Basic Money Management Skills Everyone Should Have

money management skills
BY Aly J. Yale
Apr 14, 2022
Key Takeaways:
  • Basic personal finance skills can help you save money and avoid too much debt.
  • You don’t need complicated spreadsheets or a finance degree to manage your money.
  • Mobile apps can help, or try a simple system with envelopes and cash.

Every adult should have a few basic money management skills so they can take care of themselves and their financial future. You don’t need a finance degree or a CPA to take care of your money from day to day and avoid costly mistakes. Take a few minutes to make sure that you understand these simple concepts and put them into action. 

Top 9 Money Management Skills

Want to better manage your money and safeguard your financial future? There are really just nine basic money management skills you need to do it. Brush up on each one using the tips below.

Access Your Cash

Having money in the bank only gets you so far. You also need to be able to build on and access those funds when needed (and particularly in a pinch).

You should:

  • Have an online banking login established with your bank or credit union — anywhere you have a checking or savings account.

  • Install your bank’s app on your mobile phone for quick and easy access. You may need to check your balance on the fly.

  • Know the account and routing numbers for each of your bank accounts (or store them somewhere safe). 

  • Understand how to write a check and use your debit card. Not everyone accepts Venmo. You should also know your PIN and understand how to withdraw funds from the ATM or use a withdrawal slip at the bank.

  • Know how to deposit funds into your account. This should include depositing cash and checks at a physical bank location or ATM, setting up direct deposits, and scanning checks/deposits using your mobile app.

If you’re not sure how to do some of these, schedule an appointment with someone at your bank’s nearest branch location. They’ll make sure you know how to use and contribute to your accounts.

Set a Budget

The phrase “budgeting” might seem complicated, but the idea is pretty simple: You need a plan for your earnings, and you need to stick to it.

To start, know how much you bring in each month (an average is fine), and list out all your monthly expenses — student loan payments, groceries, gas, utility bills, rent, credit card payments, etc. You’ll then deduct these from your typical monthly income to get your discretionary funds — or how much you have left after covering your necessities. 

If it feels overwhelming, consider using a budgeting app to help. There are lots of options these days, including Mint, YNAB, Personal Capital, and Mvelopes. The latter uses the envelope budgeting system, which essentially gives you a set “envelope” of cash for each monthly expenditure. Once you run out, you have none left for the month, so it forces you to be mindful of your spending and cut back where possible. 

Protect Your Identity

You probably won’t get paper bank statements anymore (unless you specifically request them), but that doesn’t mean you shouldn’t be monitoring your accounts. Primarily, you need to be aware of your balances to 1) stay on budget and 2) ensure you don’t overdraw your account or bounce a check. Those will result in costly penalties and fees and make you overdue on bills.

You also want to monitor your accounts for any signs of hacking or identity theft. According to the Federal Trade Commission, card fraud is the second-most common type of identity theft in the nation. Nearly 400,000 Americans fell victim in just 2020 alone.

If someone steals your debit card number or starts using your account, you’ll want to catch it early and report it to the bank. They can then shut down your cards and issue new ones to prevent any additional fraudulent activity. 

Control Your Spending

Know how to separate your must-haves from your nice-to-haves. That’s critical for proper money management. You need a clear picture of your monthly expenses — the money it takes to run your house, feed your family, power your car, and take care of your debts — and put those needs above all else.

Everything beyond that — dinners out, trips to the movie theater, even extracurricular activities for the kids — must come second.

If you’re worried about your ability to prioritize, the envelope budgeting method (noted above) can be particularly helpful. You can also shop with only cash (this helps you avoid impulse purchases and makes sure that you only spend what you have). Or you may choose to direct deposit some of your earnings into savings, where it’s harder to access for impulsive purchases.

Saving for Emergencies

Saving for retirement is certainly important, but even more crucial than that? Saving an emergency fund. Without an emergency fund, an unexpected medical bill, vital home or car repair, job loss, or a decrease in working hours could upend your life and make it hard to pay the bills. Worst case, an emergency could even force you into bankruptcy or foreclosure.

Experts recommend having two-to-six months of expenses in a savings account just in case. This should include your monthly rent or mortgage, debt payments, and things like car payments, utilities, groceries, child care costs, and more. However, even a $1,000 emergency fund can head off many problems. Start savings now even if you can only afford a few dollars a week.

Building and Protecting Credit Scores

Your credit plays a big role in your financial options. Good credit can open the door to buying a house, leasing a car, or even getting a great apartment. And bad credit? Well, it just might close that door — or, at least, make it significantly more expensive. That makes managing your credit one of the most important money management skills over your lifetime.

You should start building your credit as early as possible. It takes at least two “tradelines” to establish a credit score. If you can’t get a traditional credit card or loan, try using a secured credit card. They are not actually credit cards because you have to deposit money with the card issuer – usually, your deposit is equal to your “credit limit.” You can also get a tradeline by having friends or relatives with good credit add you as an authorized user to one of their accounts. 

Keeping your debts low, making on-time bill payments, and avoiding unnecessary credit inquiries can also help your increase score in the long run.

Understanding Financial Products

On any given day, you might find an offer for a credit card, a refinance, or a new, costlier type of bank account in your mail (or email inbox), and they often come with enticing promotional terms — like limited, 0% interest rates, airline miles, and other rewards.

While these can be tempting, particularly if you’re struggling financially, it’s important to take offers with a grain of salt and to read the fine print. Make sure you understand the product’s downsides as well as the advantages. You don’t want to use a card with a promotional 0% rate to pay off $10,000 in debts, only to get hit with a 30% APR a year down the line — especially if you can’t pay off the balance before that higher rate hits. 

When in doubt, talk to a financial advisor or a credit counselor for guidance. They can help you make the right choice for your finances.


Sometimes, things don’t work out as planned. Maybe a job falls through, you don’t get that raise you expected, or your rent goes up more than projected. It happens, and a part of good money management is learning to adapt to these unexpected financial mishaps. 

This might, of course, mean tapping your emergency fund, determining where you can cut back on spending, or taking on a side job or extra hours if necessary. Having a plan for your money is important, but having backup options? That’s just as critical.

Knowing Who to Ask for Help

It’s great to manage your money independently, but sometimes professional help is a wise investment. If you feel like your budget isn’t working or you’re not meeting your financial goals, talk to a financial advisor. If you think you’re paying more taxes than you should be, reach out to a tax professional. If you’re confused about how to use your bank or savings account, call your local bank branch. And if you’re struggling to pay off your debts? Maybe a credit counselor or debt relief company can help.

The moral of the story: Don’t be afraid to ask for assistance if you feel your money management skills are lacking. The move typically pays off (and prevents costly mistakes) in the long term.

Build Money Management Skills

You don’t have to master each one of these money management skills at once. Start with understanding the ins and outs of your bank accounts and setting a budget, and then move on to saving and achieving other financial goals. 

And when in doubt, ask for help. Your future finances will thank you for it.

Frequently Asked Questions

What is personal net worth?

The short answer is net worth is what you own minus what you owe. Simply add the fair market value of all your assets -- personal possessions, vehicles, real estate, investments and savings -- and subtract your debt balances -- credit cards, auto loans, mortgages, student loans, etc. The difference is your net worth.

How much does my credit rating matter?

Your credit rating matters a great deal. A good credit rating means you'll pay less for everything you finance -- cars, credit card purchases, homes bought with mortgages. According to MyFico, for example, borrowing $300,000 would cost a person in the 620-639 range over $100,000 more than the person with a 760 credit score.

In addition, a poor credit rating can make it difficult to work in certain industries, so it's good to establish and protect a good credit rating early on.

What's more important? Saving or paying off debt?

It depends on how much you're paying to borrow and what kind of return you're getting on your investments. In general, however, interest rates on debt are higher than returns on safe investments. So it's usually smarter to pay debt than to save.

However, there are exceptions. if your company matches retirement contributions, you should take full advantage of that benefit.