money as a beginner is to have an emergency fund. Having an emergency fund is crucial for your finances. It can give you peace of mind as you will have a safety net in case any unexpected costs arise.

In simple terms, an emergency fund is for any unexpected costs, but some people use it to save a few months’ worth of expenses in case of job loss. Which I absolutely recommend, but you can also include a buffer for any other emergencies.

Or you could create a separate sinking fund for unexpected costs like a medical emergency or home repairs.

Your emergency fund is like a layer of protection. For example, if you have to pay for a car repair unexpectedly you will have a fund that you can dip into instead of having to use a credit card or borrow money. 

This actually happened to me this week! I took my car for its annual MOT inspection, but it failed the test and I ended up having to pay $300 for repairs plus $50 for the inspection. 

Luckily for me, I had an emergency fund that I could use to pay for this. I included the inspection cost plus a buffer in my budget, but I had it wasn’t enough. 

If I didn’t have an emergency fund or any savings I would have had to use my credit card which could lead to me being in debt. 

8. Save Up For Large Purchases

Saving up for large purchases is a good way to manage your money. Doing this will allow you to plan and prepare and we are all about planning our money.

This will mean that you won’t need to pay for large purchases in a lump sum unexpectedly. Instead, you can save small amounts over time.

For example, if you travel every year you can save up for the holiday in advance. This makes the process less stressful as you will have planned for it.

Other large purchases you can save up for are birthdays, weddings, a new laptop, or a new designer bag.

9. Pay Annual Costs Upfront

Paying for annual costs upfront will save you some money and also reduce your direct debits each month. 

Most companies will charge you an admin fee for collecting the money via direct debit. The annual cost for the same service is usually cheaper as the fee isn’t included.

For example, if you pay for Amazon Prime the monthly fee is $8.99 which is $107.88 a year. But if you pay for the year upfront it will cost $95 which is a $12.88 saving. 

This may seem like a small amount of money, but if you did this for your other annual costs like insurance the savings will add up. Plus it is one less thing to pay for every month.

You could create a sinking fund for this and when the renewal time comes up you will have the money to pay the fee in full upfront.

10. Spend Smarter

Once you are aware of your spending habits you can start to find ways to cut back and spend smarter. Your money is not only there to pay bills, it is also meant for you to enjoy. I believe you can do this if you find smarter ways to spend.

Food is one of our largest expenses so you can start there. You can shop at cheaper grocery stores like Aldi. Before you go to the grocery store you can take inventory of the items you have at home to ensure that you only buy what you need. I have a post going into more detail about this, you can read it here.

If you like shopping you could shop during the sales. There are many sales throughout the year so you could create a sinking fund for shopping and shop during the sales guilt-free. This way you are prepared and you will get some great bargains. 

 Cut Back On Spending

Another tip is to cut back on your spending. If there are non-essential items you spend a lot of money on you need to cut back. You don’t have to give it up completely, you can just reduce the amount.

For example, if you love fashion and spend a lot of money on clothes you can cut back on the amount. Let’s say you spend $300 on average each month, you can reduce it to $150. 

This way you are still able to shop, you just have less money to spend. You could take it a  step further and find cheaper places to buy clothes, such as thrift stores. 

Other places to look at are your subscriptions. If you have Amazon Prime, Netflix, and Disney ask yourself do you need all of them? You could cancel the ones you watch the least and keep one. 

 Next, you could look at the services you pay for such as internet, care insurance, etc. If they are up for renewal you could try to negotiate a better price.

You could explain to the service provider that you love the service but can’t afford to pay it at the current price. Most companies want to retain their customers so they will try to offer you a better deal. 

If that fails you could check a price comparison site and see the best deals in your area. I use this one a lot click here they compare the prices on everything from energy, car insurance, and broadband.

11. Have Different Bank Accounts

To make things even easier when managing your money, I recommend having different bank accounts. This will keep everything separate and make it easier to track. I recommend having at least 3.

Main Current/Checking Account

Your current/checking account can be used as your cash flow account. This is the account you will be paid into and pay your bills via direct debit and essential expenses.

Savings Accounts

As you probably guessed this account will be used for your savings, emergency, and sinking funds. You will transfer money from your cash flow account to these accounts.

I recommend having a high-interest account for your savings so you can benefit from making money from interest at the same time.

You could have an easy-access account for your emergency and sinking funds, and a fixed-term account for your long-term savings.

You need to ensure you read the terms and conditions as you will be liable for fees if you withdraw your money before the agreed term. 

Current/Checking Account 2

This account can be used for your non-essential expenses or your fun money. When you get paid you can transfer the budgeted amounts to this account.

Having this account separate will also give you some control over your spending as it will force you to spend within a limit. This will also encourage you to spend more consciously. 

12. Pay Off High-Interest Debt

When you have debt it can be stressful and expensive. Consumer debt such as credit cards, personal loans, and car loans come with high-interest fees. This makes the debt even more expensive and harder to pay off. 

I recommend making it a priority to pay off this type of debt. This will free up more money in your budget to put towards your goals.

You could start with the smallest debt first then work your way up.

13. Educate Yourself

Knowledge is power, the more you learn the smarter you will become. When you are trying to learn how to manage your money it is important to educate yourself about money.

It is important to understand things like what causes inflation, why interest rates have increased, and how the economy works. Once you know this you will think about money differently.

You can learn by reading books, watching documentaries, or you could watch creators on YouTube. There are some creators who talk about their journey with personal finance that you can learn from. 

Here are some of my favourites.

Books

• Rich Dad Poor Dad
• The Psychology Of Money

Things To Watch

• How To Get Rich on Netflix

YouTube

• Jennifer Kempson
• Nischa 

14. Pay Your Bills On Time

Money management tip number 1 is to pay your bills on time! This is the first thing you want to get under control when you are trying to manage your money. 

Once you have audited your finances and have a list of all of your bills, you need to make a list of their due dates. When you have done this I recommend setting them up to be paid via direct debit.

This makes paying your bills easy. You don’t need to think about it, every month the money will be taken from your account automatically. 

You need to ensure that you have the money in your account to pay your bills. I recommend setting up the direct debit to leave your account on the same day you are paid. 

For example, if you are paid on the 31st of every month, set the payment up to leave the same day. 

Paying your bills on time is also a good way to build your credit. I know a lot of people talk about taking out a credit card to build credit. But if you have bills in your name and you pay them on time every month you can build good credit.

15. Change Your Mindset

When you are managing your money your mindset is very important. Everything begins in the mind so you want to ensure your mind is in the right place.

You need to have an abundant mindset. If you have to cut back on spending to reach your goals, don’t focus on what you are losing. Instead, think about what you will gain in the future once you begin to manage your money in the right way. 

Final Thoughts

Managing your money is very important for the health of your finances. 

If you have the right mindset, a solid plan, and the right tools to help you, you will be able to improve your finances and reach your goal a lot easier. 

Have you found these tips helpful? Which stage are you at on your journey to manage your money?

This post is all about money management tips for beginners.