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As many as 77% of US households with low to moderate-income fall below the asset poverty threshold. These households don’t have enough assets to last three months of not having an income.

That’s a sobering fact, but it’s one that you can avoid by following smart money management tips.

To that end, we created this list of the top money management tips for millennials and other folks of all ages. Whether you’re about to retire or are still decades away from it, these strategies can help.

Track Your Daily Expenses

Suppose you’re like most Americans who drink an average of three cups of coffee each day. Let’s also say you buy two in three of those cups from a cafe, and each cost $2.50 a pop. So, each day, you spend $5 on take-away coffee alone, which sums up to $1,800 a year.

Surprised, aren’t you?

That’s why one of the most crucial money management tips for adults is to create a daily expense list. You can do this with an expense app; you just need to enter whatever you spend money on, and it’ll give you a running tally.

At the end of each day, go through your expenditures and check which ones aren’t necessary. You can then cut back on those costs and use the money to build up your savings instead.

Know Where Exactly Your Money Goes Every Month

To create a realistic budget, you first need to know your fixed and variable expenses. Fixed expenses don’t change, such as your mortgage, rent, or car loan. Variable expenses are those that always change, including utility bills and grocery costs.

It’s always best to start with fixed costs, as you usually can’t modify these expenditures. Actually, you can, but that may mean refinancing a mortgage or moving to a cheaper apartment.

Variable expenses are adjustable, so they’re the easiest to control and cut costs on. In this case, one of the top smart money management tips is to cut ties with, say, your cable service. It’s a good idea to trim your shopping expenses, too, and instead, save all that cash.

Acknowledge Your Net Income

Gross income can be deceiving as it doesn’t include any deduction yet.

As such, it’s better to know what your net income is, which is your gross income minus taxes and other deductions. It’s the income that you actually receive, take home, and get to spend. You can use an income tax calculator if you’re not sure how much your taxes are.

By knowing your net income, you can get a better idea of your finances’ actual state. After all, it’s this income that you deduct your fixed and variable expenses from.

The difference between your net income and expenses is your left-over disposable income. This is the money you can spend on other stuff or put toward an emergency fund or retirement savings.

Set Your Savings Goals and Automate Them

Once you know your left-over disposable income and which costs you can cut, it’s time to set goals. For example, you may want to start by stowing away $300 a month each for an emergency fund and a retirement fund.

To increase your odds of really meeting those goals, consider automating their transfers. This way, you won’t feel tempted to use the money for other purposes, such as late-night shopping.

You can usually do such transfers with most mobile banking apps. You only have to specify the transaction date, amount to transfer, and where to wire the money.

Start Following These Smart Money Management Tips Today

If there’s anything that 2020 taught us, it’s how to spend less and save more. In fact, almost half of surveyed Americans said they are now “more of a saver.” So, if you haven’t yet, take a page out of their books by keeping these smart money management tips in mind.

Ready for even more tips and tricks to help you become financially savvy? Be sure to check out our other guides on managing and saving money then!

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