Back to BasicsBack to BasicsWe all have that one seemingly “easy” task we’ve never quite figured out. This week, no problem is too trivial, no question too stupid. Just because it’s simple doesn’t mean it’s not a hack.
The hardest part about managing your finances is getting started.
Once you have some structure set up, checking in on your money becomes routine, and it’s easier to make decisions along the way. But “structure” doesn’t mean setting up a budget once and then forgetting about it. It doesn’t mean opening a retirement account and hoping it makes you a millionaire.
You’ve got to take care of your money on a regular basis. To keep you on track, you’ll want to visit (and revisit) the most important part of your financial toolkit.
You can’t figure out what to do with your money if you don’t know what you’re working with.
There are a million and one ways to budget your money, but if you’re looking for a non-judgy way to get started, try the Kakeibo method, which has you group your money into just four categories to get a quick overview of what’s working and what’s not.
If that’s too much to handle at first, break things down into biweekly segments instead of monthly.
And if you’re up for the ultimate back-to-basics challenge, how about taking it old-school with a paper spending ledger? Maintaining it, even for a month, will ensure you’ve got an eye on your budget every day.
Once you’ve got a grip on your budget, it’s time to ramp up your saving efforts.
So what about these emergency funds everyone’s talking about? Experts say you should have enough money stashed away to cover three-to-six months of expenses, in the event you lose your job or have to make an unexpected purchase. But ultimately, the right amount is up to you. Obviously, the bigger the better. But if the idea saving six months worth of rent/utilities/food/transportation makes you wheeze, any amount will help provide a financial cushion.
A great place to stick your emergency fund is in a high-yield savings account that earns interest while you enjoy as many emergency-free moments as possible. Here’s how to choose one.
If your budget is feeling more flush these days, that doesn’t give you carte blanche to spend. Every time you get a raise, make sure you’re putting your money in places that matter most.
When it comes to banking, we have one word of advice to rule them all: Stop paying fees. Banks love to charge you money to hold on to your money for you, to access your money, to back you up if you accidentally run out of money.
If you need a little motivation for switching banks to avoid pesky fees, we’ve got plenty of support for you:
Happy with your bank? Make sure you’re still keeping an eye on your cash by setting up alerts and notifications.
One more thing: checks still exist. I’m sorry, but it’s true. If you don’t deal with them often and are feeling rusty on the whats and wheres of writing a check, we’ve got a guide for you.
There are personal finance experts who think using credit is always a bad idea. But not us—we recommend using credit as a tool to help you achieve your financial goals. Still, you’ve got to tread carefully.
First things first: You’ve got to understand the magic formula that comes together to create your personal credit score. This guide points out the parts of your score and why it’s so important to pay on time and watch your spending:
Ah, yes—the importance of paying on time. To make sure you never miss a payment, let technology do the work and automate your minimum credit card payment.
If you’re ready to earn points or miles to exchange for rewards, we’ve got a beginner’s guide to help you understand how it all works:
But whether you’re trying to earn miles or simply increase your credit score, make sure to keep your credit as safe as possible. Freezing your credit is free and one of the easiest things you can do to prevent fraud and identity theft.
Budget organized, savings shored up, credit managed? Time to invest. Take the mental image you have of traders shouting on the floor of the New York Stock Exchange—your experience will not be like that. Instead, your best bet as a beginner is to set up a simple portfolio that doesn’t need much maintenance.