5 Money Management Tips from the World’s Financial Experts

The rising cost of living and the rising fuel and food prices in the United States are among the main concerns for many, especially families on a budget. In 2023, food prices will increase 6% and food-at-home prices at 5.9%, USDA predicts. With the current economy, managing your money effectively is even more crucial.

As a mom, you can’t help but worry about finances, but it's best to focus on what you can control – such as creating a realistic financial plan. While tracking your expenses might seem daunting, smart saving and budgeting will help you reach your financial goals. Money management habits will help you get out of debt faster and build your financial future.

Don't know how to get started? Here’s how to budget, earn extra income, manage debts wisely, and other financial tips from the world's financial experts below.

Money Management Tips From Experts

Chris Hogan 

Chris Hogan, a best-selling author, and a personal finance expert, advises individuals to pay off their debt and build an emergency fund. For instance, if you’re taking personal loan, prioritize debt repayment using the debt snowball approach, focusing on paying off the smallest debt first while making minimum payments on others. Consider options like debt consolidation or balance transfers if suitable, but carefully review terms and seek professional advice if needed. 

• Establish a family emergency fund that can cover 6 months (or up to 2 years, considering the pandemic) of expenses for unexpected financial needs.
• Borrow responsibly and utilize the snowball method to repay debt effectively.
• Invest in retirement and education savings for the future.

Suze Orman

To help you take control of your finances, you need to create a household budget and stick to it, according to Suze Orman, an American financial advisor, author, and podcast host. She founded the Suze Orman Financial Group in 1987.

She also advised individuals and families to avoid debt by paying with debit instead of credit whenever possible. In one of her blog posts, she shared, “There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card.” Do not treat your credit card as “free money.”

Additionally, Orman advises creating an emergency fund to handle unexpected expenses.

• Establish and stick to a budget to gain control over your finances. Budgeting serves as a foundation for financial stability.
• Use debit cards over credit cards whenever possible to avoid accumulating high-interest debt and the associated risks of overspending and high-interest rates.
• A financial safety net reduces reliance on credit and provides a buffer for unforeseen circumstances.

Elizabeth Warren

Senator Elizabeth Warren created the 50/20/30 Budgeting Strategy. She advises dividing your after-tax-income into these basic categories:

• 50% of their income must go toward your needs
• 20% must be allocated toward your savings account
• 30% can go towards your wants

As a working mom, this proposed budget plan allows you to allocate part of your income to building a family emergency fund or paying down high-interest debt. This plan will also help you allocate a budget for an education, retirement, and investment account.

Note: If you don't understand an investment strategy, such as stocks or bonds, don’t put your money into it (yet). Additionally, promises of high investment returns typically mean a higher risk of losing money. That said, talk to financial experts or financial planners to understand your options.

While this budgeting strategy looks like a straightforward money management plan, it requires discipline. This is especially true when you can't fit certain expenses into a fixed category.

Vicki Robin

Author of Your Money or Your Life, Vicki Robin, advises individuals to keep track of every cent that comes into or out of their life. That said, you need to be more conscious of not only your expenditures but also your income.

For instance, you can create a record-keeping system to accurately record your family’s daily and monthly expenses. Along with this, Robin also advises aligning your spending habits with your personal values and goals. 

Consider asking yourself the following questions after your monthly budget:

• Do you feel satisfied or fulfilled after having spent that much?
• Are your expenses in line with your life values and purpose?
• How will your expenses change if there is a disruption in your source of income?

Ultimately, you need to make an effort to reduce your expenses. For instance, you can take advantage of your health insurance plan – if you're already paying for one. Instead of paying for your child’s check-up or medicines out-of-pocket, see if your health insurance plan can cover the cost.

You can also boost your income, which means working more hours in the short term. However, this can lead to achieving financial security and independence while living a simpler, more fulfilling lifestyle.

Farnoosh Torabi

Prioritize savings instead of treating them like an afterthought. This is the number one money management tip by Farnoosh Torabi, one of America's leading personal finance experts. It's best to pay yourself first – whether it's 5% or 10% of your income.

That said, avoid using the formula:

Salary – Expenses = Savings

Instead, you need to consider this: Salary – Savings = Expenses.

Setting aside your money will allow your savings to grow faster, which is especially crucial with the current inflation rate. Starting your savings early means giving your money time to grow.

Additionally, Torabi advises, “Know your ‘why' for spending and saving. Align it with your values.” Knowing what you want to achieve and what you're saving up for will help you set a clear financial goal. Once you know what you want to achieve, you can set a fixed amount to create a more feasible budget.

Other tips from Torabi include:

• Negotiating and asking for a raise on your monthly take-home pay
• Avoiding impulse purchases
• Invest in stocks and real estate for long-term financial growth

Summary of the Tips:

Remember, the right plan, mindset, and discipline can manage expenditures and debt.

1. Create a comprehensive budget and stick to it.
2. Build an emergency fund and pay off debt.
3. Save for retirement and other long-term goals.
4. Reduce expenses and increase income.
5. Align spending with personal values and goals.

The secret to enjoying financial security and freedom for you and your family is to ensure that your annual expenses are less than your yearly income, according to Jeyaraman Parasuraman, a Veteran MoneySENSE speaker. To help you get started, use the money management tips from these experts to help you set a financial plan. 

Key Takeaways:

• Create a clear financial plan: Establish a comprehensive budget, build a family emergency fund, and save for retirement and long-term goals. Stay disciplined and committed to your financial plan.
• It’s okay to take a loan but manage debt wisely: Avoid accumulating excessive debt and prioritize paying it off. Use strategies like the debt snowball method to repay debts effectively.
• Increase income: Consider taking on a side hustle or investing your money to boost your income. This may require working more hours in the short term but can lead to long-term financial success and security.