How you manage, spend, and invest your money can have a profound impact on your life, yet very few schools teach these important skills. Learning financial savvy can take a while, but the basics are fairly simple and . Here’s where to get started.

You were probably taught some basic math growing up, but too many people make it all the way to adulthood without ever learning basic money management. Skills like creating a budget, investing for the future, or even how credit cards work are startlingly rare skills. If you’re in need of a Money 101, we’ll cover the basics for beginners, while also giving you the resources you need to learn more.

The Golden Rules of Personal Finance

Managing your finances feels like nothing but a lot of paperwork and numbers. You make X amount of dollars, you spend Y amount, and you try to make sure Y is less than X. However, your finances are just as much about psychology, habits, and the values you choose to live by. Put another way, your mindset matters just as much as the math.

Beneath all the software and the budgets, there are a few rules that will always help improve your financial life:

Spend less money than you earn: If you earn $30,000/year and you spend $31,000/year, you’ll end up in a spiral of debt that’s hard to walk away from. If you spend exactly as much as you earn every year, you’ll never be prepared for emergencies or major life changes. Spending less than you earn allows you the freedom to save, to prepare for the future, and deal with the inevitable crises that life throws at you. The bigger the gap between your income and your spending, the better.
Always plan for the future: This doesn’t just mean retirement. When a store offers to let you pay off some gadget in 6 months with no interest, you need to know you can pay it off, or avoid that deal. Establishing an emergency fund will allow you to deal with unexpected car repairs or medical bills. Having a retirement plan will ensure you have income when you’re unable to work anymore. Your finances should always look forward beyond the current month.
Make your money make more money: Want to know how the rich keep getting richer? It’s because money can grow while you sleep, provided you save some of it. Properly invested money earns more money over time. Don’t just sock all your cash away in a low-interest savings account. Invest in things that will earn you more money than you had before. Sometimes that’s an investment account, but sometimes it’s starting a business, or even getting an education to get a better paying job.

The most important personal finance rules don’t change. What your grandparents did may not work for you. There will always be newer, better tools to manage your money. However, spending less than you earn will always be beneficial. Investing your money will always be better than doing nothing with it. And planning for the future will always be better than blowing your paycheck as soon as you get it.
How to Find a Bank Account

It’s neither safe nor advisable to keep all your money under your mattress. You’ll need some kind of account to stash your spending money and short-term savings. A bank (or credit union) can hold your money and allow you to access it with an ATM/debit card. Setting up a bank account is easy. You can usually apply online, or go to a branch, ask a teller to open an account, and they’ll guide you through the process. Choosing a bank is tougher.

Picking a bank means finding an institution that has the services you need with the fewest fees. Common services include debit cards, ATM access (or at least refunding fees for using other bank’s ATMs), paper checks, and a web site where you can see your account balance. While some banks charge monthly fees or require you to have a minimum balance, there are plenty of banks that are worthwhile without either of these requirements. We’ve discussed more about what to look for in a bank here.

Chances are, most adults in your life have recommendations on which bank they prefer. However, if you can’t get a decent suggestion, the FDIC has a tool here that you can use to search for insured banks in your area. The site can find branch locations near you, and give you links to the company’s websites where available. NerdWallet also has a great online tool here that compares checking accounts from a variety of banks.

Of course, keep in mind that not every bank has physical branches. Some banks—like Simple, Ally, or Capital One 360—are online-only. These often come with certain trade-offs (like, you know, not having physical branches), but many offer fewer fees and better services. They also typically offer better interest rates—meaning the money you save earns a little extra money just for keeping it in your account—than traditional banks, because they don’t have as many operating costs associated with physical buildings.

Once you’ve decided on a bank, either go into a local branch or visit the company’s site and ask to open a new account. You’ll need to provide basic forms of identification, including your name, social security number, date of birth, and some form of photo ID like a driver’s license to prove you are who you say you are. You can check with the bank you want for specifics.

If you’re still not sure which bank to go with, don’t worry too much. Most banks generally offer similar services and if you decide you don’t like one, you can always change to another.
How to Set Up a Budget

Do you know where your money goes, or does it kind of just disappear from your account? A budget—even a basic, barebones one—is one of the best ways to make sure you’re spending less than you earn, and starting early is important. When you’re young and your career is new, you don’t have a lot of money. Getting into the habit of categorizing your bills and tracking your expenses will help prevent a lot of financial problems before they start. If you’re making a budget for the first time, it may be easier to start with paper, a pen, and a calculator, but we’ll get to more advanced tools you can use in a bit.

Start by calculating how much money you make in a month. If you get paid hourly, multiply your wage by the typical number of hours you work each month. Then, write down all of your regular expenses. This includes recurring costs like your rent or mortgage, utilities, car payments, and and so on. For more complex things like food, you may need to track what you spend over time. Gather up your receipts for the past few weeks, or use your bank’s transaction history if paperwork isn’t your thing. If you can’t get a precise number, estimate in the meantime. Then, keep track of all your expenses for the next month or two. At the end of each month, add everything up to see how much you’re spending in each category.

Ideally, the amount you spend in a month should be lower than the amount you earn. If it’s not, start going over your list and see which expenses you can cut down on until it is. If you have to, cut ruthlessly. For some, it may be as easy as cutting those lattes, but for others, you may have some big decisions to make—like whether you can afford to live in that expensive city.

Once you get the hang of tracking your expenses, you can try using a service like Mint to manage it for you. Connect your bank account and it will automatically tag your transactions, so you can easily see how much you’re spending on bills, groceries, restaurants, shopping, and other categories. You can also use it to set budgets for different things like groceries or entertainment and get notified when you’re going over. You can read more about how to use Mint with our beginner’s guide.

So you’ve gotten into the habit of tracking your spending, and now it’s time to create that budget. There are a few different philosophies here. Some people prefer to have a very detailed transaction history with strict allotments for expenses like food, clothing, and entertainment. Others, like financial expert Ramit Sethi, believe that being overly strict doesn’t work. Instead, Sethi suggests dividing your money into four categories:

Fixed costs (50-60%): This should include every cost that you know is coming each month, that rarely change. That means rent, gas, power, groceries, your cellphone bill, and anything else that generally stays the same. Some of these may vary a bit from month to month, but are at least somewhat predictable, and are necessary for regular life.
Investments (10%): As you build your savings (which we’ll discuss later on), you’ll eventually want to invest some of your money so it grows over time. If you have any investments like a company 401(k) that come out of your paycheck, you can count it here.
Savings (5-10%): Short- and long-term savings should go in this category. This includes saving up for vacations, gifts, or large purchases like a new TV or computer. You should also include an emergency fund—which is just a block of money you keep in a savings account for unexpected emergencies like car repairs or sudden bills—in this category.
Guilt-free spending (20-35%): This category is where you can put whatever you want. Dining out, drinking, or splurging on entertainment is often seen as a financial vice, but the truth is, we do these things because we enjoy them. As long as you have the other three categories covered you can spend this money without feeling guilty about your budget.

Those are Sethi’s recommendations for young people, but you can (and should) adjust the percentages based on your age, your financial goals, and what you find important. Remember: the more you save, the more money you’ll have later on to buy a house, retire early, or achieve other goals. (We’ll talk about this more in a bit.)

Ultimately, budgeting just means knowing where your money is going and planning ahead. If you don’t want to go to the trouble of writing down every single dime you spend at the gas station, this model will still cover most of what you need to budget for. The only thing you need to decide is how much you’ll place in each category. We’ve included Sethi’s recommended percentages as a guide, but you can adjust as needed. If you can’t afford to save or invest 10% of your income after expenses, save what you can. You can also add more to your savings rather than forcing yourself to spend 20% of your budget on guilty pleasures. The more you can save, the better!

There’s no shortage of personal finance tools to help you manage your budget.

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