Protected areas are a fundamental mechanism for conserving global biodiversity. Given limited conservation funds and shortfalls in funding for existing protected area management needs, a critical question is: should countries and states spend new funds on purchasing more land or managing existing protected areas to an acceptable standard? We used a non-spatial dynamic landscape model to compare the relative importance of expansion of protected areas versus improved protected area management in diverse contexts. We provide guidance on how to allocate funding across these two actions, and the order in which these actions should be prioritized. We discover that, in contrast with spending patterns, which focus on expansion rather than management, management is often the better first investment. The relative priority of expansion and management is determined by observable factors: the relative costs of the two actions and rates of degradation in protected and unprotected areas. Importantly, regardless of these factors, the final recommended action is always to split the budget across expansion and management such that there is adequate money for management. This highlights that, while our existing protected areas are an important asset, increased investment in management is essential to maximize their potential to protect biodiversity.