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How to manage money

How to Manage Money


One thing is for sure.  If we don’t manage our money, it will escape us and we’ll be left scratching our heads, looking about and wondering where it went!

This is because it’s soooooo easy to spend.   Everyone is selling something wonderful, and we are socialized to want loads of stuff, so naturally our money gets handed over to acquire as much of that wonderful stuff as we can.

Very few of us learn formally how to manage money.   It’s just something we muddle through and work out for ourselves.  Some of us are fortunate to get tips from friends, or parents, and a few even read books on the topic!

What does managing our money actually mean anyway?

Managing anything means understanding what outcomes are required, and ensuring a set of processes to achieve those outcomes.

So when we consider how to manage money, we need to be clear on what  outcome we want.   The number one priority outcome is to always have enough money for our basic costs.

How to Manage Money to always have enough for our basic costs.


Our basic costs are those that are always there.  These are commonly known as our FIXED expenses.   It’s really disturbing to constantly feel that we don’t have enough for the rent, or the utility bills, or even for our groceries.  The usual reason for this, is that we have overspent on the bright shiny things, and haven’t left ourselves  enough for the basics. A detailed description of how to make sure we never run out of enough for the basics can be found here.

How to Manage Money to always have enough for some fun.


The number two priority outcome is to always have enough money for some fun.  When we are really clear on what it is that we love to have, or do, or experience, then we can work out how much that is going to cost us per time period.  It’s convenient for the time period to be our pay period.  If we don’t have a regular pay period, then we just need to choose something meaningful to us.  It might be a week, or a fortnight, or a month.

So far we have two purposes (outcomes) for our money – basic costs, and fun.  The key thing here is to work out how much is needed for each type, and keep those amounts separate!   Instead of all our money swimming around in one pool, we need to keep the calculated amounts in separate pools!    And we need to be careful to spend from the correct pool each time.

The number three priority outcome is to create enough money for our future.

How to Manage Money to always have enough for our future.


Now for this to work, we have to have an idea of what we’ll need in the future.  This can be all kinds of things, but we’re keeping things simple here, so let’s just think about having a pool of money that is for things other than the basics, and other than fun.  This could be a a vehicle, or a holiday, or toys of some kind, or fancy clothes, or hobbies, or a new fridge when the old one dies.

So this is our third pool of money.

Putting this all together.


This simple 3 outcome method for how to manage money means that every time we are paid, we divide that amount into the 3 pools.   Then, we are very conscious about our spending, and make sure we are spending from the correct pool each time.

This is simple in concept, and fairly simple to set up.   And it’s a sure way to stop that head scratching and wondering where all our money went, and why we haven’t got enough to pay the rent.

There – how to manage money was easy really wasn’t it.

If you need any help with setting this up, be sure to contact me for some assistance.

To Your Money Success,

Glenda Nicholls

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