Starting is scary— trust me, in writing this (first!) website resource, I know exactly how it feels. I’ve poured over any personal finance resource I could find as I confronted my own insecurities around money. And I’m still going. Luckily, I realized that finances, and wealth building, isn’t actually that scary after all.
You don’t have to be an Econ major, ‘finance person’, or investment junkie to get started. This community is built for anyone that:
Today’s Two Recommendations - Starting your Personal Finance Journey
1. Know where you are
You can’t know where you’re going without knowing where you are— tracking your spending is super important. Do you know how much you spend on groceries? Uber/Lyft rides? Gas? Clothes? Happy hour? Start small, and try to track your spending over just 2 weeks. Given that small sample of transactions, you can estimate how much you spend per month!
There are many ways to track spending. You can do it as you go, or dedicate time at the end of each week, or month, to review what you spent.
Some people prefer to track using paper and pen, others like Excel, and others like to use free Apps associated with your bank or otherwise. I personally use Mint, a popular budgeting app, although there are tons out there for your unique needs, whether you need something hands off, hands on, alerts-based, or otherwise.
2. Create a budget
I personally use the 50/30/20 rule because it is easy, memorable, and logical. It also aligns with my new lifestyle as a working professional, but full-time students may want to adopt a different model.
Under the 50/30/20 guideline, 50% of your expenses should be fixed essentials, like rent, insurance, internet, groceries, and minimum payments on existing debt. 30% of your expenses should be flexible — these are your partial needs and wants, ranging anywhere from gym memberships, haircuts, shopping, and going out (including drinks, rides home, etc.). 20% of your expenses should be financial goals— this includes saving an emergency fund for immediate access, starting your retirement fund, and also saving for upcoming purchases like trips, gifts, or otherwise. (more on savings later!)
If you can stick to this breakdown, or at least get close, you’ll start to develop healthy habits of living within your means, enjoying the present, and looking out for your future.
There is a middle ground between depriving yourself of good times and being completely reckless— this is where good personal finance comes in. Your money management is dependent on your personal priorities at the time, whether it’s traveling to spend time with loved ones, saving for a big life event (like graduate school), or otherwise. I used to worry about “getting it right”, but I realized that my finances, just like my life, are constantly changing. Don’t worry if you don’t have it perfected today— we’re starting to build our finance muscles slowly, and that’s something to celebrate!
When it comes to managing your money, how do you avoid the noise, and bad advice, to actually get peace of mind?
This month, tune into our podcast for the exclusive Future of Finance series. We ask leaders from digital investment apps and social impact companies to simplify what you should, and shouldn’t, be doing with your money!