Some people find it difficult to learn how to manage their money. Having your own money can sometimes lead to overspending or financial irresponsibility. It’s important to be smart about what you spend your money on. So, what are some ways to manage money better in 2022? Here’s some great tips!
What are ways to manage my money better?
There are so many different ways to manage your money better this year. But, the biggest tip is to have a budget.
And, it doesn’t have to be boring, stringent, or hard to keep up with. The easiest budget for newbies is the 50/20/30 budget, but of course, you can always research what could work best for you.
What is the 50/20/30 budget rule?
We mentioned the 50/20/30 budget above, but I doubt too many people really know what that is. So, what is the 50/20/30 budget rule??
The 50/20/30 budget rule is one of the easiest ways to manage your money better.
- 50% for the essentials including rent/mortgage, groceries, gas, etc.
- 20% for savings/investing
- 30% for everything else, including eating out, wanted items, etc.
And that’s it!
No more tracking all of your spending, planning to reach $0, or anything else. This is the easiest budget to prepare for too.
To make it even easier, have 20% of your paycheck put into savings or investments before you even see it, so you can just budget the 50% needs and 30% wants.
How can I manage my money better on a low income?
We’re talking budgets, which is easier for some than others.
What if you’re trying to budget on a low income? Is it even possible?
It’s not easy to be low income for sure…
When you’re looking to manage your money better, there really are only two options:
- cut your expenses, or
- make more money
There are many side hustles to help you make money in your free time. Or, you could up-level your skills and get a higher-paying job, promotion, or even start your own business.
If you can’t do that, cutting your expenses will have to do.
I know, it sucks having to give up the things that make you happy. But it should be a short-term sacrifice until you get to where you need to be financially.
How To Manage Money Problems
Even if you don’t have an income problem, you may have some money problems like debt, being house poor, or other issues.
If you’re trying to learn how to manage money problems, first, you need to sit down and see where you’re at financially.
Write down all of your income, expenses, and debt.
- Are you losing more money than you make?
- Are your bills heavy at the beginning of the month, using up most of your paycheck?
- Do you impulse shop?
Asking and answering these questions can help you get to the root of your money problems. Then, you can make a plan to fix it.
When it comes to managing your money better, you may be looking for some tips for saving money too.
So what are some tips for saving money?
For one, save a specified amount each pay period. It could be just $5 each time you get paid. But, by getting in the habit of saving something, you’ll feel better when you notice your savings growing. And, you can always increase this amount as time goes on.
Second, automate your savings! If your job allows it, have them transfer a percentage of your paycheck to a savings account when they pay you. That way, you don’t even have to worry about transferring the money yourself, but it’s still being saved.
And of course, remember that your savings journey is your own. You don’t have to save $10,000 in 3 months if you can’t afford that. You don’t need $50k in your account just to say you’ve done a good job. Figure out what you need to start saving for your situation, and just start!
Related: Easy Ways to Get Started With Saving
How much should I have in savings?
This will depend on you and your situation.
For example, if you’re single, renting, and don’t have kids, you may not need as much as someone who has 3 children and a mortgage. However, experts do recommend having 6-12 months of your monthly expenses saved up as a just in case.
How much is too much savings?
Anything over your 6-12 month emergency fund is considered too much. That’s because this extra money isn’t earning interest money. Once you’ve saved your emergency fund, focus on moving the extra into investment accounts.
How do you balance savings and spending?
Now, how do you balance savings and spending?
You could try out the 50/20/30 budget rule. But you could also focus on paying yourself first, and then making sure your bills are taken care of.
A popular option amongst many people is to set aside a certain amount of money each paycheck as “guilt-free” spending money. That way, you can treat yourself and not feel bad for spending money. And then, when it’s gone it’s gone, so there isn’t any overspending involved.
Related: Is Automating Your Savings Worth It?
If you’re not earning enough from your day job, there are a few different ways to earn money faster.
- Asking for a raise/promotion
- Starting a side hustle
- Decluttering your home and selling what you don’t need/use
- Getting a better job
You can also do a combination of these things too! Whatever works best for you and your schedule. But, all of these are easy ways to help you earn more money.
Other Simple Ways To Manage Your Money Better in 2022
Last but not least, there are two other simple ways to manage your money better. Let’s talk about them!
You’ve seen and heard commercials about your credit score on TV and the radio, but what exactly does it mean?
Loan and finance companies need to know that you’re reliable with their money when you take out a loan or finance a purchase. Part of their choice is based on your credit score.
Hard money lenders want to see that you’ve had some experience with money management, and if you’ve never taken out a loan or even signed a phone contract, you won’t have much of a track record to look at for them. And, if you have a lower credit score, they will believe that you’re not great at managing money (even if you’ve gotten better!).
That’s not to imply you should go out and apply for a loan just for the heck of it; there are alternative ways to build your credit. Clearscore is a fully free program that assists you in building a respectable credit report and can even support you in turning your finances around if you’ve had a few hiccups in the past.
Your credit score will help you in the future. You’ll know that your credit score won’t fall through, and you’ll get better interest rates if your score shows that you’re trustworthy.
Prioritize Your Health
Unfortunately, even simple things like remaining healthy have become expensive. Even if you are fortunate enough to have free healthcare at work, there are some expenditures and treatments that are not covered by them.
For example, if you needed treatment for anything that your doctor was unable to refer you for, you would have to pay for it out of your own pocket.
Taking up life insurance and disability insurance would be a wise financial move in this situation. This means that no matter how tight your budget gets, you’ll never have to worry about your health again. Why not make a sound financial decision right now and look into getting quotes for these? The costs may surprise you (in a good way)!
Ways To Manage Money Better in 2022 – Will You Get Better??
As you can see, there are many ways to manage money better, especially in the new year! And, these are all simple solutions to help you get your budget, and life, back on track.
So how about you? Are you ready to manage money better in 2022? What do you plan on getting better at?
AUTHOR Kimberly Studdard
Kim Studdard is a strategy consultant and course launching expert. When she isn't spending time with her daughter and husband, or crying over This Is Us, you'll find her teaching other mompreneurs how to scale their business without scaling their workload.