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Want to learn how to manage money and master your finances? Tammy Lally explains the keys to money mastery below.

What would it feel like to actually be in control of your money? To know that it is working for you, and you are calling the shots on where it goes each month? It all starts by learning how to manage your money.

Learning how to manage money is a simple enough concept, but hard to put into practice. Especially because by the time we start the journey in earnest, we are usually trying to dig out of a not-so-rosy financial situation.

Certain concepts and habits are essential to money mastery. When my clients learn to incorporate them, we watch their lives transform.

I’ve talked about how the mechanics of saving money are important, but even a clear understanding of how to fix our spending can be sabotaged by our inner monologue. The keys to money mastery, then, are the ones that help you rewrite your story.

They include the internal and external. Because without addressing your money shame and beliefs, you are fighting an uphill battle.


One important facet of mastering your financial health is gratitude. When you are in a spiral of debt, your focus tends to be directed inward.

How do I keep my head above water? What’s my next move?

If you are maintaining a lifestyle you can’t afford, you may tell yourself that it’s temporary—you’re so close to that raise.

Or maybe you are avoiding reality, hoping the situation will go away. Here—try this credit card instead. It should be fine!

The dance distracts you from seeing the abundance already present in your life.

By contrast, when you know how to manage money your focus tends to converge towards gratitude.

What’s the true source of happiness when it comes to money? It goes beyond learning how to manage money better, and depends greatly on your emotional health.

Studies have shown that materialistic individuals are less happy than their peers, at all levels of wealth. Materialism is measured by how much importance you place on the things you own and compare your possessions to others. The more emphasis you place on your belongings, the more likely you are to experience increased anxiety, depression, and substance abuse problems.

Materialism is a game you cannot win. There is always going to be someone with more toys and more money. There will always be something new to buy.

Gratitude is the anecdote to materialism

Gratitude is the anecdote to materialism. It’s also the first step towards learning how to manage money wisely.

Gratitude is being able to enjoy what is happening in your life and acknowledge the moment and the people that contribute. You savor things that you don’t necessarily own—natural beauty, kindness, friendship. You are less likely to seek instant gratification from things because gratitude is fulfilling. Because you feel more content, gratitude makes you want to pay it forward.

Think about the last time you got a bonus, a raise or a small windfall. If your first reaction was to inflate your life a little—because you deserve a nicer car or it’s time to commit to joining the country club—you may remember how after a short time, it felt like those things were always a part of your lifestyle. “Hedonic adaptation” is the concept that we experience positive vibes when we suddenly have more money, but we quickly adapt to that new level of spending—and just want more.

We see young celebrities and pro-ballers blow through new fortunes all the time, and we think, I would never be that irresponsible. But if you’re making a good salary and never seem to have enough, you may have a glimpse into how it happens.

Beyond $75K you aren’t going to be much “happier” with money

In 2010, a Princeton study found that after reaching an annual salary of about $75,000,  emotional well-being—aka happiness—is not improved with more money. $75,000 is enough salary to cover your basic needs in most of America. Yet most people still assume that having more money would make their lives better. (But in reality, as we are discussing today – there’s more to gain by learning how to manage money, regardless of your income level.)

Why do we think this?

Since most people start in the workforce at a lower salary, many workers notice incremental improvements in their lifestyle as they get promotions and raises that improve their pay. Up to around $75,000, more money may allow someone at a lower salary to better care for their families and save for some stability.

At some point, we’ve all come to accept that this cycle continues infinitely…that adding more money will always create additional positive impact on their well-being. But after your needs are met and you feel confident about future stability, more money is just….extra.

Corporate America makes a big deal over the workers who are successful. Their paychecks grow with their status. Successful CEO’s even become celebrities—Elon Musk, Jeff Bezos, and Bill Gates are all household names.

Marketers are only too happy to continue the notion that more money and “buying power” is a sign of prestige.

When we start to believe that the magic equation is more money = more happiness, we have it wrong. The truth is, instead of making us happier, more money often leads to lifestyle inflation in search of feeling more important. But you can’t find meaning in things.

How gratitude changes things (gratitude empowers you to manage your money better).

Hedonic adaptation works in reverse also…if we spend less, we miss our old level of spending for a little while, but then we adapt and don’t notice it so much. Cutting back forces us to prioritize our purchases and consider how they serve us. Often we’re surprised by the freedom we feel when we purge all the extras.

When we give money away to a cause we care about, it forces us to carve out the funds to support that cause. Generosity makes us feel empowered because we are able to provide money to help someone else. It challenges the narrative that you need more things to prove your worth. You become more relevant when you are able to help others, and you can do that in many ways, no matter the size of your paycheck.

Curious how to manage your money better? Practice new and scary money habits daily.

How to Manage Money & Master Your Finances - Tammy LallyPart of changing our money focus is to start taking steps that feel uncomfortable. At first you may feel like you are giving up some of your freedom or limiting your ability to have fun. But living on borrowed money is neither free nor fun.

If you’ll geek out with me for a minute on the science of neuroplasticity, it’s closely related to a subject I am interested in—the ways behavior is shaped by past stories and experiences, not just rational thought. Neuroplasticity is the study of our reactions and decision making tendencies and our ability to change how we react. When we consider our actions in regards to money, it is called neuroeconomics.

Without getting too deep here, the idea is that while economic theory can explain a lot of the ways people behave with their spending, it’s too broad to predict what individuals will do. That’s because when we make decisions, we are using a combination of deliberative and emotional cues. Our behavior also depends on how much we really know about managing our money.

How to Manage Money: Deliberative vs. Emotional Cues

Deliberative means we are analyzing and making a decision, and as you might imagine—Emotional is more of a gut response. Neither is wrong, but everyone will interpret and react to a given situation differently because of their wiring. Your past experience will help you formulate a response that is your unique combination of emotion and strategy.

The good news is that you are not victim to your response patterns. Your brain can be retrained.

The brain is amazing in terms of its ability to expand, learn, and relearn. Consider when someone experiences head trauma, they may lose their ability to speak or walk. But often, they can be mastered again.

While physical exercise, learning a language, and new experiences through travel can exercise your brain, you can similarly enhance your mind through making a regular practice of new behaviors that you want to incorporate.

How would you feel about only paying in cash?

When I’m working with a client, we consciously add what I refer to as new and scary money behaviors. At first it might feel foreign to only pay with cash. What if you are embarrassed at the register, or you run out of money before the end of the month? But when you start to see how the switch benefits your bottom line, it becomes easier. The habit is reinforced with positive feelings.

These changes can start small. You might track your daily spending or commit to having a weekly money conversation with your spouse or partner.

By stepping out of your comfort zone, even if it’s just for a trial period, you can see the results and decide for yourself if the trade-off is worth it. It’s not just words on the page of how to fix your money woes, it’s deliberate action with your money. Hopefully the positive results will change your perception the next time you go to the store.

The good news with spending is that we all have to do it all the time, so there are lots of opportunities to learn through doing. Managing your finances isn’t some unattainable task that only business people know how to do. You can change your money habits.

Strive for emotional balance when learning to manage your money.


Taking care of yourself is important, and there are many mental benefits. It’s easier to feel gratitude when we are physically well. Expending energy through exercise releases hormones that make us feel good and give us confidence. Time outside and natural light provide mood-enhancing benefits too.

Michael Otto, a professor of psychology at Boston College says that even though exercise has been proven to improve mental health, it is rarely the focus of a treatment program. Within 5 minutes of moderate exercise, your body starts to experience some beneficial effects and regular exercise can even move the needle for those with long-term depression.

If you suffer from mental health issues, exercise may not be the comprehensive treatment you need. But it is something you can begin on your own, for little to no cost, that can have significant positive impacts on your health, mental and physical.

Why we stop learning

Money shame can be a real drag on mental health. It’s when you tell yourself that you are flawed and there is no way you can fix your mess. It’s a cycle that will hold you back because it tells you that you can’t change. It tells you that you’ll never *really* learn how to manage your money.

Having confidence doesn’t mean you have all the answers, but it means you have reached a point where you allow yourself the grace to not be perfect. To recognize that it’s worth trying new things. That it’s not over for you.

As children, the stakes are low. Kids are expected to fall the first time they get on a bike. No one assumes you know how to do math before it’s taught in the classroom. You and your peers learn the same skills along a similar timeline.

We say learning is harder as an adult, but it’s really our perspective that has changed.

The end goal versus the journey there…

As we get older, we tend to focus less on the journey and more on fast results. We exercise to lose weight. Unless our company is requiring and paying for a class, we don’t have time for new studies.

We have a tendency to feel ashamed for not already knowing how to do something or for not being able to pick up a skill easily. We don’t want to admit that we aren’t experts at our own finances or that we have questions about how to save for retirement.

It turns out that holding onto curiosity and not seeing trial and error as failure is what helps you to “grow” as an adult.

Growth mindset is a term I see everywhere. It’s the idea that you learn when you assume that with perseverance, you can accomplish any goal. And that learning is worthwhile in and of itself. Schools have adopted this as their mantra to encourage all students to do their best. I think it sums up the drive that successful adults hold onto.

Faith in more

Similarly, it’s easy for children to believe in God.

Believing in a higher power forces you to acknowledge that you are not always in control. That there is something else at work in the universe that wants what is best for you.

Prayer is a form of intention, and having faith that change is possible.

I firmly believe that recognizing that you are part of something bigger forces you to step out of that inward-facing perspective. You are not the focus, but rather part of a bigger story where you have purpose.

And that purpose is beyond updating your master bathroom. It also goes beyond learning how to manage money.

It’s important to find perspective if you want to break the spending cycle. You only get this one life. What do you want to be remembered for? How do you want to use your time on earth?

Ironically enough, by looking beyond the here and now – and beyond the simple calculations involved in balancing your check book, so to speak – you will get better at managing your money and move closer to true money mastery.

Savings is Self-Love

You have the ability to live within your means.

When we talked about gratitude, I mentioned that we make space for something we are passionate about. If the most important thing to me right now is helping women in abusive relationships, I will find a way to support this cause with my money.

When you don’t give your money focus, your spending still says something about your values. If you are always spending and not really thinking about your long-term goals, you are not prioritizing yourself.

You may have heard people say that you should pay yourself first. Getting serious about your spending starts with making a budget, and the first step is to track exactly where your money goes each month.

When you are ready to allocate the money coming in each month to work towards your goals, you will start by paying down high interest debt and saving money for your retirement and goals that are important to you.

Saving money for yourself is a form of self-care. You shouldn’t come at the bottom of the list after you have paid everyone else. One of your first goals should be to get yourself out of a position where you rely on others to fund your life, whether that’s a family member subsidizing your pay or living in the shadow of credit card debt.

By living on less than you make, you bring control into your life and you can buy what you like without a loan or permission from anyone else. This is a major step towards money mastery, and one of the major keys to learning how to manage money.

Be Generous

When you have crushing debt and you can’t see past next payday, being generous may feel like a luxury you can’t afford.

Generosity doesn’t always mean money. It’s the giving of your time, your attention, your kind words. There are many ways to be generous.

Giving back is hopeful. You give because you have enough. You don’t give if you feel like someone is taking advantage of you. Giving comes from a place of expecting nothing in return and recognizing that the universe has your back.

It wasn’t until I reached a  low point in my financial life and had to rely on help from others that I understood how being generous benefits both the giver and the receiver. I was denying my friends and family the chance to give by rebuffing their offers of help. In a way, I was blocking their ability to show love, and this was frustrating for them…not to mention I was denying help I needed. Our relationships became closer when I admitted I could use their help.

Generosity is good for your mental health, and it’s also a sign that your journey towards money mastery is progressing forward.

Generosity is good for your mental health, because it promotes feelings of gratitude and confidence. A study at the University of Michigan found that generosity increases life-span. Another showed it can lower blood-pressure. And yes, generosity can even increase happiness.

Once someone who has been buried by debt manages to bring it under control, their first response may be to hoard money for themselves to ensure that situation never happens again. Savings are an important part of self love. But holding onto money in fear means you still have work to do because you are trapped by fear.

Interestingly enough, then, giving back is often a sign that you have overcome fear – and in the process of doing so, it’s a sign that you have learned how to manage money!

The circle of life and the cycle of money

After all, money is cyclical. In economics they call this the “velocity of money” but in daily life it’s just an intuitive thing. You have to give money to receive it. You pay for the things you need, and others pay you for the role you play. When you have enough to share, you can help others reach their goals and benefit your own health in the process.

Giving is another way to be a part of something bigger than yourself. It’s hard to have low confidence when you know you play a role in someone else’s success. Being generous requires thinking outside of ourselves, and often results in social bonds with other people interested in helping.

We’ve covered a lot, but my hope is that you see how attainable these changes are for you. The Money Circle is a free, online space where members talk about steps that have helped them get their spending under control. Check out the conversation and find your inspiration to make 2021 the year you take back your money.

Tammy Lally

I BELIEVE MONEY IS NOT YOUR WORTH. Tammy Lally is an author, speaker, and Certified Money Coach (CMC). She helps others master their finances by first conquering their emotions around money, then by creating a comprehensive financial plan. She brings decades of experience and endless love to her bulletproof process for money mastery. She is the author of the book Money Detox, and her TED talk on Money Shame has over 2 million views.

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