Money management skills: The key to financial freedom (2024)

Managing money can be difficult, especially when you have bills to pay and a limited income. However, with the right money management skills, you can make the most of your money and achieve financial freedom.

Let’s look at the money management skills that can help you take control of your finances and create a better future.

What are money management skills?

Money management skills are the abilities and knowledge required to manage your finances effectively. It includes skills such as budgeting, saving, investing, and debt management. By developing these skills, you can create a sustainable financial plan that will enable you to meet your financial goals and live the life you want.

Having good money management skills is essential for a number of reasons:

  • It helps you live within your means: By learning how to budget and track your spending, you can avoid overspending and ensure you live within the income available to you.

  • Enables you to save money: Good money management skills can help you save money for emergencies, future expenses, and long-term financial goals.

  • Allows you to invest wisely: Investing can help you grow your wealth over time, but it requires knowledge and skill to make smart investment decisions.

  • Helps you manage debt: Debt can be a major obstacle to financial freedom, but with good money management skills, you can learn how to manage and pay off your debts.

  • Improves your financial wellbeing: With good money management skills, you can reduce financial stress and improve your overall financial wellbeing.

How do you improve your money management skills?

Here are some of the essential skills you need to help you improve your money management.


Creating a budget is the first step in managing your money effectively. It involves tracking your income and expenses and ensuring that you don't spend more than you earn. By creating a budget, you can identify areas where you can reduce your spending and increase your savings.


Saving money is an essential part of financial management. It involves setting aside money for emergencies, future expenses, and long-term financial goals. By saving regularly, you can build up a financial safety net and work towards achieving your financial goals.


Investing can help you grow your wealth over time, but it requires knowledge and skill to make smart investment decisions. By learning about different investment options and understanding risk and return, you can make informed decisions and achieve your financial goals.

Debt management

Managing debt is an essential part of money management. It involves understanding your debt obligations, creating a plan to pay off your debts, and avoiding new debt. By managing your debt effectively, you can reduce financial stress and achieve financial freedom.

Financial planning

Financial planning involves setting financial goals and creating a plan to achieve them. By identifying your financial goals and creating a roadmap to achieve them, you can work towards achieving financial freedom.

A financial literacy short course to help build your money management skills

At MAX we understand the importance of good money management and the impact having strong financial literacy can have on your life.

That's why our RTO (0667) has launched a new Financial Literacy Short Course (FNSFLT211) that can help you develop essential money management skills. The course covers topics such as personal budgeting, taxes, superannuation, and insurance, and aims to raise awareness of financial literacy and its benefits.

The course can be studied online or in a classroom setting.

Blended learning takes place over five x 5.5 hour sessions, totalling 27.5 hours, and includes real-life scenarios to help you apply your learning.

Upon completion of the course, you will have gained money management skills to help you into the future.

Recent course participant Yvonne shared about her experience in the Financial Literacy Short Course:

“I learned a lot about making a budget, and how helpful it can be, and how it can tie into different areas. I learned about resources I can use if I get into trouble or find out about personal loans,” says Yvonne.

Money management skills: The key to financial freedom (2024)


How do you manage money for financial freedom? ›

How to Achieve Financial Freedom
  1. Clearly Define Your Financial Goals. Start this process by clearly defining your financial goals. ...
  2. Track and Analyze Your Spending. ...
  3. Create a Budget. ...
  4. Pay Off Your Debt. ...
  5. Start Investing. ...
  6. Create Multiple Streams of Income. ...
  7. Save for the Future.
Jan 24, 2024

What are the key components of financial freedom? ›

That is the ultimate goal of a long-term financial plan.
  • Set Life Goals.
  • Make a Monthly Budget.
  • Pay off Credit Cards in Full.
  • Create Automatic Savings.
  • Start Investing Now.
  • Watch Your Credit Score.
  • Negotiate for Goods and Services.
  • Stay Educated on Financial Issues.

What is the 50/30/20 rule for managing money? ›

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

What are money management skills? ›

Personal money management skills include budgeting, wise use of credit, managing debt, banking, and planning for the future. Learning to manage money well can increase your financial power by making your money work harder for you.

What are the 7 steps to financial freedom? ›

You can too!
  • Save $1,000 for Your Starter Emergency Fund.
  • Pay Off All Debt (Except the House) Using the Debt Snowball.
  • Save 3–6 Months of Expenses in a Fully Funded Emergency Fund.
  • Invest 15% of Your Household Income in Retirement.
  • Save for Your Children's College Fund.
  • Pay Off Your Home Early.
  • Build Wealth and Give.

What are the 5 ways of financial freedom? ›

Handle your wealth modestly, without overspending or being too generous with your money. Review, monitor and adjunct your investment portfolio when required. Ensure your financial strategy remains up to date as your life and goals change over time. Tip: An ongoing relationship with a financial advisor can help.

What are the four pillars of financial freedom? ›

Are you financially healthy? Many financial experts agree that financial health includes four key components: Spend, Save, Borrow, and Plan. It is crucial that you actively work on improving the health of each one.

What are the 7 stages of wealth? ›

Sabatier's 7 levels of financial freedom
  • Level 1: Clarity. ...
  • Level 2: Self-sufficiency. ...
  • Level 3: Breathing room. ...
  • Level 4: Stability. ...
  • Level 5: Flexibility. ...
  • Level 6: Financial independence. ...
  • Level 7: Abundant wealth.
Aug 25, 2022

What are the 3 building blocks of financial freedom? ›

The main aspects in achieving financial security is budgeting, reducing expenses, eliminating debt, and increasing savings. These four aspects are the building blocks to financial freedom and will help you kick-start your financial success.

What is the 75 15 10 rule? ›

In his free webinar last week, Market Briefs CEO Jaspreet Singh alerted me to a variation: the popular 75-15-10 rule. Singh called it leading your money. This iteration calls for you to put 75% of after-tax income to daily expenses, 15% to investing and 10% to savings.

How to manage money wisely? ›

These seven practical money management tips are here to help you take control of your finances.
  1. Make a budget. ...
  2. Track your spending. ...
  3. Save for retirement. ...
  4. Save for emergencies. ...
  5. Plan to pay off debt. ...
  6. Establish good credit habits. ...
  7. Monitor your credit.

What are the four walls? ›

In a series of tweets, Ramsey suggested budgeting for food, utilities, shelter and transportation — in that specific order. “I call these budget categories the 'Four Walls. ' Focus on taking care of these FIRST, and in this specific order… especially if you're going through a tough financial season,” the tweet read.

What is your biggest financial goal? ›

Long-Term Financial Goals. The biggest long-term financial goal for most people is saving enough money to retire. The common rule of thumb is that you should save 10% to 15% of every paycheck in a tax-advantaged retirement account like a 401(k) or 403(b), if you have access to one, or a traditional IRA or Roth IRA.

How to increase money management skills? ›

7 Money Management Tips to Improve Your Finances
  1. Track your spending to improve your finances. ...
  2. Create a realistic monthly budget. ...
  3. Build up your savings—even if it takes time. ...
  4. Pay your bills on time every month. ...
  5. Cut back on recurring charges. ...
  6. Save up cash to afford big purchases. ...
  7. Start an investment strategy.
Jun 27, 2023

How to take control of finances? ›

5 Steps to Take Control of Your Finances
  1. Take Inventory—and Set Goals. ...
  2. Understand Compound Interest. ...
  3. Pay Off Debt and Create An Emergency Fund. ...
  4. Set Up Your 401(k) or Individual Retirement Account (IRA) ...
  5. Start Building Your Investment Profile.
Jan 9, 2024

What is the 4 rule for financial freedom? ›

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

How much money do you need for financial freedom? ›

Americans say they'd need to earn about $94,000 a year on average to feel financially independent. That's about $20,000 more than the median household income of $74,580.

How do most people achieve financial freedom? ›

Whatever financial freedom means to you, practicing habits like budgeting, paying down debts and monitoring your credit can help you get there. You can learn more about a specific type of financial freedom called the Financial Independence, Retire Early (FIRE) movement.

What is the right way to manage money? ›

How to manage your money better
  1. Make a budget. According to the Capital One Mind Over Money study, people dealing with financial stress struggle more with budgeting. ...
  2. Track your spending. ...
  3. Save for retirement. ...
  4. Save for emergencies. ...
  5. Plan to pay off debt. ...
  6. Establish good credit habits. ...
  7. Monitor your credit.


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