Bad With Money? These 3 Signs Say You're Better Than You Think

I don't come from money, and finances were definitely something my parents worried about when I was growing up. We moved around often (nearly all of my childhood was spent in military housing or rental homes), and when we did take a vacation, it was a short one, and always of the road trip variety. As an adult, I've nearly always lived paycheck to paycheck, and I frequently worried that I was bad with money, and there was no way to change that.

But I spent 2022 whipping my finances into shape by increasing my income and paying off debt (and seeing my credit score jump by 100 points). And now that I've made this much progress, I can look back and appreciate how far I've come. We're all beholden to our circumstances and upbringing, but it's never too late to get better at managing your finances. Here are a few signs you're doing better than you may realize.

1. You know where your money goes

Some people sign into their banking app, see how little cash is in their account, and sigh, "I just don't know where all my money goes!" That said, if this isn't you, you're head and shoulders above those people. Budgeting is really no one's idea of a good time, but knowing how and where you spend is a cornerstone of personal finance.

The good news is that to know where your money goes, you don't even have to go all-in on a detailed budgeting app that gives every single one of your dollars a job. Some of my colleagues here at The Ascent take a different approach -- Lyle Daly sets saving and investing goals, and then fits his spending around them. Christy Bieber automates her finances rather than strictly tracking spending.

Personally, I skew toward Lyle's example, and as long as my bills are paid and my savings goals are met with every paycheck, I don't sweat every single dollar. I have an earnings target that I aim for every week (as a full-time freelancer, I make my own work schedule and I'm not paid a set salary). I also keep track of how much money I'm supposed to have left in my checking account after I pay bills and send cash to my savings account. Staying on top of your balances (on credit cards, too) is another sign you're doing OK with money.

2. You have a handle on your debts

Being in debt is no fun, but if you are, you're certainly not alone. According to research from The Ascent on average household debt, the average American had $5,733 in credit card debt as of the first quarter of 2023. It isn't being in debt (or not) that determines whether you're bad with money, though. If you know roughly how much money you owe, and to whom you owe it (credit card issuers, other lenders, etc), you're in good shape.

Ideally, you'd also have a plan to pay off that debt, but if you're still in the knowledge-gathering phase on that, I have some advice for you: increase your income. Living on ramen noodles is unsustainable once you're out of college, and allowing yourself no opportunities for discretionary spending will eventually lead to frustration and misery. If you're trying to slay the debt dragon, consider taking on a side hustle or some freelance weekend work, or even ask for a raise at your main job, if it's been a while. Any new money you can bring into your household will not already be earmarked for bills, so you can roll it toward your debt.

3. You have emergency savings

The commonly held, oft-repeated wisdom is that a proper emergency fund should consist of three to six months' worth of expenses. This is great advice, but in a world where 63% of Americans couldn't cover a $500 emergency out of their savings (according to SecureSave), this might not be possible or realistic for many people.

Carve out money to save (possibly from that side hustle?), but know that any amount of savings can help you out of a jam. If all you can save is $25 a month (this was me, for many years), that money will still grow in a high-yield savings account, and the next time you have to cover a surprise expense, it'll be there for you. And even if it's not enough to pay the whole bill, but only amounts to, say, $400, that's still $400 you won't have to borrow -- or pay interest on.

If you think you're bad with money, take a moment to consider the list above -- if it describes you, you're doing better than you realize. And if it doesn't, now you have a short list of goals to help you feel more secure with your finances.