Whether you’ve never thought about how to handle your finances before or just need a refresher, Personal Finance 101 is a class everyone needs to take. Understanding how to manage your money is an essential, lifelong skill that will help give you peace of mind, build a prosperous future, and set yourself up for success.
If you follow the six tips below, you’ll be on track to snagging an A+ grade.
#1 Your First Assignment: Making a Budget
Understanding where your money goes is essential to understanding how to manage it. It’s easy to let your spending get out of hand if you don’t hold yourself accountable. Creating a budget doesn’t only mean buying the absolute necessities—a good budget leaves room for some fun purchases, too.
Take a look at some of these excellent budgeting tools:
- Budgeting apps –Thankfully, technology has made budgeting much easier. Apps like Mint or YNAB give you an easy way to track your spending. Many of these budgeting apps link to your bank account or credit card, giving you the power to track your spending in real-time.
- Spreadsheets – Spreadsheets are a more traditional way to track spending, but they’re still effective. Just be sure to update your spreadsheet frequently—once you get behind, you might be tempted to give up altogether.
- Pen and paper – If you want to go truly old-school, there’s nothing wrong with whipping out some good ol’ pen and paper to track your spending. Be sure to keep your records in a safe place because “my dog ate my budget” just won’t cut it.
#2 Ask Questions
Personal Finance 101 is no different than any other class you’ve ever taken—asking questions will help you learn more. Most importantly, be sure to ask your bank plenty of questions about the tools and resources they offer customers.
Your bank does more than just store your money, so be sure to ask about the following:
- ATM fees
- Annual fees
- High-yield savings accounts
- Mobile banking options
- Overdraft fees and policies
- Transfer options
#3 Taxes Will Test You
Think of taxes as the final exam of Personal Finance 101. The stakes are high, and the material is difficult. Like with any exam, you’ll have to spend a lot of time prepping for tax season and take the process very seriously to get good results.
It pays off to hire a professional if you need help with your taxes, especially if you feel you’re at risk of an IRS offset or audit.
#4 Plan Ahead
Planning is essential. This doesn’t just mean saving money in a piggy bank—it also means structuring your finances in a way that aligns with your long-term goals.
If you want to retire early, focus your efforts on an aggressive savings plan. If you want to focus on using the market to your advantage, start buying stocks or open up a mutual fund. Everyone’s financial goals are different, so be sure to step back and think about what you want down the line.
#5 Do Your Homework
Investing time to learn and research about the various components that make up your overall financial picture will help you manage your money more effectively. Without having a clear picture of your finances, it’s going to be a lot harder to get them under control.
Here a few things you’ll need to look into:
- Credit card rewards
- Employer benefits
- Your credit score
- Interest rates on loans
- Income vs. expenditures
Once you do your homework and learn the ins and outs of your finances, be sure to organize your findings in a secure, easy-to-access place.
#6 Use Your Resources
In school, you probably survived by relying on study groups or office hours to help you tackle material you didn’t understand. Though the days of asking your professor for extensions are over, you still have access to a wide array of financial resources at your fingertips.
Personal finance isn’t always easy, which is why you can always consult the professionals out there whose careers are dedicated to helping out folks like you. Don’t hesitate to reach out to a financial planner, CPA, or even a tax lawyer if you feel you need help.
You’re Ready to Start Managing Your Money
Now that you know a few key tips and tricks, it’s time to take what you’ve learned and apply it to your personal finances. Even if you only implement a few of the tips above, you’ll be well on your way to carving out a more secure financial future for yourself.
Now: sharpen your pencils and get ready to ace your personal finance exam!