Step 1 in Personal Finance: Establish Financial Objectives
Short-term (less than a year): emergency reserve, minor debt repayment.
Mid-term (1–5 years): Saving money for a down payment on a house, vacation, or automobile.
Long-term (5+ years): Real estate, retirement, and college funds.
2. Monitor Earnings and Outlays
Establish a monthly spending plan.
Utilize spreadsheets or applications to keep track of:
Income: Benefits, side work, and salary
Rent, utilities, and loan repayment are examples of fixed expenses.
Transportation, entertainment, and food are examples of variable costs.
3. Establish a monthly spending plan
Take the 50/30/20 Rule as a guide:
50% of necessities (groceries, utilities, and rent)
30% Desires (hobbies, eating out)
20% Off & Repayment of Debt
4. Establish an Emergency Fund
Aim for three to six months’ worth of living cost
Start small; even $500 can have a significant impact.
5. Pay Off Debt with High Interest Rates
Payday loans, credit cards, and other high-interest debts should be your main focus.
Use one of the following:
Avalanche method (priority of interest)
The snowball strategy, which starts with the smallest debt to motivate
6. Consistently Save and Invest
Save money automatically in a different account.
Think about investments such as:
Account for high-yield savings
ETFs and mutual funds
Retirement funds (401(k), IRA, etc.)
7. Examine Every Month
Compare your spending to your budget.
Where necessary, make adjustments.
Honor little victories!
8. Safeguard Your Money
Obtain renter’s insurance or health insurance.
Use two-factor authentication and create secure passwords.
Maintain a list of all the relevant financial documents you own.
9. Make Future Plans
Make a simple estate plan or will.
Establish savings targets for retirement.
Think about sources of passive income.
