The Beginner’s Guide to Personal Finance – Step-By-Step Tips

Mastering one’s personal finances requires taking one step at a time and should not be seen as a daunting challenge.

Start by setting financial goals, evaluating your current net worth and cash flow situation, as well as managing debt. After this is complete, save and invest accordingly.

Set Goals

Setting goals is the cornerstone of financial wellness. In order to set targets that truly reflect your soul and purpose in life while remaining manageable and achievable.

As opposed to setting an ambitious 20-pound weight-loss goal by next spring, setting more realistic and obtainable goals such as losing four pounds by May 5 may prove more doable and help motivate you toward its achievement.

Setting financial goals such as budgeting, reducing debt and saving money are crucial steps towards financial wellness. To save money try cutting spending or shopping for discounts online (such as through Latest Deals). Furthermore, investing and saving for retirement should also be prioritized.

Create a Budget

Establishing and adhering to a budget is the foundation of personal financial management. A budget will keep you on the path towards reaching your financial goals in an orderly fashion.

Set out by categorizing your monthly expenses into fixed and variable categories. Fixed expenses such as rent/mortgage payments, insurance and utilities remain consistent each month; variable expenses might include food (both groceries and dining out), entertainment, gas purchases and clothing purchases that vary each month. Make a record of everything using either an app or bank/credit card statements.

Once your budget is in place, review it frequently so you can make any necessary adjustments and stay on track. This will also allow for any emergencies that arise and provide opportunities to save.

Invest

Once your high interest debt, such as credit cards, has been cleared away, it’s time to start saving and investing! Aim to max out any employer sponsored retirement plans (particularly ones offering company matches).

Choose an investment account. Your options include savings accounts, Individual Retirement Arrangements (IRAs), and mutual funds. Decide whether you would prefer investing your money all at once or in equal installments over time, known as dollar cost averaging.

Now is the time to embark on your financial freedom journey! Make sure that you stay on track and meet your budget and goals; once done, enjoy your hard work and reach for your dreams! CFI will always be with you every step of the way!

Pay Off Debt

As part of your debt repayment strategy, creating a budget should be the starting point. Your budget should cover all regular monthly expenses including minimum debt payments. Checking this regularly to make sure that you’re meeting your goals of paying at least $400 towards debt each month is essential to reaching them.

Once your budget is in order, the “debt snowball” method can help you begin attacking your debt. This involves listing each debt from smallest balance to largest; when one debt is paid off, its payments roll onto another until all are clear.

Although saving money while paying off debt may seem appealing, doing both at once will only stall progress. Save as much as you can afford while simultaneously eliminating debt!

Save Money

Many young adults assume they still have decades to go until retirement, enabling them to put off personal finance management for another time. Unfortunately, this mindset can lead to bad financial habits that will ultimately cost more in the long run.

If you want to start saving, one way is to move money out of checking and into an emergency savings account that won’t allow any withdrawals except when needed for emergencies. Or sign up with Ebates’ cashback rewards program or use an online savings builder account.

Saving is also easy by contributing as much as possible to an employer-sponsored retirement account if available (and beyond), or opening a Roth IRA (Individual Investment Arrangement), which offers tax advantages not found with savings accounts. When shopping, be sure to use discount or voucher codes online first for added savings!