3 Money Handling Skills to Keep You Out of Financial Trouble

Festus Otasowie


It does not suffice to just make money. You need to be skilled at handling it too. Otherwise, you will end up making lots of money but having little wealth.

When you have great financial skills you will easily maintain a great credit score and avoid carrying a huge burden of debt. While you need to know basic subtraction and addition, you do not have to be a math whiz to greatly manage your finances.

You also have to be conscious as you deal with money to ensure that your decisions impact your net worth positively. Learning money handling skills is all about how to be responsible with money, planning how much money to keep in your checking accounts when you do start earning money and some Good Rule of Thumb when it comes to certain money handling decisions.

Related post: How to Generate cashflow

How to be Responsible with Money

Your spending habits have a great influence on how well you are going to do financially in your life. You can start practicing great money habits and get better at it. The following tips can help keep you financially sane;

  • Have a budget and stick to it. A budget will help you ensure that all your finances are in order. However, it will only work if you use it and update it throughout the month.
  • Track your spending. Start tracking your spending to know when you overspend. This happens when you make small purchases that add up after a while

Learn to save money

  • Limit unbudgeted spending. it is okay to have fun once in a while as you lower stress and get new experiences. However, you should avoid spending more than you have planned to
  • Avoid new recurring monthly expenses. This includes that new loan that you just saw you qualify for
  • Ensure that you get the best deals. Ensure that you pay the lowest price by going for discounts, cheaper alternatives, and coupons
  • Save up if you need to purchase hugely. Delaying when saving up allows you to evaluate whether you really need the purchase, evaluate cheaper alternatives, and also avoid paying big on interest as in the case of using credit
  • Limit your credit cards. Resist the urge to use credit cards since you are often tempted to make the purchases without a plan on how to repay
  • Save regularly. This is the biggest thing you can do to improve your financial discipline and saving regularly helps to strengthen your financial muscle

How Much Money to Keep in (Checking) Account

When it comes to bank accounts there are two essential types: the checking and the savings accounts.
They might have some similarities but they serve different purposes. Checking accounts mainly serve the purpose of holding the cash you use on a routine basis, like everyday purchases. As such, they allow for quick deposits and withdrawals.
Savings accounts, on the other hand, have high interests and offer a place for you to stash and multiply your money for prolonged periods.


Money handling skills also include learning to manage your credit cards
Learn Credit Card Discipline

Having a substantial amount in your checking account helps to lower the fees you may be charged and also puts you in a great financial position, even when you have an emergency.

To get an idea of the amount you should have in your checking account, you should make the following considerations;

  • Cushion against overdrafts. Overdrafts occur during a debit, such as when you have to make a purchase but have insufficient funds in your account. Most banks and credit unions will charge you a fee when you overdraft and it can be as high as $50 or more.To avoid this your checking account should have extra funds such that you can withdraw without fees even when unexpected situations or emergencies arise. You also need to have enough money in your checking account to carter for preauthorization fees. Restaurants and retail stores, among other institutions, send a pre-authorization fee to verify your account’s authenticity before they charge the full amount.
    The $1 returns to your account after 48 hours. Even for such small charges, your account could attract an overdraft if you have several lined up at once and have insufficient funds
  • Minimum balance requirement. Checking accounts could charge a fee or close if you fail to have a certain minimum balance at the start of each day. The amount differs from one bank to the other. Some require a $5 minimum balance while others require $500. If the bank has no specific minimum balance for a checking account check the amount indicated for all types of accounts
  • Sufficient to handle utilities. You may have set up automatic payments for your utilities and other routine or monthly expenses. Some of such bills fluctuate and at times you never know that they have gone up or the exact higher amount that you have to pay. Having more than needed for the bills ensures that there is a buffer and any fluctuations are covered. You have to also ensure that you know the exact date certain expenses are billed so you can plan for them in advance
  • Day to day expenses. Financial experts suggest that your checking account should always have up to two months’ worth of outgoing expenses
  • Avoiding to drain all your savings. You should avoid keeping all your money in a single account, even if you want to have enough for expenses, preauthorizations, and prevention of overdrafts. It is better to have the excessive money stashed in a retirement fund or high-yield savings account

Good Rule of Thumb in Saving Money

When it comes to saving it is generally ideal to consider a scenario when you do not have any money coming in. This is typical when you have been laid off or are sick.

Since you won’t stop living you will still have to pay a majority of your everyday expenses and that is when you will dig into your savings. The general rule of the thumb is to have an emergency fund enough to cover your daily expenses for about 3-6 months. While this is purely a recommendation and general best practice, nothing stops you from keeping a little more than the recommended amount. The YouTube video below explains why you need emergency funds

Why you need emergency funds video image
Having an emergency fund is an essential part of learning money handling skills

Best Payment Type When You are on A Budget

If you want to maintain your budget the best payment method to take on is the use of a debit card or cash. The debit card only uses the money you have in your checking account such that you only use the money you have to buy things.
However, you still need to watch out for overdraft fees meaning that you should ensure that your debit card has sufficient cash to cover your regular expenses.


Making money is just one step towards a comfortable life. You also need to be watchful of how you spend and practice other great financial habits like money handling skills. This ensures that your debt never becomes too great to bear and that your credit score is always credible. Some of the best financial habits include having a budget and sticking to it as well as establishing a great saving plan.
When you have a dependable emergency fund you can survive for up to six months with zero income or outside help.
You also need to use a debit card rather than a credit card for payments to ensure that you only spend the money you have.

Connect with us. What are your own experiences with money handling skills? Is it something you find hard or easy to do? What are your challenges while learning these skills? Please share with us using the comment box below.

Frequently Asked Questions (FAQs)

  1. How much do you need for retirement?

    It all depends on your age, the amount you save each year, your current income, and the level of comfort you desire when you retire

  2. What is debt?

    This is when you owe someone and have to refund them such as when you have taken a car loan or mortgage from a bank

  3. Where can you find more information about credit management and debt?

    The consumer federation of America has a website with valuable information

  4. How many credit cards should you have?

    It all depends on how responsible you are financially and your current credit score. Having several can help improve your credit score but too many could be dicey

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