Personal Finance 101: Essential Tips for Beginners

4 min read
July 23, 2014

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Looking to get on the right track with your money? Feeling behind with your financial goals?

Don't worry: it's never too late to start paying attention to what your wealth is doing, and working to create more of it. Our relationship with money is an ever-evolving one -- and it should be a positive one, too. Instead of feeling down on yourself for what you haven't done yet, create a positive mindset and focus on all that you can accomplish once you're ready to take action.

Keep these essential, actionable tips in mind if you're working to turn over a new financial leaf:

Track Your Expenses

Knowing where your money is going is absolutely key in getting your finances sorted. If you can't tell what your money is up to right now, it's impossible to develop a plan and move in the direction you want to go. You must know where you're starting before you can reach the finish line -- and a big financial goal.

Your Actionable Tip: Start keeping tabs on your money! If you don’t feel like manually tracking your expenses via a spreadsheet, free tools like can help you out. Mint will ask you for your account information, pull your transactions from there, and categorize them. The app then provides an easy-to-read synopsis of your spending (complete with attractive charts).

Create a Budget

Once you establish the habit of tracking your expenses, you can create a monthly budget for you or your household. This serves as a check-in point, so you know how things are looking during the month. Plan to update your budget on a regular basis so you're in touch with the realities of your financial situation throughout the month.

Your Actionable Tip: Include all of your fixed expenses, such as rent, car insurance, cell phone, utilities, etc., as well as your variable expenses, like gas, personal care items, and one-time expenses. And don't forget the most important expense to account for: you and your savings! Always pay yourself first.

Add up all of your expenses to make sure that the total number doesn't exceed your income for the month. Spend less than you earn and avoid ending up in the red.

Goals, Goals, Goals

Do you have any debt to repay? Do you have something in particular you want to save up for, like a car, house, or vacation? Do you want to ensure your ideal retirement in the future?

Great! Maintaining goals is crucial to financial success. It's difficult to stick to good money management habits if you don't have anything tangible to work toward; without goals, you're also without direction.

Keep your big goals in mind when you make financial decisions. If you're torn between spending or saving, considering your goals and asking yourself which action moves you closer to achieving them helps keep you on the right track with your cash.

Your Actionable Tip: Post a list of your top 3 to 5 goals in places you’re sure to see: on your fridge, desk, or at work. This way, you’ll stay motivated every time you see them. Or instead of a list, go a step further and track your progress of these goals in a visual way as you work to accomplish them.

Prioritize Your Values

Your spending should align with your values. Think about it this way: if you love to travel, you might skip on getting that $60 haircut or $100 handbag because those things aren't nearly as important as your ability to see the world (right?). You can put that money in your travel fund instead.

Speaking of travel, financially successful people value experiences over “stuff” like material items. To do more with your money, consider shifting your priorities if you're currently obsessing over things more than you are spending time with the people you care about or experiencing things that bring you lasting happiness.

Your Actionable Tip: Put your money where your values are. Make a list of things that are important to you, and spend less in areas that didn't make that list. Keeping track of your expenses really helps with this. You might be surprised to find that you’re spending way more than you thought on something like meals out when you really value being able to fund your woodworking hobby.

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Establish an Emergency Fund

Emergency funds come in handy for unexpected situations, such as your car breaking down, a trip to the veterinarian or doctor, or an expensive home repair.

How much should you save? That’s up to you. No one knows your situation better than you do, so advice really differs here. Some experts say that $1,000 is fine, especially if you’re still in debt. Others say 3 to 6 months of living expenses. More if you’re a freelancer, self-employed in some way, or have unstable income.

Your Actionable Tip: Figure out what you’re comfortable with, and go from there! Saving something is much better than saving nothing. And don't stress if you need to start small. Even $5 or $10 per week or per month will get you to your goal exponentially faster than contributing $0 to your emergency fund.

Personal Finance 101: Take Action Now

These are just some basic ideas to get you started on the right financial path -- but that's the key. Just getting started is the most important thing you can do. Knowledge is definitely power when it comes to your money.

When you start, go at your own pace, and keep the focus on yourself. Don’t focus on how other people are spending their money. Keeping up with the Joneses will get you nowhere, fast. Do what works for you, and if something isn’t working, try tweaking your methods. It might take some trial and error to get things right, but we all start somewhere.

And don't be afraid to reach out and ask for help. Personal finance may have some simple fundamentals, but money -- and making the right decisions about it -- gets complicated fast. If you need professional advice, stop by our Find an Advisor resource to search for a financial planner that can specialize in your unique needs.