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What is Happy Money Management, exactly?

Happy money management is having the financial stability to live a life you love!

It’s looking at your bank statements and thinking Woohoo! instead of Oh S***.

And having the freedom to go for happy hour with the girls without feeling guilty about spending money on drinks.

It’s the peace of mind that comes from knowing you’re financially prepared for the future, even if (when!) your world goes sideways.

And it’s creating systems so your finances kinda handle themselves instead of hijacking your life.

Sound too good to be true? It’s not! It’s totally doable. It just takes a little strategic planning and some conscientious choices. We can show you how to make it happen.

It all starts with our 10 Commandments of Happy Money Management.

Money's not going to rule my life. I'm choosing happy money management to stress less and celebrate more.

1. Don’t spend more than you make

Duh. This is the ground-floor, starting-point, basic MUST for happy money management. There’s no possible way you’ll ever have any level of financial happiness if you’re constantly spending more than you make. It’s not sustainable!

However, most of us (myself included) go through periods where our basic living expenses cost more than our part-time or minimum-wage jobs can support. Maybe you’re in school (with all the accompanying expenses), and your part-time job just doesn’t cut it. Maybe you just got laid off, and finding a new job is taking longer than expected. We’ve been there!

You do what you have to do to make ends meet when you’re in that tough situation. You take on extra student loans to cover living expenses. Or you put your expenses on credit cards. It sucks, but you can recover.

So don’t panic if you’re currently overspending your earnings. But also don’t be totally cool with it. Know that this is a temporary suck, and make a plan to fix it.

2. Have an emergency fund

Emergency funds seem like overkill (like, hi, I’m just trying to pay all my bills; I can’t also worry about stashing money away for some future expense), until you need them. Then you suddenly understand why they’re so important.

What do you do if your car breaks down? Or you’re laid off? Or you have an expensive medical emergency?

Would your emergency have to go on a credit card? If so, your emergency will end up costing you a lot more because of those stupid high interest rates. Or you might have to ask family for a loan. Ugh. Awkward family holidays until you pay them back in full.

An emergency fund is the solution. Your starting goal should be $1,000. Try setting aside a small amount from each paycheck until you have a cool $K sitting in a high-yield savings account, ready to come to your rescue when you need it.

As you become more established as an adult, you’ll have more to lose from an emergency, so your emergency fund should grow accordingly. At 30-ish, I keep enough in my emergency fund to cover 3 months’ worth of expenses. If I’m laid off, I know I’ll have 3 months to recover.

At 40, I’ll want about 6 months’ worth of expenses in my account since higher-level jobs take longer to land.Money's not going to rule my life. I'm choosing happy money management to stress less and celebrate more.

3. Always pay extra on high- and moderate-interest debt

Did you know that $5,000 in credit card debt could actually end up costing you $16,739.14?

Yep, if you have a high-interest credit card with 23% APR (annual percentage rate), making a minimum monthly payment of $110 will cost you $11,739.14 in total interest. And it will take you 168 months (that’s 14 years!) to pay off that debt and interest. Oh. My. Gosh.

If you have high or moderate-interest debt, you need it gone! And the only way to make that happen is to make extra payments. But don’t blindly start paying a little extra on all your bills. Use our Champagne Waterfall debt hack to strategically pay down debt and save a crap ton in interest!

4. Always invest in retirement accounts

Just like interest works against you in debt, it works for you in investments. And the more time you give your investments to grow, the more you benefit from the magic of compound interest. That’s why you want to start saving for retirement while you’re young and broke.

Check this out: if you start saving at 25-years-old, you can reasonably expect to retire as a millionaire. $1,200,000 actually. But if you wait until 40 (when most people start actually thinking about retirement), saving the same amount of money every month will give you less than $400,000 at retirement.

Just look at how this interest grows because of the extra time!

And here's why I'm saving for retirement despite being young and broke

PS: Want a compound interest calculator to crunch your own numbers?

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And if you’re a newbie to the retirement savings idea, check out these 3 Easy Steps to the Retirement of Your Dreams.

5. Always push for higher pay

Ok, we’ve been talking a lot so far about using money. Like to stock your emergency fund, pay down debt, and invest in retirement. But you have to actually have the money available to do all that. How are you supposed to afford to stash away so much money?

The best way is to earn enough money to cover all your essentials, pay down your debt, fund all your savings/investment accounts, then pay for life’s non-essentials (all in that order!). So you need to get paid!

Women, in general, are kinda notorious for underestimating their financial worth. But your future financial happiness depends on you knowing your worth and insisting on getting paid for it! So as your skills and experience grow, you need to push for higher pay.

Not super comfortable asking for a raise or increasing your fees for your clients? Check out our Do’s and Don’ts of Asking for More Money.

Bonus tip for happy money management: diversify your income

Let’s take this higher pay concept a step further. You’re not limited to just your day-job salary! You have limitless earning potential if you look for opportunities to increase you income. Getting multiple sources of income is known as “diversifying” your income. And there are countless ways to make this happen!

Diversifying your income not only increases your available cash, but also protects you when one of your income streams disappears. Maybe you lose your job one day, but you own rental properties that make enough money each month to keep you afloat until your next job. That’s happy money management right there!

6. Diversify investments

So we just talked about diversifying your income for added cash and added protection against the unknown. Same concept applies to investments.

Let’s say you’re only investing in the stock market. What happens if the market tanks? You could lose your tush.

But if you have a diversified investment portfolio of stocks, bonds, gold/silver, real estate, etc, you’ll have some protection against these inevitable market down-turns. You’ll still lose some, but you won’t lose as much.

On that note, you should know going in that markets rise and fall. It’s in their nature. So you will gain money and lose money over your financial life. And that’s ok. The stock market has always rebounded, even from the worst slumps (i.e. the Great Depression and the Great Recession).

The trick is to manage the risk. When you’re young, you have time to ride the ups and downs of the markets, so you can invest more heavily in stocks, which are inherently higher-risk and higher-reward. As you get closer to retirement, you need to keep more of your money safe from these down-turns. So you should invest more heavily in the safer government bonds.

But wherever you are in your financial journey, you want to invest in a bit of everything so your eggs aren’t all in one basket.

That’s why index funds are one of my absolute favorite investments. Index funds are like a sampler box of a bunch of different stocks or bonds. So instead of buying a share of Apple (which will go down at some point!), you buy a share of an Index Fund that includes some portion of Apple stock, but also some portion of potentially hundreds of other stocks. So if one company plummets, the other companies will be able to buoy your investment. Learn more about why index funds rock.

Money's not going to rule my life. I'm choosing happy money management to stress less and celebrate more.

7. Don’t ignore free money

I know this sounds crazy, but people ignore free money every day.

The biggest culprits are

  • tax credits
  • employer 401(k) matching
  • interest
  • unclaimed money
Tax credits

If you’re doing your own taxes, you’re probably paying way more than you should. That’s because the US tax system is bat-s crazy and includes a bunch of exemptions most people don’t know about or understand.

Example: my husband is a video game designer. So he’s always buying games, consoles, headsets, and even upgrading TVs for the best picture and sound quality. All of these expenses are work-related. He has to stay on top of the gaming industry and related tech to be successful in his career, so these are all necessary business expenses. Which means that the money we spend on all of that is tax exempt, and we get a tax break for those purchases.

What tax breaks are you missing?

The best way to collect all your tax credits is to find a great CPA to do your taxes. We pay a few hundred dollars for our CPA to file our tax return, but he always finds us more money than Turbo Tax or H&R Block ever could.

Employer 401(k) matching

Did you know that lots of employers will match your 401(k) retirement contributions up to a certain percentage? Like, they will put free money in your 401(k) as an incentive for you to invest in your 401(k). If your employer offers contribution matching, make sure you’re investing at least enough in your 401(k) to get the full benefit of the matching program. Just talk to HR for all the details on your employer’s 401(k) program.


If you’re saving all your money in a savings account, you are missing out on the free money you can earn from interest by investing that money. It’s not enough to save. You need to invest.

This is really important in your retirement account. Some people contribute to their retirement account not realizing that the money is just sitting in a holding cell until they select their investments within the retirement account. In the holding cell, the money’s maybe earning minimal interest, but often not earning anything. You need to select the investments within your retirement account to start seeing interest growth. 3 Easy Steps to the Retirement of Your Dreams explains this process in more detail.

Unclaimed money

Have you ever checked your state treasurer’s office to see if you have unclaimed money (also called unclaimed property)? It’s a lot more common than you would think. You might have overpaid taxes or have escrow payments waiting to be refunded to you, and if you don’t claim it within a certain time frame, your state is entitled to it. Los Angeles Times reported in 2015 that California gains $400,000,000 per year in unclaimed property. Yeah, $400 MILLION per year just in California.

The good news is it’s pretty simple to claim your money once you know what to look for and how to do it. Just google your state treasurer’s unclaimed property (like “California Treasurer unclaimed property”), and you’ll be able to find their website and search for your name to see if you have unclaimed funds waiting for you.

Money's not going to rule my life. I'm choosing happy money management to stress less and celebrate more.


8. Don’t waste money replacing perfectly good stuff

Trends come and go, but classics are good forever. Unless you truly love fashion or decor, don’t waste money trying to keep up with ever-changing trends. Just spend some money on quality, classic clothing and interior design, then enjoy it to death. Only replace things that actually need replacing.

9. Spend on things that matter most to you

Saving money on the non-essentials leaves more wiggle room for spending on the things that really matter to you. Maybe it’s travel or make-up or books or gifts or charitable donations or food. You shouldn’t have to feel bad or guilty spending money on things you love.

That’s kinda the whole point of happy money management. You manage your money well so you have it available to spend on the things that matter most to you.

And that’s why I love budgets. They show you in black and white how much you can afford to spend on the stuff you love. If budgeting just sounds like a drag to you, check out our Budget Calculator for Budget-Haters.

Bonus tip for happy money management: buy assets that will pay for your liabilities

In Rich Dad, Poor Dad, Robert Kiyosaki taught us to buy assets (things that generally grow in value like real estate, stocks, and businesses), not liabilities (things that decline in value like cars, electronics, and almost all of our personal belongings). And when you need to buy liabilities, you should first buy assets that will generate enough money to pay for your liabilities.

Like, dude doesn’t just go buy a car. He buys real estate that will generate enough money to pay for his car. Let that sink in a sec. It’s brilliant!

Are you poor spending? Learn the secret to rich spending!

10. Automate

Commandment 10 ties everything together by fool-proofing your happy money management plan.

I’m not going to rely on self-control to keep myself on track to meet my financial goals. Self-control is way over-hyped. If you really want to make sure you’ll meet your goals, you need to create a fool-proof system that won’t let you fail.

And that’s why financial automation is the bomb.

You create automatic transfers to your retirement account and savings/investment accounts. So you never have to remember to stick to the plan. It just happens automatically! You can even set up auto payments to your debts and to pay your bills so you never pay late or miss a payment!

It looks something like this:

Here's how to put your finances on auto-pilot

Ta-da! You can set it and forget it. So you can go about living your life while your savings and investments continue to grow.

Want to Put All This in Action?!

If you’re ready to get your finances really and truly in order, sign up for our totally FREE 5-Day Financial Fix Challenge. Enter your info below to start your challenge today!

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Thoughts on these 10 Commandments of Happy Money Management? Did we miss anything you think is vital to Happy Money Management?

Cheers! From Savings and Sangria