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Six Smart Money Management Tips – Including How to Use the 70/20/10 Rule

Looking for smart money management tips for 2022? Good for you! Most people don’t stop and think about their finances, and here you are researching money management and budgeting. You’re different. You’re ready to win with money, and win big I might add!

Related: The Best Way to Manage Your Money (5 Easy Tips!)

Smart money management tipsSmart Money Management Tips For 2022

In this post, we’ll explore simple money management tips, smart money management techniques, and we’ll even answer these common questions:

  • what is the 70/20/10 rule with money?
  • what is the 50/30/20 budget rule?

Ready to learn some new financial tips for 2022? Check out all the info below!

Related: Wondering What To Do With 1000 Dollars? (Use It To Make More!!)

What is the 70/20/10 rule with money?

For many people, bills can take up a huge chunk of their income. While this isn’t always a bad thing, it can make saving and paying off debt harder. But, if you live in a high cost of living area, and still want to manage your money better, the 70/20/10 rule can help. 

What is the 70/20/10 rule with money?

The 70/20/10 rule works like this:

  • 70% will go to bills,
  • 20% to debt or savings,
  • and 10% to wants.

The wants category is a bit low but can be adjusted as your payoff debt or lower expenses.

What is the 50/30/20 rule with money?

If you’re not big on budgeting, but still want to learn how to manage your money better, one of the best ways to do that is with the 50/30/20 rule.

What is the 50/30/20 rule exactly?

Well, it’s actually super simple.

  • Basically, 50% of your take-home pay is budgeted for bills and necessities.
  • 30% is towards debt or savings,
  • and then 20% is for wants (like those new shoes you’ve been eyeing). And that’s it!

If you’re not financially ready to spend 20% for wants, then stick with the 70/20/10 rule.

RelatedCreating a Spending Plan – For Those That Simply Despise It…

Smart Money Management Tips For Adults

Most people often have a financial strategy when the year begins but rarely follow it through. With the year fast coming to an end, you may be thinking about how to make 2022 your best financial year, especially if 2021 has not been it. Then it’s time to acquire some smart money management techniques!

Managing your finances does not have to be a complex task. On the contrary, all you need is a great strategy and the discipline to follow through. Below are some money management tips for adults to consider in 2022.

Simple money management tip - set goals1) Set Financial Goals

You must set a financial goal if you intend to achieve financial success. Think of it as your money management road map that will set you toward financial stability and freedom, depending on what that means to you. Having a financial goal helps you know how much you need to make and spend to attain your goal.

This is also a great way to push yourself, whether to start a business or get that promotion at work, to help you attain your financial goal. It would be best to set small achievable goals since this will motivate you to keep going. You are likely to get discouraged halfway through if you set huge financial goals that you cannot achieve.

Related: 15 Short Term Financial Goals

2) Debt Management

Debt management is a vital part of successful money management. For instance, you might notice that a large percentage of your money is spent on paying interest on your loans. Debt financially paralyzes you, so ensure that all your debt is paid on time to avoid higher interest rates.

It would also help to have a solid strategy for paying off debt before taking a loan. You can employ several strategies to ensure that a large percentage of your income does not go into debt. The list of strategic debt solutions includes debt consolidation, home equity loans, and credit card modification.

Related: The BEST Debt Snowball Excel Template (And It’s FREE!!)

3) Investing

Part of the effective money management strategies you should consider is investing. You cannot invest when you live from paycheck to paycheck and are constantly worried about having enough money for your daily expenses and rent.

Several investment opportunities can help you grow your money. It would be best to do your due diligence before selecting what works for you best. There are plenty of investment opportunities you can explore that will ensure your money is being put to good use.

Related: Should You Invest Now or Wait a Year?

Smart money management tips - savings4) Savings

Savings are vital, whether it is…

  • a retirement savings plan,
  • savings for a rainy day,
  • or saving for a significant purchase.

Therefore, ensure you start saving.

All you have to do is start small and be disciplined. If you want something, save up for it, especially if it is a major purchase. Avoid impulse buying and instead take the delayed gratification approach. This will keep you on the right financial path. You will be motivated and always feel a sense of achievement whenever you buy something meaningful.

Related: Why You Need More Than $1,000 In Savings

5) Understand Your Financial Situation

Understanding your financial situation is also vital, even more so when it comes to making significant financial decisions. You cannot manage your money if you do not know how much you are spending. You already know how much you make, so do your calculations on how much goes into debt repayments, groceries, and bills.

It is easier to budget when you know how much you spend on different items. This way, when you get your paycheck, you know where the money goes.

This will also help you be more accountable. Ensure you account for every expense, even if it seems small. This is the only way you can successfully manage your money.

Separate your wants from your needs6) Differentiate Your Wants from Your Needs

Being able to differentiate your wants from your needs is one of the key money management tips.

For instance, needs are the items you need to survive like:

  • shelter,
  • transportation,
  • clothing,
  • healthcare,
  • and food.

On the other hand, your wants are things you want to own but do not necessarily need.

Most individuals cannot differentiate between the two and will spend money on unnecessary things that affect their finances in the long run. Your needs should always come before your wants.

Related: What is a Reverse Budget? (And Do You Need One?)

Smart Money Management Tips For 2022 – In Summary

With the new year being so close, you can have a better financial year when you put in the work. The only solution is coming up with an effective money management strategy. Use the listed tips and avoid spending money you do not have.

Which of the above are your favorite simple money management tips? Tell us in the comments below!

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AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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