How to improve your finances: 12 tips for better money management

By Carolyn Morris | Published on October 21, 2025

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Balancing paying off student loans against other financial goals and needs can be tricky. That’s why an annual checkup is important. This is your time to assess your financial health and make tweaks accordingly. Your money needs change as you change jobs, increase your assets, and embrace new opportunities. So, every time an event like this happens, it’s worth giving your finances a second look then, too.

But let’s say your financial situation does change. How do you improve your finances accordingly? Here are 12 ways to take back control, make smarter financial decisions, and manage your money in a way that aligns with your goals.

Calculate your burn rate

The first step to improving your finances is understanding where your money is going. Start by recording everything you spend money on for a full month—every coffee, every dollar you feed the parking meter, every night out with friends. Record the date, the amount, and the reason for each purchase in a spreadsheet. Things like rent, utilities, student loan repayments, car payments, and monthly insurance premiums should all be included. If you also throw a chunk of money at old credit card debt each month, include that chunk, as well.

Once you have a spreadsheet with all your monthly expenses, tally them all up. Then figure out what percentage of your monthly take-home pay you spent. This is your “burn rate.”

Set savings goals

First, sit down and write out all your financial goals. Why are you saving your money, anyway?

“It’s not enough to make a plan to save. You have to figure out what you are actually going to do with the money,” said Cady North, chief executive of North Financial Advisors LLC in Washington, D.C., in an Interview with Earnest. “Having concrete goals makes it much easier to stick to a plan.” Those concrete goals could include purchasing a home, starting a business, taking a vacation, paying for a wedding, or having your first child. Write down everything you would like to do, how much each goal will cost, and what date you’d like to have each goal accomplished by.

Now, work backwards to figure out your monthly savings goals. If you want to buy a house in five years, and you need to save $50,000 for a down payment, then you’ll need to save $833 per month to hit that goal by that date. If you want to go on a big vacation this time next year, and it’s going to cost $2,000, you’ll need to save $166 each month for 12 months to have enough for your trip.

Create an emergency fund

According to a 2024 survey, more than half of Americans say they wouldn’t be able to afford an unexpected $1000 expense. You don’t want to be one of those people. That’s why one of your first savings goals should be to set aside an emergency fund.

An emergency fund is money you sock away in case of a crisis or surprise expense. Many experts recommend having a minimum of $1000 in emergency savings. The ideal emergency fund, however, tends to be at least three to six months of living expenses. This can help insulate you against job loss. Try not to shell out for any other big expenses — like a car or a house — until you have a solid emergency fund in place.

Make a monthly budget

Having (and sticking to) a monthly budget is absolutely key to good financial health. There are a number of apps and online programs that will help you create a budget, but it’s just as effective to do it the old fashioned way: with pen and paper, or with a good spreadsheet.

Once you know your savings goals, compare your ideal monthly savings rate with your monthly burn rate. Are they compatible? Do you have enough money left over after expenses to save as much as you’d like to? If not, see if you can trim down your current expenses to get there. Quitting subscription services, eating out less, and saying no to new clothes and other impulse purchases are all effective ways to spend less.

Lump your monthly expenses into categories like groceries, debt payments, housing costs, transportation costs, and miscellaneous expenses. Decide what amount of money you’d ideally like to spend on each category every month. It can be tempting to slash each one by a huge amount and promise yourself you’ll hit all your savings goals early, but that’s not always sustainable. Make changes that feel reasonable and workable. If they feel overly Spartan or restrictive, you’re not likely to stick to your budget for very long.

Increase your savings rate by 1%

If you already have a monthly budget and a basic savings plan in place, see if you can increase your savings rate by even more. If you got a salary raise last year — but didn’t raise your savings — it’s time to kick it up a notch. Consider increasing your savings rate by just 1%. So, if you’re already saving 10% of your income, try saving 11% instead. You likely won’t notice the difference when it comes to your day-to-day quality of life, and it can significantly boost your savings over the long run.

Regularly check your credit report for errors

Having a strong credit score can help you qualify for low interest rates on mortgages, auto loans, and refinance loans — all of which can help you save money over time and hit your financial goals faster. If you don’t have a long credit history, or if you know you’re prone to missing payments, consider pulling your credit report to see how this has impacted your score. (You can pull one credit report for free from each of the main credit bureaus at annualcreditreport.com) This will give you a baseline and show you whether you need to work harder to boost your credit score into the “good” to “excellent” range.

It’s also worth pulling your credit score at least once per year to check for errors. Credit reporting errors are relatively common. Many reports will accidentally pull in old addresses, misstate your contact information, continue reporting on old credit cards that you’ve closed, and sometimes even include data from the wrong social security number. These errors can negatively impact your score. Give your entire report a thorough read and dispute any errors to the relevant credit bureau immediately.

Make a plan to pay off high-interest debt

If you have credit card debt or other high-interest debt — like from pay-day loans or high-interest personal loans — prioritize paying off that debt as soon as you can. It shouldn’t come at the cost of paying off your student loans or setting aside a basic emergency fund, but high-interest debt can quickly eat away at your savings. There are a number of different strategies for paying off debt fast. All that matters is that you find one you can stick to over the long term.

Consider a high-yield savings account

If you have some savings in a bank account, make sure that money isn’t sitting idle. Signing up for a high-yield savings account can help you earn up to 4% or 5% interest on your cash each month. That’s significantly more than the 0.1% to 0.5% many traditional financial institutions offer on a regular savings or checking account.

Many high-yield savings accounts only allow you to make a few withdrawals every month, so make sure this is money you’re not planning on using any time soon. It’s a great place to store an emergency fund or any long-term savings you don’t plan to touch. If you have really long-term savings—say, a bundle of cash you know you won’t need access to for a year or two—consider putting it in a certificate of deposit account (CD). Oftentimes, you’ll be able to earn even more on that money, and at a rate that’s locked-in for a designated time period.

Make sure you have enough insurance

“Your education and your ability to earn a living are probably your biggest assets at this point, and you should protect them,” said Harriet J. Brackey, director of investments at GSK Wealth Advisors in Hollywood, FL.

Disability insurance can provide critical financial security by protecting you if you’re unable to work. While you’re out of the workforce, it will pay you a portion of your income. This ensures you’ll have the cash flow to do things such as pay your bills (and stay on track with your student loans, for example).

You can also buy a plan on your own, which may be more expensive, but the benefit is that you can keep the plan if you change jobs, Brackey said. Moreover, any benefits paid are not taxable when individuals buy policies themselves.

Review your retirement account contributions

Many individuals contribute up to their employer’s match for retirement savings, but that may be as low as 3% or 6%. Now it’s time to consider whether you can increase that amount.

“This is great if you are just out of school with your first job, but many individuals do not re-examine this amount once they are earning higher incomes,” said Anjali Jariwala, founder of FIT Advisors in Chicago. If you have extra money in your budget at the end of each month, consider contributing more to your retirement savings. The more you contribute early on in your career, the more time that money will have to grow.

Reconsider a Roth 401(k) or a Regular 401(k)

If your company offers both a regular 401(k) and a Roth 401(k), which one should you use?

For high-income individuals, it actually may make more sense to contribute to the regular 401(k) over the Roth 401(k) because of the tax savings, said Jariwala.

For those starting with more modest incomes, the Roth 401(k) may be a good way to go, Brackey said. “You probably don’t need the tax deduction now nearly as much as you’ll appreciate the tax-free withdrawals later,” she said.

Consider refinancing your loans

If you have high interest rates on your student loans, those high payments can quickly drain your monthly income. That makes it tough to save up over time. The good news is that there’s a way to lower those rates: student loan refinancing.

If you meet your refinance lender’s requirements and qualify for a lower interest rate on your student loan debt, you’ll have the opportunity to reduce your monthly payments and streamline the repayment process, and even save money over the life of your loan. In that way, refinancing can help you take back control of your finances and start saving money for a brighter financial future.