Effective ways to manage money and spend effectively

manage money

Many people have financial problems and always have a headache to not spend too extravagantly. To have more abundant finance, besides increasing income, you also need to manage spending and saving effectively. Most of the problems associated with overspending are rooted in personal habits. Let’s learn together great ways to manage money and spend effectively through the article below.

What is expense management? 

Spending management is knowing what to do with your money when you receive it. This is an extremely important step on the journey to independence and financial freedom. 

The sooner you know how to manage your money, the less pressure you will have with money. Moreover, understanding how to effectively manage to spend with yourself, makes money a launching pad for the life you want to build, instead of holding back.

Effective ways to manage money and spend

1. Pay yourself first

This is a very suitable way for those of you who are extremely shy about managing your money. In this method, it is simply that every time you receive an income, you will deduct an amount (minimum 10% recommended) into a savings fund. This is paying yourself first.

The remaining amount in your spending account is free to spend. Because you know you always have money in your pocket. To save more, you should use smart, like taking advantage of discount codes, coupons when shopping. It will help you save a considerable amount of money.

Paying yourself first can be considered the simplest method in managing money as well as spending yourself. Everyone should use it, even if you don’t care about money management.

Very simple, easy to use, takes less time (at the beginning of the month you transfer money to a savings account 1 time is done!).  The only downside is that you don’t invest anything in the future. That means you will only have enough money, nothing more and nothing less.

2. The rule 50/30/20

This is probably the most famous method of spending management for beginners. When you have income, you will divide it into 3 accounts with the following ratio:

  • 50% for essential expenses: compulsory living expenses such as rent, meals, transportation, electricity, and water,…
  • 30% for the desired spending: entertainment, meeting friends, travel, shopping…
  • 20% on savings (and debt repayment)

This is a good method. That’s why it’s popular. The clauses are quite easy to remember and immediately applicable. Similar to the Pay yourself first method, this method does not prioritize growing your money, just maintaining the status quo and protecting you. 

Even if there are times when you need to spend more than 50% on essential expenses, it will take a bit of effort to adjust. But overall, this is a good way to manage your money and spending.

3. Cover letter method

If you need a tough approach to money management, the cover letter method is for you. 

This is a method of using cash. Cash ONLY, and real paper envelopes. Proceed as follows:

  • You list the important expenses for each month and set a budget for them. (Example: food, housing, entertainment,…) Each of these expenses is a cover letter.
  • When receiving earnings, CASH CASH and divide the amount into each envelope.
  • When you spend on something, you use the money from that cover.
  • Once the cover has been exhausted, you are NOT ALLOWED to spend on it for that month. Until the next income is received.

This method sounds a bit rigid and intimidating. A lot of people gave up after a month of testing this way. But being forced to use cash and only being used for each envelope is a great way to train yourself to spend more properly. Especially for those who spend too much or are in debt.

This method helps you save money very quickly and pay off debt very quickly.\

4. 6 Jars methods

This is the method of T. Harv Eker in the book “Secrets of the Millionaire Mind”. In this method, you will divide your income into 6 amounts:

  • NEC ( Necessary Jars) 55% : for essential expenses
  • PLAY 10%: To satisfy your pleasure 
  • EDU (Educational Jar) 10%: To develop your knowledge, skills, and mindset
  • GIV (Giveaway Jar) 5%: For you to do charity, help people around
  • LTSS (Savings for future spending) 10%: Save money for big expenses such as traveling abroad, buying a house, buying a car, getting married, having children,…
  • FFA (Financial Freedom) 10%: To invest, do business, develop your money

The best part about this method is that you can set aside an amount to grow your income without affecting your current life. The system of 6 jars is also very clearly divided for the necessary expenses. 

The difficulty in applying this method is that you have to keep a close eye on it to see if you’re spending within your limit. And because there are so many, it can sometimes be a bit messy to arrange to spend. But this is still an extremely effective way to manage to spend.

5. Save

To manage money as well as spend most effectively, saving is the top way. Save your money in the best way. When buying goods, pay attention to promotions and discounts. Discount codes, coupons will help you save a lot of money when shopping. Regularly monitor brands and e-commerce sites to be able to catch up on occasions, discounts and can accumulate membership points to save more money.


Here are some helpful tips to help you manage your spending more effectively. Apply these tips quickly and save more money in the future!