There are many money management guides out there.
But here’s what makes this one different…
In my 7-year Wealth Management career, I’ve worked with:
- Self-made millionaires
- Decamillionaires (worth $10M+)
- Ultra-high net worth millionaires (worth $30M+)
And even centimillionaires (worth $100M+).
Now, I’m going to reveal the money management tips these individuals used to become wealthy.
Let’s dive right in.
In this article
Why is Money Management Important?
When you talk about your financial situation, how do you feel?
- Upset
- Scared
- Anxious
- Nervous
Or, you may simply not even want to talk about your financial situation – following the motto “ignorance is bliss.”
If you feel heart palpitations even thinking about your financial situation – then you are not alone.
Managing your money can be a tough job.
And it’s probably not fun to think about – especially if you fall into that 78% category of people who are living paycheck to paycheck.
Imagine if one of the following situations happens to you:
- A flat tire
- A vet expense
- A hospital emergency
Could you afford these unforeseen expenses without flinching?
There really is no wonder that much of our daily stress comes from money – especially after reading these statistics.
It’s time to take back control over your financial life – whether you earn $30,000 or $300,000.
The simple rule in life is this:
You can’t become wealthy without a plan.
When you create a plan, dealing with financial matters won’t be stressful.
So take the time, to read through this, and apply the strategies I suggest here to improve your life.
15 Money Management Tips of Multi-Millionaires
The hardest part of managing your money isn’t starting – it’s staying the course.
It requires:
- Time
- Patience
- Discipline
- Consistency
And while you won’t become a millionaire overnight…
You will see success if you stay committed.
With that said, let’s kick things off with tip #1.
1. Gaining Financial Clarity
Want to manage your money like a millionaire?
The first step is to figure out how much money you have.
This is the scariest part of the entire process.
This is where you figure out your net worth.
What does net worth mean?
Net worth is the value of the assets you own minus the liabilities.
Here are the 3 types of net worth:
- Negative Net Worth – You owe more than you own
- $0 Net Worth – You don’t owe anything, but you don’t own anything either
- Positive Net Worth – You own more than you owe
To figure out your net worth, get my free net worth calculator below 👇
FREE RESOURCE
Net Worth Template
This net worth template will help you figure out how much you own/owe.
This net worth calculator is free and it’s super easy to use.
Pro Tip: If you’re calculating your net worth for the first time, it’s so important to be honest with yourself.
Your net worth statement will be the foundation for financial freedom.
The most important thing here is to write down your current financial situation.
Don’t let it sit in your head (where numbers can become skewed).
2. Creating a Path to Wealth
To manage your money like a millionaire, you must track your money.
If you don’t track your money, you could:
- Fall victim to old habits
- Fail to follow healthy habits
- Lose sight of your financial vision
If you’re the type of person who has no idea where your money is coming from or going, then you 100% need to track your money.
And tracking your money is very easy.
You can start by using award-winning tools like YNAB (aka You Need A Budget) 👇
New YNABers save more than $600 in their first 2 months – and they save more than $6,000 after their first year.
Here are a few more tips:
- Take note of your basic living expenses
- Take note of any unnecessary expenses
- Make a true effort to stop spending on unnecessary costs
If you’re new to tracking money, consider tracking every cent of your expenses for the last 2 to 3 months.
Get an idea of how much you are spending over time.
Doing this will give you a good understanding of your spending habits and financial patterns.
3. Protecting Your Wealth
Having an Emergency fund is essential to build wealth.
An emergency fund can make or break your financial future.
Your emergency fund should have the following:
- 24/7 access
- 3 to 6 months’ worth of living expenses
Note: If you feel like saving 3 to 6 months’ worth of living expenses is too much, try to save $1,000 first.
And – just like the name says – an emergency fund should be used ONLY for emergencies.
Some examples include:
- A flat tire
- A leaky roof
- A health emergency
Pro Tip: Make your money work for you by storing your emergency fund in a high-yield savings account.
Let’s say you’re stashing about $10,000 in your high-yield emergency savings fund.
Check out how much money you can earn – without moving a finger – with a high-yield savings account 👇
| High-Yield Savings Account | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Initial Investment |
$10,000 |
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Investment Time Frame |
30 Years |
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Interest Rate |
5% |
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Ending Portfolio Value |
$44,677.44 |
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Profit |
$34,677.44 |
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Given the current interest rate environment (June 2024), a good high yield rate would be around 5%.
Where can you find the highest yielding savings accounts?
By using a savings platform like Raisin 👇
And Raisin is free… there’s my favorite word again!
The bottom line:
An emergency savings account is critical to your financial health and it should be one of the first things you should aim to build before focusing your financial efforts elsewhere.
4. Doubling Your Paycheck
You can boost your income in several ways.
But the best way to increase your income is by starting a side hustle.
The potential money you can make from a side hustle is unlimited.
In fact, 54% of Americans now have a side hustle.
Why the popularity?
Because your work could let you go at any moment and you’d be left without an income stream.
That’s why it’s so essential to find and build a side hustle that could add an extra income stream.
So how do you start a side hustle?
Here’s the process:
- Invest in the Income Multiplier (50% off – limited time only)
- Study lessons 3.2 to 3.5 on how to start a side hustle
- Launch your side hustle
- Start collecting your side hustle income
- Continue working and building your side hustle
If you’re selling a service like consulting, you could earn an extra $1k to $2k per month.
Is this easier said than done?
Yes. But if it was easy, everyone would do it.
To be above average, do what the average won’t do.
Other ways to increase your income include:
- Living frugally
- Finding gig work
- Finding a mentor
- Learning new skills
- Investing in alternatives
- Earning passive income
- Creating digital products
- Negotiating a higher salary
Start increasing your income today.
Your future self will thank you.
5. Building Lasting Wealth
If you want to become wealthy, you need to understand the importance – and power – of investing.
Thanks to compound interest, investing early and often is how you can grow your money over decades.
You can start investing with:
- $5 a day
- $10 a week
- $500 a month
It doesn’t matter how much you use to begin your investing journey.
What matters is that you start and continue investing.
Don’t stop investing (or withdraw your invested money, which would defeat the purpose).
And if you haven’t started investing yet, consider starting with low-cost index funds.
Even Warren Buffett (the 5th richest person in the world) recommends investing in index funds.
Here’s the process:
- Research your index funds
- Decide which index fund to invest in
- Decide where to buy your index fund
- Determine your index fund investment type
And if you don’t have an investment account yet, consider using Robinhood.
It’s free to open an account with Robinhood and new members get 1 free stock.
In the end, what matters is simply starting the investing journey.
Although investing $5 per day may not sound like much, in 4 decades from now, you’ll be thankful; you started when you did.
6. Revamping Your Finances
There is no way you can manage money like a millionaire without tracking your progress and reviewing where you currently are.
One of the key traits to success is creating and more importantly reviewing your long-term goals consistently.
When was the last time you checked in, on your progress?
If the answer is more than 24 hours ago, it’s time to review your current financial situation – especially how much you have been spending.
Of course, a budget is going to be the easiest way to help you monitor your spending habits
If you haven’t created a budget yet, then I’d suggest checking out the customized budgeting app YNAB.
As you review your daily spending habits, it’s important to keep in mind the following:
- Your needs (basic living expenses)
- Your wants (eating out, clothing shopping, etc.)
- Your wishes (things or experiences you’d like to buy, like vacations)
Anything that is not considered a “need” or a basic living expense (such as health care insurance costs, rent/mortgage, groceries, utilities, etc.), I would cut out of my budget.
There is a lot of money to be saved on monthly, recurring expenses as well:
- TV bills
- Wifi bills
- Cellphone bills
- Satellite radio bills
There are services available to you, such as Rocket Money, that reach out on your behalf to these servicing companies and negotiate lower prices for you.
7. Unlocking Higher Earnings
It’s always a good idea to review your income – especially if you are a freelancer or own your own business.
I feel like I have a running tally in my mind of how much money earn each day or week, but sometimes that number can be vastly skewed.
You can review your income either through a budgeting app like YNAB.
Or you can track your own income – for free – using a free spreadsheet like the one below:
FREE RESOURCE
Budget Spreadsheet
This budget spreadsheet will help you track where your money is coming from, and where it is going.
Yes, reviewing your income and expenses daily may be tiresome.
However, monitoring your finances doesn’t have to take hours on end.
In fact, if you have your budget under control, it could take you a few minutes to determine whether your finances are on track.
8. Living With Intention
Understanding your “why” is underrated when it comes to money management.
When you know your “why” it will be 1,000 times easier to keep going instead of giving up.
Here are my why’s:
- My family
- Building a life I love
- Leaving a lasting legacy
- Creating lasting memories
If you’re just saving to save and just investing to invest – without a real purpose – then giving up will be much easier… and possibly permanent.
9. Escaping the Debt Trap
So many people suffer from debt today.
Debt can take away your dreams of:
- Retirement
- Living stress-free
- Saving for the future
- Leaving a legacy for your family
In fact, debt can force people to change their life goals.
For example, debt may be a factor why people can’t:
- Start families
- Afford homes
- Take vacations
And it gets worse:
The average credit card debt per borrower in America is $6360. This is an all-time high.
So to help you build a better tomorrow, it’s essential to pay off high-interest debt.
Remember this, if you can’t pay off your credit card in full every month, you can’t afford your lifestyle.
10. Boosting Your Buying Power
Reviewing your credit score is critical to understanding your current situation versus where you want to be in the future.
Your credit score is a 3-digit number that could make or break your financial future.
Especially as it relates to interest rates or whether you are approved for loans.
Here’s a rule of thumb:
The higher your credit score, the lower your interest rate.
And if your interest rate is lower, that means you save more money.
The great thing is that your credit score is not permanent.
You can always boost your credit score if you follow strategies, such as paying your bills on time, becoming an authorized user, and more.
Pro Tip: If you have a credit card and a child, add your child to your credit card as an authorized user.
When they turn 18 they will have a higher credit score, and a long credit history (as long as you pay the balance on time and in full).
11. Staying Ahead of Expenses
One of my go-to strategies for managing money is to prepare a sinking fund for anticipated, major future expenses.
A sinking fund is where you set aside money in a separate savings account to pay for anticipated future expenses.
For example, if you know you’ll have to pay for:
- A new car
- A new roof
- College costs
- Life insurance bills
Then it might be a good idea to set aside a small portion of your paycheck in a separate, high-yield savings account (to maximize your money) to pay for these future, anticipated expenses.
The worst thing that can happen is this:
You know you have to pay for future expenses, you fail to save for them, and then you’re left scrambling to find the cash to pay for these expenses. Ouch.
To avoid the scenario, I’d suggest doing this:
- Open your sinking fund using a high-yield savings account
- Set aside a portion of your paycheck toward a sinking fund
- Regularly move money into your sinking fund
If you don’t have a high-yield savings account yet, consider using Raisin to find the highest interest savings accounts available.
Raisin offers competitive high-interest rates, which could help you earn a little bit of extra money on your stashed sinking fund cash.
12. Securing Your Future
If you want to retire early, it’s important to start saving and investing, beginning today.
Why is it important?
Because of the power of compound interest.
Compound interest is when your money earns you more money.
In other words, your original contribution (the principal) earns interest and the interest earns interest.
You may not see a major impact on your investments in year 1.
But you will start seeing your total investment balance increase over the decades.
The key is to:
- Invest consistently
- Don’t withdraw money
- Don’t allow emotions to control your investments
Keep in mind that there are many different types of investment accounts out there.
Some of those accounts include:
- 401(k)s
- Roth IRAs
- Joint accounts
- Traditional IRAs
- Individual accounts
If you want to take out money a few decades from now, then a Roth IRA could be the right option for you.
If you’re under 50, the Roth IRA limit is $7,000 in 2024. That’s only $135/week.
And if you invest that money into an S&P 500 index fund like $VOO, in 30 years, you’ll have invested $210,000.
However, that account should grow to $1 million of passive, tax-free income (assuming 9% growth).
That’s the power of tax-free growth and compound interest.
If you haven’t yet, consider opening a Roth IRA with Robinhood.
With Robinhood, you can earn 3% extra on every annual contribution to your IRA when you subscribe to Robinhood Gold.
13. Protecting Your Loved Ones
Life insurance is an essential tool to protect your family.
If you haven’t taken the time to review your life insurance situation…
And you currently:
- Have or plan to have a family
- Have a spouse who earns less than you
- Have someone who depends on your income
Then it certainly is time to consider purchasing life insurance.
My favorite life insurance – especially for young professionals – is term life insurance.
Term life insurance is the cheapest and simplest form of life insurance.
Term life insurance can cover you for a specific term, typically between 10 to 30 years, after which your term expires and your insurance coverage evaporates.
However, if you’re a young professional and are considering forming a family in the future then I highly recommend that you choose term life insurance.
You could obtain term life coverage of $1,000,000, for example, which may only cost you around $60 per month depending on your health status and several other factors.
My go-to term life insurance marketplace is Everyday Life.
Everyday Life is a marketplace – which means that they don’t just represent 1 life insurance company.
Instead, when you request a quote from Everyday Life, you can receive quotes from several different – and high-quality – life insurance companies.
14. Committing to Lifelong Learning
Knowledge is power – in any aspect of life.
So, the more you understand how to:
- Save money
- Invest money
- Build a network
…The better your future chances of success will be.
The more I learn about personal finance – and trust me, the learning process never stops – the better I can evaluate my current financial situation and make adjustments as needed.
With this statistic in mind, I would suggest that to manage money like the pros, you also have to keep educating yourself like the pros.
This means:
- Read books
- Listen to podcasts
- Learn from mentors
- Take online courses
If you want to discover exactly how to create multiple income streams that help you escape your 9 to 5, consider enrolling in Income Multiplier and following the step-by-step guides inside the course.
Learn as much as you can, every single day, to help you master your personal financial situation.
The more you learn from others – both from their successes and their failures – the more time, energy and money you can potentially save.
15. Initiating Change
To manage money like a pro, you don’t need to be overwhelmed.
In fact, when you do the heavy lifting:
- Reviewing your budget
- Reviewing your net worth
- Automating your investments
- Setting up an emergency savings fund
The rest is actually pretty easy.
It’s just so important to monitor your finances regularly – and never lose sight of your financial goals, be it to pay off debt or to build a nest egg to retire early, etc.
Once you master the art of managing your money like a millionaire, you’ll be able to:
- Pay off debt
- Save for retirement
- Leave a lasting family legacy
- Free up time to do the things you want to do
But none of that will happen if you don’t start – and don’t consistently monitor your efforts.
Make sure to begin and implement your plan today.
Money Management FAQs
How do you do the 50-20-30 budget rule?
The 50-20-30 money rule is a money management tool to help you allocate your after-tax income in the following 3 categories: Needs, wants and savings.
- 50% should be spent on necessary expenses
- 20% should be allocated toward savings
- 30% should be spent on any “wants”
The 50-20-30 budget rule is simply a rule of thumb – and I would argue that the 20% of savings should include retirement investments – not just a savings account.
How do you balance your money?
There are several steps you can take to balance your money – and take back control of your financial future:
- Budget
- Pay off your debt
- Analyze your income
- Analyze your expenses
- Cut out unnecessary expenses
- Save 20% to 30% for retirement
- Build an emergency savings fund
The hardest part is doing these things every day, every week, every year.
Without consistently monitoring your financial situation, chances are, you’ll likely fall short of your future financial goals.
What are the 3 basic steps to better money management?
You can take 3 basic steps to improve your money management:
- Budget
- Start saving
- Pay off your debt
If you readily commit to these 3 money management goals, you will be taking back control of your money in no time.
How can I improve my money management skills?
There are several steps you can begin to take to improve your money management skills.
Below is a list of 5 steps that you can take today:
- Pay yourself
- Pay off your debt
- Build an emergency savings fund
- Cut out spending on unnecessary items
- Increase your income by building a side hustle
- Organize your financial picture by using a budget
The most important step is simply to start.
Closing Thoughts
With a simple plan of action, you have the power to turn around your financial situation for the better.
Your financial picture is only as difficult and stressful as you make it.
If you decide to look the other way, and neglect your finances, you may be in for a rude awakening.
Instead, take some time – 30 minutes every week for example – to sit down and review your financial status.
Those 30 minutes you spend reviewing your:
- Budget
- Income
- Savings
- Spending
- Investing
…Could save you $1,000s and a lot of time.
Now that you read through this post, gathered some actionable ideas on how to manage money, it’s actually time to start.
"Starting can be the most difficult but most important part of the process."
If you want to follow in the footsteps of the wealthy then your first steps should include implementing these suggestions above.
Anyone can manage their money with success. It’s going to take time, effort, and consistently showing up.
Your bank accounts will thank me later.
