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Money Management

A tiny snowflake is barely noticeable. Yet, when enough snowflakes fall at once, they can create a devastating blizzard. Money is the same way. We spend a small amount here, make a few minor purchases there, and suddenly we are under an avalanche of debt we never expected. Managing money to avoid or overcome debt is all about making the most of what you’ve got.

Get the Picture

New to managing money? Here are a few easy steps to get you started.

  1. Know how much you makeLook at your take-home pay and see what you are working with. If you get the same paycheck each period, this is easy. If you have inconsistent hours, earn tips, are self-employed, etc., estimate your income based on past earnings adjusted for any future changes you know about.
  1. Make a list of all your expenditures. Use old check registers, credit card and loan statements, receipts for major purchases, etc., to make your list. To get a handle on cash spending—including smaller day-to-day purchases—spend a month writing down expenditures in a notebook or using one of many free smartphone applications listed at the end of this article.
  1. Categorize your expendituresCategories should include housing, transportation, food, and utilities. Understand which spending categories are essential (i.e., rent/mortgage) and which are discretionary (i.e., eating out), so you know where you can economize.
  1. Project how much you need to spend per month. Assess what you’ve been spending while considering your current habits and choices. Some monthly expenses, such as mortgage or rent payments, are already determined or fixed. Other monthly expenses are variable, such as groceries or gas. For those, you can take a few typical months of past spending and divide by the number of months to get an average monthly amount. Still, other expenses are periodic, such as bills you pay on a quarterly, annual, or as-needed basis. Make sure those are in the mix so you are not surprised. Figure out the total over a one-year period and divide by 12 to get your monthly average.
  1. Add your average spending amounts from each category to see your total expenses per monthHow do your monthly expenses amount align with your income? If your income is higher than your expenses—congratulations! You can focus on debt repayment and savings/investment. If your expenses are higher than your income, you need to begin cutting and controlling your expenses.

Make a Plan — and Stick with It

Now that you understand your monthly income and expenses, you’re ready to create a spending plan (or, budget). There are plenty of free budget sheets online, such as Consumer Credit, to help you stay organized ( It’s beneficial to follow a few key rules during this process:

  1. Set a reasonable monthly amount to spend for each category. Of course, there are some expenses that do not occur on a monthly basis. In these cases, either:
    1. Do a month-by-month budget and slot in each periodic expense when it will occur.
    2. Use a monthly average and set aside that amount each month so when the bill comes due, you have the funds to pay it.
  2. Create a budget that allows flexibility. Make sure you can borrow from different categories if you need to. One option is to open up different online accounts through an online bank and practice online bill paying. If using cash, a similar method would be to have different envelopes with categories (rent, recreation, food, etc.) written on them. There are several tools online to help, such as
  3. Be sure to create a budget for savingsYour first priority is creating an emergency fund of at least three to six months of living expenses (six to nine months for those with variable income). Keep this in an interest-bearing but immediately accessible account. Other priorities include saving for your retirement and children’s education.
  4. Keep all your bills in a binderEach bill for that month is inserted into a clear plastic sheet. At the front of the binder is a list of each bill owed, the minimum amount to pay, and when it is due. You can check off each bill you pay and write the date and the amount paid. If you pay by phone or online, write down the confirmation or transaction number. This system can help you keep your finances all in one place and also serves another important purpose; if another person in the family ever needed to take over the finances, he or she should know the name and amount of each debt, the minimum payment due, the due date, the account number, and how to contact the company.
  5. Use cash instead of credit cards. Set aside how much you have for groceries, clothing, gas, etc. If you must use a credit card, Credit Karma is a great app to manage your score. This app can be used to provide an up to date credit score and highlight ways keep or improve your credit standing, helping to keep you on track of your budgeting and financial status.

Ways to Cut and Control Spending

After you understand your current spending habits, you can rethink priorities and cut back as needed. Listed are some practical lifestyle changes that could help you cut back on spending.

  • Barter for services or items you need. For example, you can share childcare duty with friends or family in exchange for some other service. You can also share big box items like paper goods or tasks like making meals.
  • Reduce commuting costs by using public transportation such as carpooling, biking, or walking when possible.
  • Cut out tobacco products, liquor, prepackaged foods, and soft drinks. Packing your lunch from home every day is a simple way to save some extra cash and eat healthier than most fast food restaurants.
  • Decide if your technology use can be reduced. Is your cable or satellite TV necessary? Can you cut your home phone and just use your cell? Call about updated plans every year even if you stick with your provider.
  • Reduce utility costs by unplugging chargers and appliances such as coffee makers and computers when not in use.
  • Try to do your grocery shopping on a full stomach. You’ll be less likely to buy unnecessary foods if you aren’t hungry when you see them. Before going to the store, price compare using the Favado app. This app compares all the grocery stores in your area, letting you know which stores are offering the best savings and deals.
  • The Internet allows you to comparison shop to ensure that you are getting the best deal on a new purchase. Check Consumer Reports ( for advice on when and where and what to purchase.

Not All Debt Is Created Equal

There is good debt and bad debt. Good debt is debt that you take on with a purpose in mind, such as a mortgage (a house is a lifelong investment that will continue to pay dividends and possibly increase in value). If you choose to take on debt, it should be for something that will appreciate in value or provide you with increased income.

Digging Out

If you have fallen into debt, there are fixes available, but many are expensive — and not all of them are legitimate. There are lawyer-assisted debt services, debt settlement companies, “credit repair,” credit counseling, etc. Some of these services run about $35 a month, while others charge a fixed, one-time fee of $3,500 or more. If you do use any of these services, be sure to check their reliability through the Better Business Bureau ( or your local Chamber of Commerce. Make sure that you understand all the conditions of the plan you are agreeing to. With some companies you may sign to promise not to take actions such as opening another credit card while in their program.

You can fix your debt yourself by slowing or stopping your credit card spending and begin paying it off. Experts recommend paying down your highest interest rate cards first. As you are working on eliminating your debt, it may help to switch to cash to better control your purchases.

Avoid Making Your Situation Worse

It is important to know that some organizations and institutional practices can worsen a weak financial situation.

  • Check-cashing institutions charge fees far outside the acceptable range for traditional financial institutions. Pawnshops and rent-to-own stores also may charge excessive fees or interest.
  • With modern credit reporting, missed or late payments can have serious consequences. Companies can increase your interest rates for no other reason than a late or missed payment to an unrelated company.
  • If you fail to pay a utility bill, providers may require a deposit in the future, and insurance rates may be higher for more economically depressed areas. Do not use any extra credit cards you may have and do not close your account, as it will affect your credit rating.

Coming in from the Cold

Just as the effects of a winter blizzard eventually disappear, your financial picture will improve by making small adjustments and sticking to your goals. The hardest thing with managing finances is taking that first step: figuring out where you are and how to get where you want to be.

Amy Ekblad of Michigan understands the emotional and financial strain of raising a child alone, but she reminds us that this situation is only temporary: “As a once single, teenage mother, [I can tell you] that though it seems like you will never get out of where you are, you will. Life will not always look like this. I look at my 17-year-old son now and am so glad he is here with me. We had a few rough years, but we survived.”

When you start to feel control over your spending and know what money you have and where it is going, you can start to see that your financial goals are possible. Your bills and debt struggles will not last forever, but you will always have the time you shared with your child to look back on.

Updated by Caroline Zody. Original article by Celina Tinsley in the 2009/10 issue of
The American Feminist, “Raising Kids on a Shoestring” published by Feminists for Life of America.


Free Budgeting Apps for Smartphones

  • Mint QuickView
  • HomeBudget Lite
  • Debit & Credit – Personal Finance
  • Money Control – Income and Expense Tracker
  • Inspire Finance Lite (Home Budget)
  • Money Pro Free – Bills, Budgets, and Accounts w/ Sync


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  • The New Century Family Money Book by Jonathan D. Pond
  • Raising Kids With Just a Little Cash by Lisa Reid
  • Personal Finance for Dummies by Eric Tyson