Photo: Pictures of Money, Flickr.

One of the things rarely taught in school -- and many times not even taught by parents -- is how to manage your money. That's more than a shame, as poor money-management can lead to a disastrous life.

Even those of us who seem to be doing OK with our dollars may be benefit from a tip or two, so here's some critical advice on how to manage your money.

Tip 1: Have an emergency fund
We all need to have an emergency fund with enough assets to keep us afloat for at least three months -- or, ideally, six months or more. But according to a Bankrate survey earlier this year, fully 29% of respondents had no such fund, up from 26% last year, while 21% had an emergency fund that was insufficient to cover three months' worth of food, housing, transportation, utilities, and so on. That's very bad news.

It's easy to assume that we'll never need a rainy-day fund, but disaster can strike when you least expect it. You could lose your job. You (or your spouse) might suffer a major (and costly) health problem -- and the other one might need to work less or stop working in order to take care of the stricken partner. You don't want to end up losing your home or suffering some other terrible consequence, so have an emergency fund, or at least an emergency plan, such as setting up a home equity line of credit to tap if need be. If at all possible, keep some cash ready for such instances.

Stay out of credit card debt. Photo: Frankieleon, Flickr.

Tip 2: Stay out of debt
One of the cardinal rules of finance is to avoid debt whenever possible -- especially high-interest-rate debt. Taking on low-rate debt in order to buy a home, pay for college, or buy a car is often a reasonable and responsible choice, but racking up thousands of dollars on a credit card and getting charged 20% or more on your debt is a recipe for disaster. A $10,000 debt at 20% will have you coughing up $2,000 annually simply to avoid falling further into debt.

Think of that interest rate as a negative growth rate. It's like reverse investing! An annual return of 15% or 20% in the stock market is considered fantastic, therefore paying the same percentage in interest should be considered a tremendous loss. If you're in debt now, make paying down those bills a priority, even if you have to take a part-time job for a while. Then aim to stay out of debt.

Tip 3: Protect yourself
Don't be under-insured. There are lots of different kinds of insurance, some of which are vital to your financial security. Going without them leaves you vulnerable to major financial disasters. It's OK to skip certain types of insurance, assuming you don't foresee a need for them, but most of us will encounter some disasters in our lives.

Insurance that you should carry includes: health insurance, disability insurance, life insurance (if anyone is depending on your income), home (or renter's) insurance, and car insurance. This can protect you from financially devastating events. Coverage that you may not need includes private mortgage insurance (aim for a 20% down payment to avoid it), collision insurance (if your car is paid off or older), and flight insurance. It's usually unnecessary to spring for extra insurance when you rent a car if your regular car insurance offers the same protection.

It's not fun to pay for insurance, and if you do so for years without filing any claims, it can seem that you've wasted your money. You haven't, though, because during those years, you were protected.

Make sure you're allocating your money in the way you want to. Photo:

Tip 4: Live below your means
It's not all about what you earn; what you keep is just as important. Those credit cards can make it easy to think that we can buy anything we'd like, but that's far from the case. If you spend with abandon, you can end up skipping out on important expenses that you should incur, such as contributions to retirement accounts.

Take a little time to draw up a budget. List all your cash inflows (salary, other earnings, dividend income, interest, alimony payments, and so on). Then list all your expenses. The best way to do this is to carry around a little pad or your smartphone and record every transaction over one to three months. Also scour your bank statements, check register, and credit card statements to find other expenses. Add in your infrequent expenses, such as an annual home insurance payment, a semiannual car payment, and/or quarterly property tax checks.

Once you have a good handle on what's coming in and where it's going, you can shape your spending so that it reflects how you want to spend and how much you can afford to spend. If you see college savings being shortchanged, maybe you can trim your entertainment spending a bit. If you're not managing to travel as much as you'd like, perhaps you can aim to spend a little less on groceries and save up for a big trip.

Tip 5: Have a plan and invest for tomorrow
One of the best financial moves you can make is to have a plan -- a big one -- for how you will fund your retirement. A visit to the Social Security website can help you estimate how much you can expect to receive from the program in the future. (As of July, the average monthly Social Security benefit was $1,336 per month, or about $16,000 per year.) To that, add any expected pension or other income (such as from an annuity). Will this income meet all your needs? Relatively few of us have pensions, so most of us will need to rely at least partly on our own savings. If you know how much you'll need, you can start saving aggressively and investing effectively in order to meet your needs.

Plan to make the most of retirement accounts, too. A 401(k) at work might offer you thousands of free dollars in the form of matching employer contributions. A Roth IRA offers tax-free withdrawals in retirement. It's possible to put together sufficient income streams for retirement, but it won't happen by accident. Come up with a plan and then work to execute it.

Here's a bonus tip: Talk about money. It's too often a taboo topic, but if we talk about our financial worries, problems, goals, and successes with others, we may help our loved ones and also learn from them. Spread financial savviness by talking about money with your kids, friends, and relatives. You may end up spurring some of them to make better financial decisions -- and they might give you some great ideas.