Saving & Spending Budgeting & Expenses

How To Manage Your Money: Top Strategies and Techniques

From understanding your cash flow to creating a budget and maximizing your saving, our guide to money management will help you improve your personal finances.

By Lindsay Frankel
and Lauren Graves

Edited by Yahia Barakah, CEPF

Updated Feb. 24, 2025

When you know how to manage your money, you're empowered to make the right choices with your hard-earned dollars and can feel more confident about your decisions and protected against emergencies. Money management comes in many different shapes and sizes, as you'll quickly learn.

Tracking your expenses and income, creating a budget you can stick to, and finding opportunities to save (and capitalizing on those opportunities) are just a few forms of managing your money.

As we talk about these money management strategies and more, we'll also share products and services we recommend to help you along the way. These include budgeting apps to help you budget more effectively, high-yield savings accounts to grow your money with compounding, and more.

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Track your income and expenses

Start by tracking your expenses. This could be done manually, through a spreadsheet, or with an app, though we recommend budgeting apps as these can save you time manually inputting transactions by tracking these for you automatically. Tracking your spending not only promotes mindful spending but also helps identify and eliminate overspending and unnecessary costs.

After monitoring your expenses for a few payment cycles, cancel any unused services, like an unused gym membership. You can also use this opportunity to set limits on your discretionary spending money. Decide which expenses you have the most control over, and start changing your spending habits to keep more money in your pocket.

You can save on utilities by either negotiating with your provider or reducing usage. Apps like Rocket Money can negotiate on your behalf, saving both time and money.

First, calculate your total monthly income and compare it to your expenses. Check if you're earning enough to cover all costs and have a surplus for unexpected expenses.

Pro tip

Financial experts recommend maintaining an emergency fund equivalent to three to six months of expenses. They also suggest saving at least 15% of your pre-tax income for retirement, including employer contributions.

If you're not earning enough to meet these targets, we suggest looking into opportunities to earn additional income. This doesn't have to be from a second job but could be a passive income venture or side hustle.

Create a budget

Budgeting is crucial for financial success. According to a survey from Debt.com, 89% of respondents said that budgeting helped them reduce or stay out of debt in 2024.

Budgeting is a powerful tool that involves allocating income to various spending categories. It provides a roadmap for financial decisions and money management.

There are several budgeting methods:

The zero-based method: Allocate every dollar to an expense, savings goal, or debt payment.
The 50/30/20 method: Allocate 50% of income to necessities, 30% to discretionary spending, and 20% to savings.
The 80/20 method: Save 20% of your income and freely spend the rest.
The envelope method: Label envelopes with expenses, such as groceries, rent, and more, and fill them with cash up to your monthly limit.

Of these common strategies, we often recommend a 50/30/20 budget for beginners because it can be one of the easier ones to wrap your brain around if you're tracking your spending and breaking expenses into categories for the first time. But we suggest that everyone try at least a couple of methods until one clicks for you, and we'll always advocate for using budgeting apps.

Use budgeting apps

Taking advantage of technology can help you reach your saving, budgeting, and investing goals. There are dozens of budgeting apps to choose from, but some of the best ones for learning to manage your money are:

Budgeting app	Main feature	Cost
Rocket Money	Can help cancel subscriptions and negotiate bills on your behalf, in addition to tracking your spending	Free version Optional Premium version for $6 to $12 per month 7-day free trial for Premium
Simplifi	Comprehensive overview of your finances that can be customized to fit any budgeting strategy	$5.99 per month (billed annually)
Oportun	Examines your spending habits and bills to help you know how much to save	$5 per month 30-day free trial

Editor's note

Many budgeting apps that charge subscription fees include free trials for anywhere from seven days to a month. Always sign up for one of these if it's offered to make sure you like a platform and find it helpful before adding another expense to your budget. Paying for a budgeting app is almost always worth it, but only if you fully commit to using it.

Find ways to save money

If you're looking for ways to save money, there are plenty of opportunities to cut costs without depriving yourself.

If this is your first foray into budgeting and you haven't tried trimming your expenses yet, you might be surprised by how simple changes can save you a lot of dough.

Here are some easy money management tips for saving on your expenses:

Compare prices from the best car insurance companies and switch insurance if you find a lower premium.
Wait for sales and search for coupons, especially on high-priced items (use a coupon website like Capital One Shopping or Swagbucks)
Use cashback apps to get up to 35% back in your pocket just for shopping at the stores you already frequent and buying things you already buy.
Check out the best cashback credit cards to earn even more cashback or travel rewards on your everyday spending.
Reduce high interest rates by working to improve your credit score and refinancing your debt (more on this next).

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Put your money somewhere it can earn interest

Whether you're focused on paying down debt or putting together a rainy day fund, you need to make saving a priority. A sudden change in income from a job loss or an unexpected expense can happen at any time, and having a backup plan can help you deal with such difficult financial situations.

Most financial experts recommend saving three to six months' worth of expenses in an emergency fund. Where you save is just as important as how much.

A high-yield savings account is a great way to take advantage of the earning potential of money you're not using because these accounts earn better interest rates than the average savings account. You can create automatic transfers into savings from your main bank account to ensure enough money goes into it before you can use it, a money management strategy known as paying yourself first.

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Once you've paid off your high-interest debt, you should also begin saving for retirement every month. Take advantage of contribution matching if your employer offers it for a 401(k) plan, and consider opening a Roth IRA. A SEP IRA can be a great savings vehicle if you're self-employed. Whatever you choose, a good retirement savings account can help your money grow faster, but just remember you'll have to wait until you reach a certain age to make withdrawals without penalty.

Assess your debt

If interest has piled up and you're still just making minimum payments on your debts, it's time to come up with a debt-elimination plan. Even if you're chipping away at your debt already, having a strategy laid out can make the process faster.

Two common approaches to debt repayment are:

The debt avalanche method: This method involves prioritizing your debt with the highest interest rate. It can often be the fastest and cheapest way to pay off debt.
The debt snowball method: This method involves prioritizing debts with the smallest dollar amounts. It can often be the quickest way to reduce your number of accounts with open balances and can be more emotionally gratifying, which can keep you in the debt-payoff game

You should also look for ways to reduce your interest rates so that you can devote more of your money toward your principal balance.

For example, you might choose to refinance debt with a balance transfer credit card to get a 0% APR. You could also opt to consolidate your debt with a low-interest personal loan. You may also be able to lower your monthly student debt payment by doing a student loan refinance.

Understand your credit report

The only way to improve your credit score is to evaluate where you're at right now. Get signed up with Credit Karma or a similar service to get access to a free credit report.

Look at factors such as credit card utilization and payment history, which have the most influence on your score.

If your credit score range is indicated as fair, it's probably costing you a significant chunk of change every year. Your credit score impacts the interest rate you'll qualify for on a loan or credit card, which means good credit could save you thousands.

There are a few steps you can take to get a good credit score on your own, including using a credit-builder loan, getting a secured credit card, or being added as an authorized user on a friend or family member's credit card.

You should also work on paying down your balance while increasing your credit limit. Set up automatic payments so you're less likely to make mistakes.

If you still need help, consider consulting a credit counseling or credit repair company. Credit counseling services are nonprofit companies that can help you get out of credit card debt and other types of financial burdens, while credit repair companies are for-profit companies that work on modifying the negative information on your credit report on your behalf.

Don't forget tax planning

Now that you've got the basics of money management down, here comes the fun part: Tax planning. Although thinking about your income taxes may not be exactly thrilling, tax-advantaged saving and investing can help you get ahead. And keeping more of your money is definitely worth celebrating.

Tax planning shouldn't be an afterthought when the new year rolls around. You should stay organized throughout the year, keeping track of your income and deductions.

You should also plan your monthly budget around a contribution to a retirement account and decide whether you want to save for your child's college education in a 529 plan.

You might also choose to make contributions to a health savings account if you have a high-deductible health plan.

These strategies will help you reduce the amount you'll owe in taxes each year and help you prepare for a healthy financial life and future at the same time.

More money management tips

Tips for managing money in your 20s

Your 20s are the best time to develop good money management habits and practices.

Your expenses will be lower than at any other time in your life since you likely won't be married, own a house, or be supporting children. That means you will have more control over what to do with your money.

It's easier to know how to budget when your cash flow is easy to manage. Here are some of the tips worth keeping in mind:

Learn how to budget and practice setting and sticking to a budget
Build in some fun money for things like dining out and avoid taking on extra expenses
Utilize a credit card to take advantage of cashback rewards and other bonuses, but pay it off in full and avoid carrying a high balance
Begin an emergency savings account and save for retirement
Take advantage of a 401(k) if offered by your employer to help retire early or set yourself up for financial freedom.

Tips for managing money with a partner

Managing money with a partner adds some difficulty to the process since the decisions one person makes may have some impact on the other.

That's why it's essential to communicate clearly and make sure that you and your partner are on the same page. Here are some tips to help you and your partner manage your finances:

Have one or more discussions with your partner to make sure you're both on the same page regarding your financial goals.
Be clear on who is responsible for paying bills and make sure they are getting paid on time.
If you and your partner have different spending habits, consider keeping some of your finances separate.
If your financial goals and habits are similar, having a joint bank account can make it easier to manage your finances.
If you are married and filing together, work with a tax accountant to make sure that you are filing your taxes in a way that supports your financial needs and goals.

FAQs

How can you improve your money management skills?

The best way to improve your money management skills is to consider tracking your spending and budgeting.

By tracking your spending, you can potentially hold yourself accountable for the choices you make. And you can easily identify where you're overspending so you can make cuts. By making a budget, you can allocate your dollars in a way that matches your values.

You could build your budget around short-term savings goals and your long-term financial plan, ensuring you're investing money for retirement, as well as saving for big purchases.

What are the best ways to reduce your monthly expenses?

To reduce your monthly expenses, commit to learning how to track spending. By monitoring your spending, you'll be more conscious of where your money is going.

You might also be less likely to overspend or make impulse purchases when you're actively monitoring spending.

You can also more easily determine if you're sticking to your budget and following your financial plan.

How much cash should you have in a savings account?

The amount of money you should have in a savings account depends on your individual needs and the account's purpose.

Generally, it's a good idea to have an emergency fund, typically with three to six months of living expenses set aside in a bank account or a financial institution that you only tap into in case of emergencies.

You may also want to have a rainy day fund with a few hundred or a few thousand dollars to cover things such as unexpected repairs.

And having a savings account could be a good idea for other goals, such as a home down payment or big purchases you plan to make.

What is the 30-day rule?

The 30-day rule for saving money requires you to wait 30 days before making big purchases.

The goal is to make sure you're avoiding impulse buys that make you happy in the short-term but compromise your long-term financial plans. It could be a good idea to implement this rule if you're trying to save money.

Bottom line

It's a bird — it's a plane — no, it's you, swooping down in your money-management cape to teach the rest of your family and all your friends everything you just learned about making healthy financial decisions.

Armed with an app-filled smartphone in one hand and a deposit slip in the other, you're ready to take on your debt while battling the impulse to spend. Those savings goals you set for your household? They're feeling well within reach.

If knowing how to take control of your finances still feels challenging or you're feeling ready to take more advanced steps to make your money work for you, consider speaking with a financial advisor.

Whether you go it alone or get professional advice, with a little planning and a lot of ongoing discipline, you know now that it's possible to not only avoid financial hardship but also to paint a bright financial future.

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Author Details

Lindsay Frankel

FinanceBuzz writer Lindsay Frankel is interested in helping people get the most out of their money, whether they're looking for an insurance company, planning a trip abroad, saving for an important expense, or buying something online. She has been featured in several finance publications, including the Wall Street Journal, CNN, and Investopedia.