Money Management Tips

Read these 20 Money Management Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Debt Consolidation tips and hundreds of other topics.

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I can't seem to catch a break. What am I doing wrong?

Focus on Your Opportunities, Not Your Obstacles

If you are going to be financially free, you have to focus on your opportunities. If all you focus on is your debt, you will continue to live in and be consumed by your debt. Once you let go you'll start focusing on other opportunities that may be around you. It could be a new job, or a new business that you were thinking about starting.

Focusing on opportunities is one of the primary differences between those who are financially free, and those are not. Ideas and opportunities sometimes happen in a flash. It is just up to you to pay attention the next time they show up.

   
How much do I need to set aside for savings?

Pay Yourself First

The "Rule of 10" is a very simple concept to understand, but one of the most difficult concepts to implement. If it were that easy, everyone would be rich. But it takes hard work and discipline.

The Rule of 10 works like this. Once you get your paycheck, immediately pay yourself first. Take the first 10% of your earnings out and deposit it into a separate account. This could be a savings account, a money market account or a 401(k). This may be difficult or even uncomfortable at first, because most individuals are on a fixed budget and cannot afford committing 10% to savings. If you cannot commit to saving 10%, start with 5% and gradually work towards 10%. If you can afford to do 10%, try saving 15%.

After a few months of successfully paying yourself first 10% at a time, you are ready to take the next step in making your money work hard for you. In this next step, all you do is take 15% of the total that you have saved and invest it in a mutual fund or a money market account. For example, if you have accumulated $3,500 in savings, take $525 of that and invest it.

In the mean time, continue to adhere to the Rule of 10, and pay yourself first. It doesn't mater if you have a little bit of money or a lot of money to start. The most important thing is that you begin saving as soon as possible . It's never too late to start working towards financial freedom.

   
Why did the interest rate on my credit card double?

Read the Fine Print

Millions of Americans are currently living with thousands of dollars in credit card debt, and the number continues to grow daily. To compound matters, many of these individuals have been on the receiving end of doubling or tripling credit card interest rates. How does your credit card go from an interest rate of 9.49% to 24.5%? It's really quite simple.

Contained in the fine print of the credit card documents that most of us never read, there is a clause that states your rate can change "at anytime for any reason". Although this may be unfair, the credit card companies are well within their rights to hike your rates. Furthermore, if you are ever or late or there is a change in your spending habits, your rate is subject to change. So what recourse do you have if your interest rate heads north?

There are a few things that you can do to keep your rates from doubling.

Prior to any rate change, your credit card company is required to notify you in writing of any APR changes. By doing this, you are given the opportunity to pay off your balance under the old APR. If you know for certain that you did not receive a notice about your rate increasing, contact your credit card company immediately, and request to speak to a supervisor. Calmly explain that you did not receive the letter, thus you were not given the opportunity to pay off your debt.

The next step is to monitor your spending habits. Do your best to keep the balance on your credit cards to at least 30% of the available credit limit. This will demonstrate to your credit card company that you are responsible enough to manage the line of credit that has been extended to you.

   
I recently came into a lot of money, and now I'm almost broke. What could I have done differently?

Respect Money and Money Will Respect You

If you treat your money with respect, your money will respect you. The lack of respect for money is a derivative of a lack of education on financial responsibility. Respecting money does not mean worshiping or praising the almighty dollar. What it does mean is educating yourself on financial matters. It's also about understanding how your money works for you.

Did you know that donating money can actually lead to increased wealth? Some of the richest people in the world also donate the most. It's the reciprocity of the gift of giving. Educate yourself on how to have your money work hard for you for the rest of your life, instead of you working hard for money for the rest of your life.

   
There are so many banking options out there. How do I choose the right ine for me?

Choose a Bank That is Right For You

Unfortunately, most people don't give much thought to selecting a bank. There is more to selecting a bank than just "free checking". Your bank is at the center of your financial development. There are several things to consider when choosing a bank including cost, convenience, and an auto bill pay option.

Make no mistake about it, banks are in the business of making money also. The easiest way to do this is by charging its customers fees. Some banks charge a flat monthly fee, some charge a fee for every check that you write, you may get charged if you walk into the bank and speak with a teller, while some banks even charge you for calling and speaking to a customer service representative (at least the call is toll free) With all of these potential charges, its difficult to keep the money that you do have in the bank.

Credit Unions are also a great alternative to traditional banking institution. Credit unions are nonprofit organizations and unlike banks, which are owned by investors, credit unions are owned and controlled by the customers. Credit Unions return the favor by offering its members low interest rates on loans, and greater returns on investment products.

Online Banks are another alternative to traditional banking institutions. They have been gaining popularity as of late due in large part to the attractive APR that most offer due to the low overhead. For example, a money market account at a traditional bank could you a 1.5% return, but a similar money market account could get you 3.04% return on your investment. As with other banks, there are some drawbacks to the Internet banks. One of those drawbacks, is making deposits. If you have direct deposit, then this will not affect you as much. If you need to make deposit, you will need to send in your deposit or use an ATM that accepts deposits for your bank.

   
What is the best strategy to begin my financial planning?

Be Crystal Clear About Your Financial Goals

"One day I would like to be debt free," is not a clear goal.

"Within the next week I will establish my budget, set up and automatic bill pay with my bank, and learn as much as I can about money management. Within the next two to three months, I will work with my credit card companies to get better interest rates. If they cannot accommodate me, I will transfer my balances elsewhere. By month four I will have 2 credit cards paid off, and increase my FICO score by 60 points.”

The second statement is an example of a clearly identifiable and measurable goal. There is a sense of direction and purpose with the second example that is lacking in the first example.

You have to be able to visualize what it is that you want to accomplish. If you need to, take a 3x5 index card, and write down five financial goals you would like to accomplish. It could be reducing your credit card debt or increasing your money management skills. You will be amazed at what happens once you clarify your goals.

Achieving your goals is easier than you might think. Before you go to bed, or as soon as you wake up, take a few minutes to visualize a debt free lifestyle. Visualize being able to travel where you want, and being able to purchase what you want without having to worry about how you are going to pay for it. Now use that vision to motivate you to start saving, and paying down your debt.

   
What is a FICO score?

Understand Your FICO Score

Your FICO score is comprised of three digits that will determine your financial future. Your FICO score will not only determine whether or not you qualify for a loan, but also what type of interest rate your will qualify for. Your Fair Isaac Corporation (FICO) score is determined by various factors including (but not limited) payment history and debt to credit limits, and is used by every financial institution.

So what constitutes having a "good" FICO score? FICO scores can range from 300-850. The higher your score, the more likely you are to receive a loan.

FICO Score Formula % of FICO score

  • Record of Paying bills on time 35%
  • Balances on cards or other loans compared to limit 30%
  • Length of Credit History 15%
  • New Accounts/Recent applications for credit 10%
  • Mix of credit cards and loans 10%
As you can see, paying your bills on time is 35% of your FICO score. Be mindful of that because you have the ability of controlling your FICO score just by paying your bills on time. All you have to do is pay the minimum balance that is due every month. This won't do much for reducing your debt quickly, but it does display to the bureaus that you are responsible and can handle your debt load.

   
What can I do to monitor my spending?

Establish a Budget

Operating without a budget is akin to getting into a car and driving to a place you've never been before without using a road map. Most people don't establish budgets because they are either scared to face the reality of their spending habits, or think it's too difficult to establish one. Your budget is essentially a guide or a road map for your spending activities. Creating a budget is the most basic step anyone can take towards financial freedom.

If you are like most people, you probably enjoy stopping at your local coffee shop in the morning before getting your day started. Do you realize just how much those daily trips cost? The reality is if you cut your visits in half, you would have a extra money in your pocket at the end of the month. That's extra money that can go towards savings or could be used to pay a bill. Just by making one small change in your daily routine, you theoretically increase your annual income by a couple thousand dollars.

In order for your budget to work, it has to be realistic. You know your spending habits better than anyone else. Take a close look at your daily routine, and try to identify areas where you could possibly cut spending. If you eat out everyday, try bringing your lunch to work. Research has shown that not only is this great for your budget, but it's also good for your health. Meals prepared at home tend to be healthier than food from a fast food restaurant. Other daily or weekly routines that could be scaled back include dry cleaning, impulse buys, magazine subscriptions, and going to the movies. Cutting back some of the activities and adhering to your budget may be uncomfortable at first. However, if your goal is financial freedom or to increase your money management skills, it is incumbent on you to make some changes.

Your budget will only work if you stick with it. Just like dieting, it's going to take hard work and dedication. Budgeting can be fun, especially once you start seeing the results of all of your hard work.

   
Is tracking my expenses a good money management tip?

Track Spending – A Helpful Money Management Tip

Are you sure you know what you spend your money on each month? How much do you spend on lunch? Or gasoline? People who have never tracked their spending find that when they do, they spent far more than they thought in many different areas.

Here is a great money management tip – track your spending so you better know where you can save. This is a great money management tip because it helps in several ways.

First, by tracking your expenses, you can get a real picture of where each dollar goes – especially those extra ones. Chances are you could spend less in some areas that you never even thought were a problem in the first place. Only this type of tracking can bring those issues to the forefront.

If you are having problems with managing your money on a regular basis and are looking for one great money management tip that may be able to put you on a better track, start tracking your spending and you will have found what you were looking for.

   
What are some steps to maintaining debt free living?

3 Steps to Debt Free Living

The keys to debt free living may seem obvious to some, but to many others, they are hard to live by. If you have gotten out of debt and are trying to remain out of debt for good, here are three steps to debt free living that can keep you on track.

  1. Live on the Money in Your Pocket – Walk into a store with a credit card and you may not have any problems spending more than you should. Walk into that same store with $100 in cash and see how easy it is to spend that money. There is something about cash that makes it harder to part with when compared to sliding that plastic barcode into the slot. Debt free living is easy if you never spend more than you have. Using cash only is a great way to do it.
  2. Analyze Expenses and Spend Accordingly – Some people are aghast to realize how much they spend on soda in a given month. Small expenses build up and up and you will usually never take notice of them. Be sure to do a thorough analysis of how you spend your money and where you can make cuts. Debt free living involves living on as little as you need. Sometimes, cuts that seem so small that you ignore them, can save you far more than you imagined in the long term.
  3. Make Your Money Work For You – The funny thing about money is that it can actually work. Unlike other lazy pieces of paper, money can make more money if it is put to work in the right places.

Building wealth is essential to debt free living so that there are always cash reserves to depend on rather than loans or other debts. Speak with an investment specialist to see how your money could be working more for you and you will enjoy debt free living in the future.

   
Should I get professional help with my personal money management?

Getting Professional Help for Personal Money Management

We all want to have total control over our own personal money management, but sometimes it can be more than we can handle. If this has become the case in your life, you should look to a professional to help your personal situation. Professional money managers have the insight and experience to show you personal money management techniques that can help you eliminate any debt you may have and keep it that way for the long term.

If you are interested in finding professional help for your personal money management, start with the Internet to find a professional in your area. Whether at a bank or brokerage, there are probably dozens right around the corner who can help you. If not, than the Internet can also point you towards national professionals who can help anyone in any area. Even the smallest changes that they often suggest make a world of difference to the average person. Don't let your personal money management cost you more than it saves you.

Find out about better techniques and practices by consulting with a professional money manager about your finances. You will find that their help is not only worth it, but often priceless compared to what they can save you.

   
What is the first step to taking control of my personal money management?

Personal Money Management – Build a Plan

Some things can never be planned for. You can never plan for a medical emergency or a natural disaster or any other event which can cause financial crisis. However, you can be proactive in the event that these things happen to you.

Personal money management is the key to planning for that rainy day and everyone should build a plan for this worst case scenario. Having a job is not always enough to ensure you always have the money you will need. Ask yourself, what can you do with the money that you earn to prepare for a disaster? This is the essence of personal money management.

Now, I am not saying that you should put every penny away for that rainy day; people should live to whatever lifestyle they prefer. But there are ways that you can build a personal money management plan that will not hamper your lifestyle in the slightest. Some people prefer to take a predetermined portion of their income and use it for savings or investment. Others simply save and invest what they can in any given month or period of time.

Your personal money management plan should be built up of minimums. What is the minimum you can afford to invest or save this month? By establishing minimums, you have a baseline to work with in your personal money management. Once you have set your minimums, never go beneath them and go above them as often and by as much as you can afford.

This is just the first step to personal money management. If you want to get the full picture of how you can better manage your money, consult with a professional analyst who can fill in the gaps in your planning. And, of course, stick to your plan once it is in place.

   
How can I remain debt free after paying off all my debt?

Staying Debt Free After Recovery

For those that have recently discovered the happiness of being debt free, it is important to never lose sight of where you were not too long ago. It is easy to fall back into debt once you have gotten yourself out. To keep out of debt for the long haul, here are a few tips that we hope will help.

  • Don't Get Spoiled – For people who spend a long time making monthly payments on their debt, not having these bills each month leaves a lot of money left over that was never there before. What should be done with this new surplus? Save these funds and re-invest them if possible. Build wealth now that you have no debt and you will not need to go into debt in the future.
  • Stay Away From Previous Problems – No matter where your debt problems originated, now that you are debt free, do whatever you can to avoid falling into the same traps. If credit cards got you in trouble before, tear them up. If you had a home equity line that was spent on things other than your home, close it out. Do not repeat your mistakes and you can easily remain debt free.

There are many other helpful tips to remain debt free available here on LifeTips. If you have yet to rid yourself of your debt and want to get there as soon as possible, consult with a debt management specialist who can give you a roadmap to success.

   
Are automatic bill payments smart for money management?

Money Management with Automatic Bill Payments

For people who sometimes have a hard time making their bill payments, there is a solution. If you want to be sure to never miss another bill payment due to money management problems, look into automatic payment options from your creditors. With automatic bill payments, you can be sure that your bills are paid before you have a chance to spend the money elsewhere. Money management is harder for some than others.

For people accustomed to a certain lifestyle, things like eating out and other recreational activities can chip away at your monthly budget before you know it. If you are like many and put off your bill payments, you will often be in a pinch when the time comes to actually pay them.

With automatic bill payments, you can take control of your monthly money management by having the bills debited from your bank account immediately. You can even set them all to be paid on the same day so that you can get a clear picture of how much funds you have to work with for the remainder of the month.

If your creditors offer it, take advantage of automatic bill payments. They will make your monthly money management far easier to handle and will keep you from ever having to check under to sofa cushions for the phone bill.

   
Is discipline important to debt free living?

Discipline – The Essence of Debt Free Living

If debt free living were easy, wouldn't everyone do it? Of course they would, but debt free living is anything but easy. It takes the one thing that more and more people lack when it comes to money – discipline.

  • Discipline not to spend more than you should.
  • Discipline to make those extra mortgage payments.
  • Discipline to do everything that goes against what we all want to do – spend more on things we need less.

Anyone can train themselves in being more disciplined with their money. It just is not easy. However, if you have a goal of debt free living and you want to get there as fast as possible, this discipline is something you will need to gain first.

For help moving towards debt free living through discipline, first, get an accurate account of where you are currently undisciplined. Go through your expenses with a fine-toothed comb. See where you can cut expenses and move that money towards paying off debt. The more you can save, the more you can invest in yourself by getting out of debt and staying debt free.

Building this type of discipline can be intimidating to some people. Some simply cannot go without their double frap in the morning. If they only sat down and saw that the $5 they spend every morning equals their phone bill and cable bill put together, they would see that discipline doesn't have to be so hard. The only path towards debt free living starts with this type of discipline so start on your path today.

   
How can money management tip the scales in my favor each month?

Let Better Money Management Tip Your Scales

At the end of the month, do you find that you are teetering on having no money left? If this is the case, let professional money management tip the scales in your favor on the 1st of the month.

Professional money management for your finances can not only save you from unnecessary expenses, but it can also help you earn more from your money in the first place. Better money management is something we should all aspire to. Even the best still could do it better. You can make major moves forward with the help of professionals with their advice and money management tips.

The main thing to remember is that money management is all about walking, not running. When you pace yourself you will find that larger savings and goals are reached for a longer term. Going head first into a sprint will often lead to bad decisions that look great for the short term, but are actually bad in the long term.

One money management tip that I can offer you is to keep your eye on the horizon. Management is about the future and not the present. With this is mind, look for money management tips and advice from professionals who share your long term planning goals. In no time, you will find that better money management leads to more money in your bank account at the end of each month.

   
Can I get through college debt free?

Getting Through College Debt Free

One of the hardest things for any college student to do is to graduate debt free. Between the college lifestyle, tuition, books, and other expenses, most of the college students today graduate and find that they have to find a job just to pay off their schooling. Seems like a terrible circle, doesn't it? Well, there are ways to come out of college debt free and here are a few tips on how.

First, stay away from unnecessary student loans. When it comes to student loans, those dollar signs look so good that many students do not appreciate that they will actually have to pay them back. Because of this, students will often take out as many loans as they can get their hands on.

If you want to get through college debt free, remember this – loans bad, grants good. A grant, unlike a loan, will not need to be paid back and there are grants available all over the place. Before you sign on for a student loan, look around for as many grants as you can find from local organizations and the like.

Second, remember, you are in college for a reason and it is not to live in an expensive apartment or to build up bar tabs. Of course you should soak in as much of the ‘college experience' as you possibly can, but never at the expense of your financial future. Too many of those aforementioned loans are spent on shots instead of books.

Keep your eye on the scholastic ball when you are in school and you have a far better chance of graduating, and doing it debt free. There are a lot of trappings in any college life. Avoid them as much as possible and you will graduate and be able to get a job for reasons other than to pay back your debts. Graduating debt free can be done with some simple planning and smart decisions.

   
What are the benefits of professional money management firms?

Benefits of Professional Money Management Firms

Everyone likes to believe that they can handle their own finances and get the most out of their money. However, it is only after speaking with a professional money management company that these people see where they have been missing out. The truth is that your money could probably be working much harder for you.

If you needed to go to court you would hire an attorney, right? Well, the same thinking should be applied to your money management. The biggest benefit to using a professional money management firm is their knowledge and experience. These firms are in business for a reason and these are the two biggest reasons. The average person simply is unaware of the many ways that their money could be better managed.

From investments to savings, professional money management can open these doors to you. If you find that you have less money than you think you should each month, these people can show you why you are in that situation after a thorough analysis. Taking advantage of the knowledge that money management professionals can offer is essential for anyone looking to get the most out of every dollar.

Seeing is believing when it comes to the benefits of professional money management firms. If you think you are missing out on opportunities or have just found that everyday money management has become cumbersome, consult with one of these professionals. You will be a believer in no time.

   
I'm thinking about buying a home. What should do first?

Research Real Estate

Purchasing a home is one of the most important decisions and one of the largest purchases you will likely ever make. The benefits of owning your own home are endless. Not only are there tax advantages for owning your own home, but studies show the net worth of homeowners is almost three times that of non-homeowners.

Before you find your dream home, there is quite a bit of work that needs to take place before hand. Grab yourself a book and start reading! “Home Buying for Dummies” is a great book to own or read, because it is easy to follow and breaks down all of the real estate terminology and lingo. Having a basic understanding will allow you to speak intelligently to mortgage companies and realtors. As you learn more you will know what questions to ask.

After you build a foundation for your real estate knowledge, and before you speak to any mortgage lenders, request a copy of your credit report from all three bureaus. Taking a look at your TransUnion, Experian, and Equifax credit reports will help you to identify any discrepancies, and your credit score will give you an idea as to what kind of rate you will qualify for.

The next step is to shop around for a mortgage. Bankrate.com provides great information on current rates and information on different lenders. Once you have all of those pieces in place, it is now time to go look for a house. In addition to seeking out a realtor, look into any first time homebuyer programs offered by your city, county or state. The government makes available millions of dollars for first time homebuyers.

Owning your own home is one of the greatest feelings in the world, and is something that everyone can do. The most important thing to keep in mind is to do your research!

   
I recently graduated, and cannot afford to make my student loan payments. What can I do?

I Have a Degree in "Student Loans"

Graduating from a college or university is one of the single greatest accomplishments any one person can achieve. All of the late night studying, the group projects, finals and term papers have finally paid off ...and by the way, you have just inherited thousands of dollars in student loans.

If you did not receive a full, or partial scholarship to go to school, you are probably very familiar with the Stafford Loan. The Stafford Loan is the most common type of student loan. These loans are divided into two categories, subsidizes and unsubsidized. The subsidized Stafford Loan is a loan in which the federal government pays the interest while you are in school. If you have an unsubsidized loan, you are paying the interest while you are in school.

Assuming you stayed in school the entire four years (or more), your first student loan payment will be due within six months after your graduation. This is a sobering realization for a lot of college graduates. Unfortunately, a lot of colleges and universities don't equip our students with the basic money management skills to survive after graduation.

If you are in a situation where you are unable to make your student loan payments due to unemployment or financial hardship, you may qualify for a Deferment or Forbearance. If you qualify for a deferment, you will not be required to make principal payments on your loan during that period. Interest payments are still due, but if you have a subsidized Stafford Loan, the government will make the interest payments for you.

If you don't qualify for a deferment, you may qualify for a forbearance. A forbearance, is a special agreement with your lender that allows you to reduce or postpone principal payments temporarily. Interest continues to accrue during this period on subsidized and unsubsidized Stafford Loans, and if you don't pay anything during the forbearance it will be added to the back end of the loan. If you feel that either of these options may be for you, contact your lender to determine if you qualify.

   
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Patricia Walters-Fischer