Learn About Your Money in Small, Manageable Steps - NerdWallet (2024)

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So, you want to learn more about your money and make moves with it. Go you.

“That’s a moment of self-awareness that requires celebration,” says San Francisco-based financial coach Saundra Davis.

And your timing is perfect, as April is Financial Literacy Month. This designation wouldn't exist unless many people needed help understanding their money.

“You’re not the one person out there that hasn’t got their finances together,” says Orlando-based certified financial planner Angela Moore.

Go easy on yourself, and start small

It’s OK if you don’t save much or have a clue what IRA stands for. Aim to avoid negative self-talk and give yourself grace, says Moore, who’s also the founder of Modern Money Education, a platform offering personal finance courses.

Start with “baby steps,” she adds. Schedule time to try the steps below, so you’re mentally prepared. (This is opposed to, say, waiting until you’ve overdrafted and feel frazzled.) For a few of these steps, you could even set a timer and plan to spend about 15 minutes on the exercise, so you don’t get overwhelmed.

As you try the following advice, “think about how you learn best,” says Davis, who’s also the founder of Sage Financial Solutions, a nonprofit specializing in financial education and planning for low-wealth and underrepresented communities. For example, while group discussions may be motivating for some people, others would much rather read a book. So try a few strategies to find what works for you.

Ways to learn about money

Talk with a professional

A financial coach, counselor or other expert can help you figure out where to start and what to prioritize.

The Association for Financial Counseling & Planning Education is offering free virtual sessions. The AFCPE website says its certified financial counselors and coaches “can help you manage immediate expenses, build savings, create a plan to pay off debt or navigate financial assistance benefits.”

You have other options, too. The Financial Planning Association provides pro bono financial support to low-income individuals and those considered to be “underserved,” including veterans, people affected by natural disasters and others.

Nonprofit credit counseling agencies typically offer free financial advice, too, and cover budgeting, debt and other topics. Look for agencies that are members of the National Foundation for Credit Counseling or the Financial Counseling Association of America.

Or chat with friends and community members

If you’re not up for counseling, simply chatting can help you think and learn about money in a casual way. You can learn how peers manage money, voice your financial concerns and brainstorm solutions.

Just remember that you’re participating in an informal conversation — not receiving professional guidance. Do your best to verify advice on your own. For example, look for webpages on the topic that include sources for the information, such as professional experts or studies.

To find in-person money conversations, look into local churches, libraries or universities. Or check out Meetup, a website that helps groups gather. You could also start money conversations among your own friends to normalize the topic.

To learn with others online, Moore suggests looking into Facebook groups that discuss personal finance. Exploring Reddit’s r/personalfinance channel and its helpful wiki page can also be an easy way to start thinking about money.

Try quizzes, apps and spreadsheets

Would you prefer a solo exploration of your money? Many online tools can help you see where you stand and determine your next steps.

Take this eight-question financial health quiz to determine your ability to weather financial stressors and achieve long-term goals.

Or see where your money is going with a budget app. Knowing how much you’re spending on what is a helpful first step in managing your money and setting goals.

A free budget spreadsheet, like those provided by the Financial Trade Commission, NerdWallet and Microsoft Office, can also help you understand your finances. These spreadsheets are more hands-on than apps that sync your accounts, because you’re responsible for filling out fields related to incoming and outgoing money.

Review your finances and set goals

Interested in learning more about your money but don’t want to fuss with an app or spreadsheet? Try Moore’s old-school approach with her clients. She has them spend 15 minutes simply jotting down their financial inventory on paper.

This would include the amounts in checking, savings and investment accounts; average bill payments; debt owed; estimated money spent each month; and take-home income. Start with estimates.

“You’re not going to know a lot of this stuff,” Moore says. Ideally, all these missing pieces will make you curious, she says. So look up the real figures. You may find your estimates are way off.

This exercise is meant to help you understand where you stand today. Knowing these basics helps you make changes and set goals.

For example, if you spent more than you thought on takeout in March, you could aim to spend half as much in April. Or perhaps you’re inspired to refinance a loan, start an emergency fund or contribute to your workplace retirement plan.

Whether you’re ready to set goals on your own or decide to use a tool or talk with a professional, you’re on the right track. As Davis says: “Start exactly where you are, with no shame.”

Learn About Your Money in Small, Manageable Steps - NerdWallet (2024)

FAQs

What is the 50/30/20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

How do you manage a small amount of money? ›

How to manage your money better
  1. Make a budget. According to the Capital One Mind Over Money study, people dealing with financial stress struggle more with budgeting. ...
  2. Track your spending. ...
  3. Save for retirement. ...
  4. Save for emergencies. ...
  5. Plan to pay off debt. ...
  6. Establish good credit habits. ...
  7. Monitor your credit.

How to learn about money for beginners? ›

  1. Watch, Listen, or Read Up on Financial Topics.
  2. Take a Finance Course.
  3. Hit the Books Again.
  4. Talk to Financial Services Pros.
  5. Ready for More?
  6. An Evolving Industry.
  7. Where's the Best Place Online to Start Learning About Finance?
  8. What Areas of Finance Should I Learn About?

What is the 70 20 10 budget? ›

This system can help you get better acquainted with what you earn and where it goes, while tracking your daily spending (that's the 70% of your after-tax earnings) plus debt repayment and saving (the 20% and the 10%).

Is $4000 a good savings? ›

Ready to talk to an expert? Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

What is the 40 40 20 budget rule? ›

The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.

How to manage $1,000 a month? ›

Here's how to live on $1,000 per month.
  1. Review Your Current Spending. ...
  2. Minimize Housing Costs. ...
  3. Don't Drive a Car. ...
  4. Meal Plan on the Cheap. ...
  5. Avoid Subscriptions at All Costs. ...
  6. Negotiate Your Bills. ...
  7. Take Advantage of Government Programs. ...
  8. Side Hustle for More Income.
Oct 17, 2023

What are the 5 basics of personal finance? ›

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.

What is the number one rule of money management? ›

Golden Rule #1: Don't Spend More Than You Make

Basic money management starts with this rule. If you spend less than you earn, your finances will always be in good shape. Understand the difference between needs and wants, live within your income, and don't incur unnecessary debt.

How can I teach myself money management? ›

Here are seven to get you started.
  1. Track your spending to improve your finances. ...
  2. Create a realistic monthly budget. ...
  3. Build up your savings—even if it takes time. ...
  4. Pay your bills on time every month. ...
  5. Cut back on recurring charges. ...
  6. Save up cash to afford big purchases. ...
  7. Start an investment strategy.
Jun 27, 2023

How to be financially savvy? ›

Here are just a few ways:
  1. Track your spending. As any behaviorist knows, it's important to know your habits before you can change them. ...
  2. Make a budget. Based on your spending, create a monthly budget. ...
  3. Think small. ...
  4. Think big. ...
  5. Borrow less and pay the interest. ...
  6. Invest the money you save. ...
  7. Save for retirement.

Can you teach yourself finance? ›

Finance can be easy to learn if you are willing to seek out informative content from books, podcasts, videos, blogs, and even professionals and then invest some time soaking up knowledge.

What is the 60 40 30 rule? ›

60/40. Allocate 60% of your income for fixed expenses like your rent or mortgage and 40% for variable expenses like groceries, entertainment and travel. 30/30/40.

Which budget rule is best? ›

Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums.

What is the 702010 rule? ›

Based on the principle that:

70 percent of learning comes from experience, experiment and reflection. 20 percent derives from working with others. 10 percent comes from formal interventions and planned learning solutions.

Is the 50 30 20 rule outdated? ›

But amid ongoing inflation, the 50/30/20 method no longer feels feasible for families who say they're struggling to make ends meet. Financial experts agree — and some say it may be time to adjust the percentages accordingly, to 60/30/10.

What is the disadvantage of the 50 30 20 rule? ›

Drawbacks of the 50/30/20 rule: Lacks detail. May not help individuals isolate specific areas of overspending. Doesn't fit everyone's needs, particularly those with aggressive savings or debt-repayment goals.

What is the 50 30 20 rule for 401k? ›

Key Takeaways

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

How much money should I have leftover after mortgage and bills? ›

As a result, it's recommended to have at least 20 percent of your income left after paying bills, which will allow you to save for a comfortable retirement.

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