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Saving and Spending Basics Everyone with a Wallet Should Know

Get a quick overview of personal finance basics so you and your money can get headed in the right direction, right from the start

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Understanding the basics of personal finance so you can create plans for how you want to spend and how you want to save can help you move toward life’s next stages—whatever you want those to be. Here’s a look at what everyone should know about money and how it comes and goes.

Create your spending plan.
Also called a budget, a spending plan is simply a plan you create to help spend money thoughtfully, so you can maintain your lifestyle and pay bills on time—even when they fluctuate. Here are the basic elements of a spending plan.

Track your money coming in – List out your paychecks, tips, loans, scholarships, everything.

Track money going out – List all the bills: housing, groceries, utilities, credit cards, we’s a whole thing.

Add. Evaluate. Adjust. Do the math and take a look at how those totals compare. Maybe you’re in a great spot, maybe you’re looking to save more. If so, here are some budgeting tips:

  • Watch the small stuff. $4 for a coffee. $6 for a smoothie. They add up. Fast.
  • Use a savings calculator: Using our savings calculator to help you quickly determine what you could save by making cuts to your budget.
  • Don’t just spend more when you make more. If you get a raise, consider saving part of it or contributing more to a workplace 401(k) retirement plan.
  • Make yourself use cash. Apps and cards are easy to over use.
  • Get after that debt. If you have a growing unpaid balance on your credit cards, part of your budget should aim at bringing the balance to zero. Use our credit card interest calculator to determine how quickly you can pay it off and how much you can save paying it early.

Be smart with savings.
Your savings account isn’t just a place to stash a rainy day fund. You can think about it as strategically as your spending plan by looking at your savings rate.

Your savings rate: Your savings rate is the amount of money you save each month and it’s expressed as a percentage of your total or gross income. That means the higher your savings rate, the more money you are saving per month, the more you can put away for retirement, or a house, or your emergency fund or whatever your financial journey is leading you toward.

What’s a good savings rate? Many finance experts suggest a rate of 15%. That number might move up based on your goals, but it’s a good rule of thumb. Here are three ways to boost your savings rate:

  • Cut back on spending It’s nobody’s favorite thing, but look over your budget for big and small cuts you can make—every dollar you cut from spending means more put toward saving.
  • Raise your income Sounds like a no-brainer, but making more money is a great way to save more money. There are quite a few ways that you can increase the amount you are earning:
    Add a side hustle
    Get a new position (with your current or a new employer)
    Negotiate a raise
  • Always pay yourself first Set up automatic transfer to move money into your savings right after each pay period to make sure your savings goal gets funded first.