Retiring rich is possible if you follow these money management tips!
What money management tips do you think the rich live by?
Better yet what is your definition of rich? Is it someone who drives around in a luxury car, you know, the kind you hope to own one day.. when you’re rich too!
Or is it those big fancy houses that always seem to be strategically placed on top of a hill?
You know what I’m talking about!
The ones you drive by and ask yourself, how do they afford that?
How do I get there?
Well, let me let you in on a little secret. The people you see with the big houses and fancy cars, they are in debt to. Most likely not just a little bit of debt either, a lot of it.
They aren’t rich! They are probably quite far from it.
Believe it or not, most RICH people probably live a life similar to yours in most aspects. They don’t look rich because they drive used vehicles and live in smaller homes.
Money management articles:
- Money Saving Tips: 5 Steps We Took To Save $100K In 5 Years
- Create a Budget and Start Saving Money With This Free Challenge
- Retirement Planning: Grow A Million Dollar Nest Egg
- Create Better Money Habits By Kicking These Bad Ones
The Definition Of Money Management
What is the definition of money management? Money management refers to the way you handle your savings, investing, budgeting, and spending.
Having great money management skills will increase the likely hood that you will retire rich.
Money management skills:
- Set up your budget and stick to it
- Have a plan for your money
- Always aware of your spending habits
- Work with your significant other on your budget
- Don’t spend more than you make
- Stay out of debt
Enjoy 10 of the BEST money management tips!
1| Managing Money – Set Financial Goals
So you want to be rich? It’s not going to happen
Everyone talks a lot about knowing you’re “why”.
Your why is what is going to drive you to succeed.
Let’s look at it this way… If you’re working on something and the going gets hard, what do you do?
A majority of people will give up, but that’s only because they don’t have a WHY or a GOAL they are shooting for.
Today write down your money goals! Write down what you want to achieve and why you want to achieve it.
This will be your driving force behind everything you do!
“The two most important days in your life are the day you are born and the day you find out why.” -Mark Twain
Once you find your “WHY” you will find your motivation!
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Here are a few examples of financial goals you could set for yourself:
- Pay off my debt and start saving for retirement
- To be financially independent and live a life you love, that you created
- Save $100,000 in 5 years
- So I can stop working towards someone else’s dream and work towards mine
- I want to be free of financial debt so I can choose to live my life on my own clock
Those are just a few examples of financial goals you could have for yourself. Go grab a piece of paper or use the notepad on your phone and write down what motivates you!
Let me say this if your goals don’t scare you, if they don’t intimidate you, they probably aren’t big enough!
I also recommended that you have short-term and long-term goals.
After all, being able to meet those short-term goals is going to give you that push to meet those long-term goals.
So let’s say your long-term goal is to save 1 million dollars. A short-term goal would be to save $100,000. If you have the willpower to save $100,000, you’re already doing what most people can’t.
If you want to see how we were able to save $100,000 in 5 years check it out here.
When we first decided we wanted to pay off our debt and start saving we were 23. A few months prior, my husband, and I had just got married, standing next to a pool… at a casino.? Did I mention we hate gambling and Casinos? No idea what we were thinking..
At 23 we had no concept of budgeting or saving money.
Anyways what I’m trying to say is everyone starts somewhere.
Your somewhere is right now, it’s today! When the going gets tough don’t give up.
2| Create A Personal Budget- My Favorite Money Management Tip
Why does everyone talk about budgeting so dang much! Well, let me tell you it’s because it works!
I wouldn’t preach so heavily about it if I didn’t believe so strongly in it.
Budgeting is the reason why we have been able to pay for my bachelor’s degree is cash!
Budgeting is the reason why we can take amazing vacations and PAY CASH for each and every one of them. It’s how we saved $20,000 in one year living in one of the most expensive cities in the country with a newborn and 3-year-old.
Basically, everything we do is tied to budgeting!
Here is a quick rundown on how to budget your money:
- Figure out the amount of money you have coming in this month
- Set your goals for the month – how much money do you want to save
- Evaluate how much you pay for fixed expenses each month
- Evaluate your variable expenses – gas, entertainment and such
- Subtract your expenses from your income
- Make adjustments as needed – do you need that gym membership or could you cancel it and save that extra $60 a month
- Stay on budget
Once you have set up your budget you should have an idea of how much you will be left over each month after your expenses are paid. Use that money to pay down on your debts.
If you want to see the exact method we use to budget check it out here!
If you’re new to budgeting and you want to learn how to budget your money I highly recommend joining our FREE budgeting course below. Our email course that will walk you through, step-by-step, how to set up a monthly budget. Click below to join us!
How To Stay On Budget – Find Someone To Keep You Accountable
Okay, so you know what you want your money to do for you – your goal. Now find an accountability partner! Whether it be your husband, wife, parent, friend, find someone who has someone similar goals.
Whether it be your husband, wife, parent, friend, find someone who has someone similar goals.
This person might not be your significant other and that’s okay, for now.. eventually you’ll want them to get on your level but for now, let that be a different struggle for a different day.
Do you currently or in the past have a gym membership? Did you see a difference when you worked out with a friend vs when you went to the gym by yourself?
More than likely if you were meeting up with a friend you’d always show up and you’d enjoy it more.
The same goes for budgeting! Find someone with similar goals and then conquer them together.
Related resource: How To Budget Your Money With The Cash Envelope System
3| Managing Money With A Personal Budget
Keeping track of your finances is not only a crucial part of budgeting but its also crucial if you want to become RICH! If you aren’t aware of how much money you have and how much you spend, you will always spend more than you make.
Have you tried budgeting without keeping track of your finances?
It doesn’t work!
That is why we created our FREE Printable Budget Binder, just for you!
What worksheets are included:
- Financial Goals
- Debt Tracker
- Monthly Bills
- Monthly Budget
- Saving Tracker
- Note Page
So if your ready to STOP SPENDING AND START
Grab your Budget Binder Printables Here
4| Live Below Your Means
Do you currently live under your means? If not you absolutely must make this lifestyle change!
Did you know the average, everyday millionaire lives under their means?
“More than 80% [of U.S. millionaires] are ordinary people who have accumulated their wealth in one generation.” – The Millionaire Next Door
It’s time to quit making lifestyle decisions based on what people around you are buying. I know its hard trust me, but this will change your life.
It’s changed ours!
Say you make $60,000 after taxes every year. Learn how to live off of $45,000. Then invest the other $15,000 and watch it grow.
Related resources: Managing money into Retirement
Benefits Of Living Under Your Means
- You’ll watch your debt disappear
- You’ll be able to build an emergency fund
- You’ll be able to retire early
- Less stress
We lived far below our means for 3 years and saved as much as we could while living on a single income. We invested our money, sat back and another 3 years later have a six-figure (what we call our retirement fund) just hanging out accruing interest like crazy.
Daily Habits Of The Rich And Successful
So you want to be rich? Then you need to create rich habits!
Let me ask you this, have you ever asked someone who wasn’t rich for money advice? If you have, did their advice make you rich?
I’m guessing probably not.
You can’t ask someone who is in the same financial situation as yourself for tips on how to become rich.. because they aren’t rich. Find someone who is in the financial position you want to be in and talk to them about money.
Here is a quick list of rich habits that you should live by:
- Read every day
- Don’t watch TV- Start a side hustle instead
- Stay away from debt
- Set goals
Books I recommend reading if you’re interested in learning how to implement rich habits into your daily life.
- 50 Genius Frugal Living Tips You Should Adopt To Save Money
- Stop Living Paycheck to Paycheck: Pay Off Debt and Start Saving Money
5| Stay Out Of Debt
Let’s face it a large majority of us have debt. The most popular kinds of debt being:
- Student Loans
- Credit Card Debt
- Car Loans
I can’t count the times I have heard “there are good debts and bad debts.” Or “I need debt so I can build my credit.”
DEBT IS DEBT, DEBT IS BAD!
If you didn’t have debt, what would you do with all of that extra money? You would save that money! Just think that $300 dollar car loan you pay every month. If you paid it off, you could pocket that $300 every month and invest in your future. Or use it to pay down other debts.
In some ways, we aren’t as frugal as we use to be. The years have passed quickly and my husband’s salary has increased drastically over the past 9 years.
BUT we always continue to stay as far away from debt as we can!
Staying out of debt puts extra money in your pockets!
6| Choose To Drive The Used Car
Did you know that a brand new car depreciates immensely as soon as you drive it out of the parking lot?
That’s right! You may as well throw a few thousand dollars out the window as you leave the parking lot because that’s basically whats happening.
Now when I say “used” I’m not saying buy a complete junker that’s going to fall apart in a week. We’ve had our “used” SUV for 9 years now and it has been one of the best investments we’ve made, or so I think.
Is my SUV old.. Yes!
Is it UGLY, you bet it is! My husband backed into a fire hydrant with it like 6 years ago and let’s just say it never got fixed.
Would I love a nice newer vehicle?
Of course, I would!
But do you know what I love more? Not having to a car payment on it in OVER 7 YEARS! Do you know how much money we have been able to save each month instead of putting it towards a loan payment!
Don’t let yourself fall into the trap of thinking you’re going to have a car loan the rest of your life.
Because it doesn’t have to be that way!
Here is why a used car will save you big in the long run:
- Your monthly payment will be substantially lower
- Your yearly vehicle registration will be cheaper
- Monthly insurance coverage will be a lot less
- You’ll pay it off faster
- Less Stress- You don’t have to worry about door dings or accidentally bumping into a curb.. or hitting a garbage can, or two.
7| Our Financial Advice – Don’t Use Credit Cards
Credit cards can be a big no-no.. if you use them incorrectly. Which sadly most people do.
Do you currently charge things to your credit card without paying attention to how much you are charging?
Let’s face it, a majority of people do. Before you know it, you have a large lump of money attached to your card and no way to pay it off.
What happens when you aren’t able to pay off your card monthly?
Interest accrues and debt happens!
If you currently struggle with this issue I first recommend checking your credit score. If you miss even one payment to your credit card you will notice it will hurt you. We use Credit Sesame to check our credit and I can’t say enough good things about them.
The best part is they offer their services for FREE. It only takes a few minutes for them to run your score.
They even alert you through email when your credit score goes up or down! This has been such a helpful tool for us. Use our LINK to check your credit score for free today.
8| Emergency Fund Are A Must
I can’t stress enough the importance of having an emergency fund! This money management tip is going to save your ass someday.
Think about it, what would you do if you’re car transmission gave out and you needed to replace it? I don’t know if you know this but transmissions aren’t cheap.
Are you going to take out a loan to pay for it??
Not if you have your emergency fund set up! Everyone has the fear of not having enough money to get by when life throws a curveball at you.
When you get your emergency fund set up, that fear goes away. Imagine how good that will feel to not have to worry about cars breaking down or having to pay a doctor bill.
Start with a goal of saving $1000 for your emergency fund. If you need help with finding ways to save money, here is a good list to get you started.
Your ultimate goal should be to save up an emergency fund that equates to about 6 months of living expenses. The idea behind a 6-month emergency fund is to cover your living expenses if you were to lose your job and need to find a new one.
Related article: 45 Creative Ways To Save Money Each Month In Your Spare Time
9| Manage Your Personal Finances And Make More Money
Maybe you have been following us here at Living Low Key for a while now and you joined our FREE Budgeting Course so your budget is all dialed in.
If not make sure to join our FREE 5-day Budget Like A Pro Course. This is where we help you develop a budget that aligns with your goals!
This process works, we wouldn’t have been able to build a SIX-FIGURE retirement fund in our 20’s without it!
Sooo what if you’re at a point where you can’t cut back anymore?
Now is the time to start looking for ways to make extra money! If you have been at your job for a while and are kicking butt, try asking for a raise.
The worst that happens is they say no.
If working a part-time job for someone else isn’t your idea of fun, you could always start your own side hustle. Get creative and find a way to make some extra money while being your own boss.
We started our blog, Living Low Key, as a way to help people with their finances and it’s turning into a nice little side hustle. If you want to know how to start your own blog you can check out our How To Start A Blog Guide. It’s got everything you need to get started today.
Don’t Increase Your Lifestyle When You Make More Money
It’s going to be tempting, but when you make more money it doesn’t mean you have to spend more money. Take your new found money from a raise or side hustle and put it towards paying off debt, emergency funds, or saving for retirement.
Whatever you do, don’t increase your lifestyle just because you have more money. That puts you in the same situation you were just in.
Related article: 40 Easy Ways To Make Extra Money This Week
I’m going, to be honest, investing has changed our lives and it’s going to change your life too!
This may be money management tip #10 on the list but it’s the most important step.
After all, what are you going to do with all of this new found money you have after you act on all of these steps?
The answer is INVEST!
Just saving money isn’t going to make you rich, you need compounding interest investment accounts to get you there.
Let me give you an example. I’m 29 years old. With our current retirement accounts, if I were to add $100 per month to our accounts for the next 26 years and get a 9% return (3% less than we are currently averaging over the life of the funds) I will retire at 55 with almost 1.3 million dollars!
That’s crazy right! Compounding interest is your friend when it comes to investing. For that example, my contributions to the 1.3 million dollars would be less than $200k, most of that money would be from the interest.
Start investing early and often if you want to retire rich!
Learning the right way to manage your money is probably one of the most important things you can do for your future self. I hope we guided you in the right direction to getting started.
What is the best money management advice you have ever been given? Let us know below!
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