Money Management: The Good, The Bad, and The Unexpected

What is money management? Why should we learn good management habits? Many young professionals today are not able to answer these questions. To many, budgets and savings accounts are things that we are supposed to have, but a lot of us do not know how to create (and stick to) a reasonable budget that fits our income and lifestyle, and you can forget about having a healthy savings account.

Unfortunately, this has become the financial reality of many in younger generations. Fortunately, there are several resources available that can help those of us who were not given the tools we need to achieve financial independence and security. These resources include books, classes, and apps that are affordable and fool-proof, meaning that you, as a recent graduate or young professional, can create good, sustainable money management habits that will have you living your best life while maintaining a budget and savings account.

The Good

But why are these habits important? Aside from the practical reasons, such as being able to pay your bills on time and afford basic necessities, good money management can help you achieve goals and obtain personal fulfillment and happiness.

Take, for example, Person A. Person A makes around $45,000 a year and lives in a small, two-bedroom apartment in a moderately priced city with an older car and a roommate. They took advantage of a course in personal finance during college and began practicing using a budget during their sophomore year.

Person A has now opened a savings account and uses an app to track all of their purchases and bills to stay on budget every month.  Because they have taken the time to practice good money management habits, Person A will be able to take one or two nice vacations this year and is considering buying a brand new vehicle, using some of their savings within the next two years.

Person A has developed a healthy relationship and philosophy with money that has allowed them to live within their means while still enjoying the occasional splurge on things that they want.

The Bad

So, what happens when you don’t develop good money management habits? One outcome, besides not being able to afford your lifestyle, is the hit your credit report and mental health can take when you are not financially stable.

Let’s look at Person B. Person B makes $50,000 a year, the current average salary in the United States. Person B moved to an expensive city and rents a large, two-bedroom apartment by themselves. They also bought a brand-new 2020 vehicle.

Person B often uses their credit cards to buy designer clothing and pay for the expensive takeout they get five times a week. They do not maintain a budget or a savings account, and they often spend their monthly paychecks covering said credit card bills and their expensive rent and car payments. They do not pay off the credit card bills at the end of the month, but cover just the minimum payment due, allowing their interest to build.

This has led to a subpar credit score and Person B often worries that they will not be able to afford the next month’s rent or bill because they have a revolving relationship with money and their bank account. This leads to a high level of anxiety, but they continue the cycle because they do not have the tools they need to fix their bad habits.

The Unexpected

It is all well and good to develop good money management habits and avoid bad ones, but sometimes the unexpected can happen. For example, 2020’s global pandemic led to widespread layoffs and unemployment, leaving even the most financially savvy among us struggling to make ends meet

These kinds of unprecedented events can leave us drowning in debt and unable to maintain financial security through no fault of our own. When this happens, there are ways to get out from underneath your debt and regain a stable financial footing. One way is to file a Chapter 13 or Chapter 7 bankruptcy. While filing may seem scary or shameful, you should always reach out for help when the unexpected has left you in an impossible situation. If you have found yourself in this kind of position due to the effects of Covid-19, you should research your options and get into contact with qualified bankruptcy lawyers in your area.

Filing for bankruptcy will affect your credit, however, it may help your mental health, and, by implementing good money management habits, you should be able to repair your credit within a few years.


Good money management is essential to living your dream life. By taking advantage of resources that are available to you, you can work towards your goals while still living comfortably and maintaining your current lifestyle and mental health.

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