Personal Finance Basics

 The Most Important Concept in Personal Finance

Compound Interest, Explained Simply.

You must understand this concept- it's so important! Time amplifies money. It amplifies it in a good way (investing) and it amplifies it in a bad way (debt). Compound interest is how a $2 candy bar put on a credit card becomes $8 of debt.

It's also how a dollar a day can become $80,000 after 40 years.

Seven Steps for Getting in Control of Your Money


Step Zero: What is Money to You?
Learning to be good with money means making sure each dollar is going towards the best place possible.

Step One: Emergency Fund
Saving for an emergency fund may be painful when you don't have a lot of money, but it is less painful than dealing with loan sharks or begging your family and friends for help.

Step Two: Take the Free Money (if it's available)
If your employer offers a 401(k) match, you'd be crazy not to take the free money!

Step Three: How to Get Out of Debt
There's no secret- you just have to pay it off. Start with the highest interest rate and work your way down. Because of compound interest, the sooner you pay, the less painful it is.

Step Four: Start to Save with an IRA
IRAs are special bank accounts that have major tax benefits.

Step Five: Max Out Any Other Tax Advantaged Accounts like 401(k)s, 529s and HSAs
If you have any other tax-advantaged accounts available to you, you should max them out before putting the money in a taxable place.

Step Six: Put the Rest in a Taxable Brokerage Account
You can still invest even if you're out of room in your IRA/401(k)/529/HSA.

Step Seven: Watch your Money Grow, Re-Assess your Goals, and Keep Spending in Check
As you earn more money and watch your net worth grow, be careful that your spending habits don't grow too. Check in with yourself every now and then to make sure your spending is in line with your personal values and goals.

 

 Money Smart, Life Smart

How to use Credit Cards Correctly

Should I Buy a House, or Rent?

How do I get customer service reps to stop lying to me on the phone?

How do I even deal with my student loans?

What should I do if a Family Member Steals My Identity?

Someone asked me to Co-Sign For Them. Should I do it?
(Spoiler alert: No. You should not.)

How to Protect Grandma from Scams

Four Common Scams and How to Avoid Them

I'm about to lose my job. What should I do? 

What's a credit report and how do I check mine?

Why a lower monthly payment on your student loans isn't always good


What is a CD?

What is an IRA?



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