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Are you looking for personal money management tips? As an immigrant and first-generation coming from the Latin community, money was always something I never learned much about in my childhood and young adulthood.
If you have ever thought “I need someone to manage my money”, this is going to be the blog post for you.
This blog post will cover the best money management tips for adults. Most of the tips will help you learn how to manage money in your 20s.
Gear up because I will explain exactly how I manage my money as a 29-year-old living in the NYC area.
It is important to understand first how I set up the money I earn from my day job first.
As I am a super visual person, I wanted to give you a snapshot of what a breakdown looks like:
So, I get paid every two weeks and before the money even hits the bank account I have an automated 11% of my income go towards an employer-sponsored traditional 401K and Roth 401K.
This transaction helps me aside the money I can later invest towards retirement and 401K are also taxed advantage accounts, which means you get to save money on the taxes you will have to pay on earned wages.
After the money comes in, it gets deposited into a checking account, and from there I funnel the money in the following ways:
I send an automatic transfer of $500 to a saving account (HYSA), in that savings account I have three different buckets, one for long-term savings like the down payment of a house, some go towards an emergency fund and the other goes towards short term goals like going on vacation or buying a new gadget.
Something I learned when I started resetting money management tips for beginners is that it is best practice to pay yourself before you pay others. This is why I first ensure my savings accounts are funded before I even pay bills or buy things I want.
The next step with that money is to pay bills. Some of my bills are automated as the vendors/providers allow automatic payments. Others like groceries, gas, and other variable expenses I put on a credit card. This usually saves me money because I tend to be more cautious about how much money I swipe.
Credit cards are great because you get to have rewards from making purchases you would have otherwise not gained any money on, however, it is important to be cautious because at the end of the day a credit card is money we don’t have.
And so part of those bill payments is to pay back the credit card in full at the end of the month so that I don’t have to pay for fees or interest.
I also have to ensure I make minimum payments on some personal loans and student loans.
Lastly, I have an investment account with Wealthfront, I have an automated deposit every month to have that money invested into stocks, mutual funds, and other investment accounts.
What is great about Wealthfront is that they do the investments for you, if you are a beginner, this is usually a good option.
[RELATED POST] 6 Tips to mastering your finances in your 20s
I get paid every two weeks, so I try to sit down for at least 30 minutes every time I get paid to go over all the expenses, transactions, and transfers to the respective accounts.
Now that you know how I have my money accounts set up, why I set my finances in that way, and how often I get paid, now let’s cover my payday routine.
Did you know that this whole post was inspired by me watching someone else’s payday routine while I was frantically searching for the best money management tips for adults?
I wanted to put all my thoughts, learnings, and tips on how to manage your own finances because there is power in knowledge especially when it comes to money management.
Since I get paid a direct deposit, that paycheck hits my account pretty early in the AM, it is such a nice feeling to wake up and see your account replenish.
I thank God every day for allowing me to have the means to pay for my bills, and debts, and fund my savings.
As soon as I wake up I check the account to ensure the amount is correct, since I am a salaried/exempt employee, my paychecks are pretty much the same every time unless I change my 401K elections in the prior month.
Once I confirm my payment is correct I immediately transfer a minimum of $500 to my savings account. I am eventually going to automate this step, but since I am still getting into a routine on how to do this more efficiently and still have visibility of what comes out, I will manage it manually for now.
Then, I go into my budget spreadsheet and check for the bills that are due and need to be funded with this paycheck. Once that money is set aside, I decide how much I will transfer over to my investment account, and then I also set an amount to make extra payments towards my debt.
Lastly, whatever money is left over I let it sit until I get paid again, in case something unexpected happens like a donation opportunity comes up, or I see something I really want to buy. If that money remains, then when I get paid again I will allocate that extra money towards my extra payments for a debt.
I also go ahead and insert all transactions, purchases, bills, and transfers I made into the budget spreadsheet. I am not really a strict budgeter, as long as I have all my savings goals, debt minimum payments, and bills covered I don’t nickel and dime my purchases.
There are some months that I try to cut back depending on the goal for the following month. But remember it is called personal finance for a reason, it is a personal choice and you should not be ashamed or embarrassed about what you do with your hard-earned money.
When I am tracking expenses I not only check for my bank statements, but I also check for PayPal purchases, and credit usage, so that I can have an accurate representation of what I spent on that month and how I can adjust accordingly for the following month.
Since I briefly mentioned financial goals and how important that is to the decisions I make when it comes to my payday routine, I wanted to give you a quick Snapchat of what plans are and how I strategize to achieve those goals.
- Completing the emergency fund that will cover at least 6 months of my essential expenses (I am 4K away from hitting this goal) *my plan is to finish funding it by July 2022
- My number one priority is to invest at least $300 a month into a brokerage account. (currently on track with this goal as of April 2022)
- My next plan is to pay off all my debt which is composed of student loans and two personal loans (currently paying minimums on all accounts, and putting any extra money towards the lowest balance loan, all of the debt have similar interest rates)
- Save to buy a bigger car since our family is growing (hoping to have this happen by Summer 2023) *I currently own my car outright and it makes me anxious thinking of having a monthly payment again
- Downpayment for a bigger home, my husband and I plan to keep our current as an investment property (hoping to hit this goal by end of 2025
Great, so now you might be wondering how to keep track of all your finances, goals, and financial future. Or maybe you have not wondered that at all, but I am still going to tell you because I think it is important to access these ideas and resources.
- Wealthfront for investment
- JP Morgan for banking
- Capital One and Ally for savings
- Federal Loans for student debt
- SoFi for personal loans
- PayPal for online purchases
- Credit cards for variable expenses
I am so excited you made it this far in this blog post; it looks like you are committed to learning how to manage your money.
Well, I certainly hope this post and my personal story help you have more perspective on personal money management.
Remember we all start somewhere and you are the real MVP for taking this important step in your financial journey.
If you have any questions please do not hesitate to write a comment below, I will answer and read all of them. I would love to hear from you.
What other topics on personal finance and money management would you like me to cover next?
This blog post covered:
- How to manage your money in 2022
- How I learn to manage my money by creating a payday routine
- And the best money management tips for beginners
DISCLAIMER: I AM NOT A FINANCIAL ADVISOR. INFORMATION FOUND ON THIS SITE IS AN OPINION BASED ON MY PERSONAL EXPERIENCE AND SHOULD ONLY SERVE AS EDUCATION, AND NOT PRESCRIPTIVE ADVICE. PLEASE CONSULT A FINANCIAL ADVISOR.