Personal finance tips for beginners
Much of the financial advice you find will be aimed at people who have some experience managing their money. But what if you’re just starting out? What if you don’t have stock options or multiple bank accounts?
Even if you’re taking your first steps into maintaining a single bank account, these personal finance tips for beginners will help you make solid investments that will last for a long time.
Create a Budget
Tracking your income and expenses — by hand, by online spreadsheet, or by app — is good for anticipating, and preparing for, how much money you think you will spend over a set period of time. Most people create a monthly budget based on how much they expect to earn in a given month and then break down how every dollar will be spent or saved.
Creating a budget presents a tangible and effective way to manage your money even if this is your first time doing it. Budgeting $10 for savings a week, for example, will save you over $500 a year.
Budgeting will help you learn how to live within your means. Even if you’re living paycheck to paycheck, you can put away a little money for a rainy day fund or to responsibly treat yourself every now and then.
Acknowledge Your Debt
No one likes thinking about the money they owe, but making an inventory of your debts — everything from total amounts to interest rates, minimum payment amounts, and loan lengths — will give you a good idea of how much you owe and the rate at which you make your payments.
Monitoring your debt in this way gives you a system by which you can prioritize and organize your payments.
It may be uncomfortable to look at. You’ll likely owe more money than you actually have, but it will open your eyes on how you can slowly chip away at your debt.
Keep an Eye on Your Money
Take one minute, every day, to look at your financial transactions. Even if you’re busy with work and family, spending 60 seconds to glance at your accounts to notice patterns, identify problems, and keep track of your goals, will incrementally — and drastically — help you set the right tone for your spending. We send you an instant spending notification every time you spend money and you can view all your transactions directly on the homescreen of your Current app. Our ‘Money In, Money Out’ feature allows for a quick glance at your monthly spending.
Doing this will also get you into the habit of spending more time analyzing your finances, especially when you have to make hard decisions or big payments. Prepping yourself with daily one-minute checks on your accounts will reduce the possibility of unpleasant surprises in the future.
Creating a Savings Plan
Maintaining savings, such as using our Savings Pods, is more than simply having a savings account. Putting money in your savings is a form of “paying yourself,” and doing that before you make any other expenses is the foundation of good money management.
Each person’s savings plan will be unique, but there are a few standard steps that will set you up to make the most out of yours.
- Set a savings goal. How much money a month should be deposited into your savings account?
- Automate the process. Most online banking portals and apps will allow you to automatically take a set amount out of your checking account and put it into your savings account.
- Keep track. Monitor how much money is being moved from your checking account and how often it happens. Even if the amount and frequency of that transaction is always the same, plan your budget and your expenses around that transaction. This makes it easy to be constantly aware of what’s going on with your finances.
When it comes to creating a savings plan, you might be asking, “How much money should I transfer to my savings account?” That’s a good question to ask because there’s no one right answer. As a rule of thumb, you should save enough money that it has an impact on your spending but not so much that you can’t pay your bills or other necessary expenses.
You could try what is known as the 50-30-20 method, popularized by Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan. Warren recommends that after taxes are taken out of your income, you divide the remaining amount up in the following way:
- 50% toward your necessities
- 30% toward your luxuries
- 20% toward your savings
Set Specific Goals
Make a list of the financial goals you want to meet. Use specific numbers and dates to make it easier to envision what you want to do with your money.
Write down how much of your debt you want to pay off and when. Get specific. Don’t write “all of it” and “as soon as possible.” Instead, make your goals realistic and achievable. Write down how much you want to save and a timeline for hitting those measurements.
Don’t be afraid to revisit these goals. Things happen, life changes, and you may have to rethink your saving strategies. Even as you need to revise your goals, keep track of those revisions too. This will ensure that you don’t stray too far from your original goals, and it can help you keep track of the changes you have to make.
Use Apps to Stay Organized
Keeping your finances organized is not easy, especially when you’ve got other priorities in your life. But a simple budget app can organize all your expenses into a big picture for you, and this keeps you informed and aware of your finances at a single glance.
At Current, we send you a push notification whenever there is any activity on your account (if you have push notifications enabled), which can give you a sense of mindfulness when it comes to your spending habits.
There are other lifestyle changes you can try to help you with your personal finances.
A big part of life where this comes into play is spending on food. Food spending can derail any budget, whether you’re a veteran or this is your first time attempting a budget. If you are eating out, you could be earning cash back with our points system at participating. This includes points on everyday purchases, like Subway and other food establishments. You can find all points locations near you on a map directly in the Current app.
You can also look at your sources of entertainment. With subscriptions to Netflix, Hulu, Spotify, and other media platforms, it’s easy to spend upwards of $50 a month without even realizing it or without using some platforms half the time. But of course, you still want to watch good content and listen to good music.
As you cancel your subscriptions with some services, check out your local library for free rentals of movies, TV shows, and music CDs. Many libraries also offer digital renting during pandemic closures. Museums often waive admission fees on one day a month, and second-run movie theaters will allow you to see popular releases for only a few dollars.
You don’t have to give up the things you love to save money. You can look for ways to enjoy these things at a lower price point.
Sign Up With Current
Personal finances can seem intimidating, especially if you’re just beginning your financial journey and even more so if you’re working with very limited means. But there are many ways that you can take control of your financial situation. These tips will help you get started, and they will put you in a good position to grow your accounts with the future in mind.
When you choose Current, you’ll enjoy a lot of perks that get you closer to better financial footing. No overdraft fees is just the start. You’ll also get paid up to two days faster with direct deposit if you're a Premium Account member. Sign up in just 2 minutes today!
Personal Finance 101: The Beginner’s Guide to Personal Finance. (October 2020). The Finance Twins.
24 Financial Tips For Low-Income Earners. (July 2020). Listen Money Matters.
What Is the 50/20/30 Budget Rule? (August 2020). Investopedia.
How to Budget and Save Money if You’re on a Low Income. (March 2019). The Sun.
7 Practical Ways to Save Money on a Low Income. (July 2016). Medium.
13 Ways to Save Money on a Low Income. (October 2020). Clever Girl Finance.
Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.
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