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Money Management 101: How to Stop Running out of Money

Do you keep running out of money before your next payday?  Is money management a mystery to you?

That’s what happening to a lot of my 20 year old uni student daughter’s friends.

And I think it’s happening to quite a few of us a fair bit older and supposedly wiser ones too isn’t it?!

So – here is THE most important, super simple money management tip to make a part of our systems and habits – to stop this nasty running out of money thing from happening.

Imagine knowing for absolute sure, that your money is going to last til your next pay.  Picture what it would be like to not have to waste brain and heart energy on worrying about whether you’ll have enough for the groceries, or the public transport fare.  Oh the peace and serenity of just going about your business, and hardly giving money a thought at all….

This IS possible, and it’s possible for everyone – so that includes you right?

Money management isn’t in the school curriculums, and unless we’ve got savvy parents who’ve passed on some great money management  tips, we’re on our own to get it right – and there’s usually much more interesting stuff to check out….so it kind of gets left out doesn’t it!

Here is the vital money management tip that saves the torment of starving til pay day, and stops us from running out of money.


Money Management 101: Separate and Control our FIXED EXPENSES

Let's walk through the following 4 steps to see how this beautiful thing works…..


1.         Know what our FIXED (SURVIVAL) EXPENSES every week add up to.

There are just two types of expenses:  fixed and variable.  

Fixed expenses are what we need to survive and be at a baseline of comfort.

Variable expenses are what we want, in order to enjoy life, and have some fun.


a) Know what our Fixed Expenses actually are.  



Accommodation:                        rent, or mortgage and rates

Utilities:                                      electricity, gas, water, telephone

Travel:                                         to work or school

Home and personal care:          cleaning and grooming

Basic clothes                              


b) Collect the Information to work out our weekly Fixed Expenses value.

How much do you require each week, to cover these?   You don’t know?  Well of course you don’t, because you haven’t had the “fixed” category, in order to measure it yet.

So the next thing to do, is to measure your spending for these things, so that you can get this figure.  


Use an app (trackmyspend) or use a notebook.   Over the next month, write down how much you spend in each of these areas.    For every payment made, note which category it is in – that is food, accommodation, utilities, etc.   


c) Work out what our weekly Fixed Expenses are.

At the end of the month add up all the payments for each category.  (An app will do this for you.)  Then, just to keep it easy – divide this by 4, to get an idea of how much you spend each week, on each category.  

For example if you have been to the supermarket 7 times, and have 7 amounts with the category of food, add all these amounts together.  Then divide this total by 4, to give an approximate weekly amount that you spend on food.

Utility bills are less frequent than monthly, so hopefully you’ve kept a few, and could go back and find them.  Or maybe you’d have a record in your bank or credit card statements, of the last few bills you’ve paid.  The very best thing to do with these, is collect a year’s worth of payments – often 4 consecutive bills.  Add up the total paid over that year, then divide by 52, to get an average weekly amount required to cover this expense.

Now you should have an average weekly amount for each of the categories.  The last thing to do is simply add these weekly amounts  together, for example:


          Food                                          100

Accommodation:                      150

Utilities:                                      35

Travel:                                         56

Home and personal care:          25

Basic clothes                              10

            WEEKLY FIXED TOTAL       $376



2. Create a Fixed Expenses Bank Account.

Lots of banks now do not charge account keeping fees.  Find  one like this. 

Create a new account that is going to be JUST for your weekly fixed expenses.  

Make sure you have a debit or eftpos card you can use for payments that is linked to this account.


3. Automate a weekly funds transfer to your Fixed Expense Account.

Get onto your online banking, and create a permanent transfer that moves your WEEKLY FIXED TOTAL from wherever you main account is, where your income gets paid,  to your dedicated Fixed Expenses Bank Account.


4. Spend on FIXED EXPENSES ONLY from this Fixed Expenses Bank Account.

For this system to work, it is VITAL that you spend appropriately!!!  Be sure to pay for your fixed expense items, in the categories you’ve included in your measurement, FROM THIS ACCOUNT!!



Everything up to this point is setting up the system.  This 4th point also includes developing THE HABIT.

This is the habit of being aware of when you are spending on a fixed expense item.  It's pretty simple though.  After you've done it for a couple of weeks, you'll get into the groove.

  • Supermarkets and travel card outlets – fixed expense card.

  • Utility payments  – fixed expense card – or even direct debit from fixed expense account.

  • Rent or mortgage – simple one time set up of automated regular payment from fixed expense account.

  • Home and Personal care.  Some of these will be included in your grocery bill, and some – like haircuts, will need to be remembered to be payable from your fixed expense account.

  • Basic Clothes.    The line is a little murky here, but if it’s undies, or shoes you have to get because your old ones have worn out, or even jeans you need to replace – these should come from your fixed expense account.   (A lot of clothes are just wants, not needs, so it’s up to you to decide here….)


Now assuming that your weekly income is greater than your weekly fixed expense amount, whatever funds are left over, that is – NOT transferred to your weekly fixed account are for your VARIABLE EXPENSES.

This is your fun money.

You can do whatever you like with that.  But of course, when it’s gone, it’s gone.



So if  you’ve just been paid, and there’s $250 left in your income account (after the automatic transfer to your weekly fixed account), that’s what you party with.

Out with friends for dinner?  Sure – $60 gone.

Birthday gift for partner?   Sure – $40 gone.

That beautiful jacket?  Hmmmm ok – $150 gone.

Out for drinks after work?   NOPE.  No money left in the income account.

But what about…..that other account…. I have some money there…?

NO!  NO!  and NO!  

It’s already spoken for, and to keep your payday peace and serenity this must NEVER be dipped into unless its for a fixed expense.


This is a VITAL part of “THE HABIT” that makes this system work.

On no account must you ever spend from the wrong account.  If you do, this whole set up system will fail and you might as well not have bothered.  The power is in maintaining the habit.

So while you may not be able to go out for dinner, or buy that book you want so badly right now, you can pay the bills and put food on the table, and get to work or school.  That’s where the security and peace come in.

Yes – it requires application and effort to set up.

Yes – it requires THE HABIT to be maintained, for it work.

Yes – it’s worth it!!!

If you have any questions you'd like answered, just use the comment box below.  Don't see one?  Click on the headline of this article and you'll go to the separate article page and there you'll have a comment box at the bottom.

Cheers and happy money management!

Glenda Nicholls


PS:   This post is a tiny snippet of information contained in my Financial Power Platform online course.  Check it out here.  Note that the first lesson is FREE.

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