Personal finance

Personal finance describes how you save, spend, and invest the money you have (your financial resources). If you’re good at managing money, then you’re good at personal finance and vice versa. Here’s how to get good at personal finance.

Everyone has a vision of what financial success looks like to them. Maybe for you, it’s having a credit score over 800, retiring by age 50, or helping your kids avoid the student loan squeeze. For others, it may be driving a luxury car or owning a second home by the beach.

Learning to budget is one of the basics of personal finance. It involves tracking your income and expenses so you can see where your money is going each month. When done right, a budget puts you in control of your money. It gives you the freedom to spend more on things you love by spending less on things you don’t. There are a lot of budgeting apps to help you automate the process.

If you always feel like you don’t have enough money to pay the bills, an emergency fund could provide some relief. It’s one of the basics of personal finance because it gives you a safety net to fall back on if something unexpected happens (such as your car breaks down or your cat needs an emergency vet visit).

Getting out of debt can be challenging. But there are a lot of reasons why you should do it. Becoming debt-free increases your financial security, gives you more money to spend on things you enjoy, and improves your credit score.

Making a plan to pay off your debt can be one of the best things you do for your personal finances—especially if you have high-interest debt. “Eliminating high-interest debt should be a top priority when it comes to personal finance,” said Yudina. “This type of debt can quickly spiral out of control and derail any financial plan you have in

place.”

Saving for retirement has all types of benefits—you can deduct contributions from your taxes, you build up a nest egg for the future, and you may get free money if your employer offers matching contributions.

The goal of personal finance is to spend less so you have more money to save and invest. Although it’s a simple concept to grasp, it can be difficult to stick with it when you’re constantly bombarded with marketing messages telling you to buy more, more, more.

Each time you go to make a purchase, ask yourself, “Does this item bring me one step closer to the life I want to live? Will I enjoy this purchase or am I just buying it to buy it?” By asking yourself questions like these, you align your spending with your values and minimize your chances of wasting money on something that puts you farther away from your goals.

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