Personal Finance 101 is the beginning steps you can take to really become self-sufficient with your money. It will include various areas like understanding expenses, how to create a budget, saving for retirement, investing basics, and more.Many of these concepts may appear difficult to manage or that you must be highly educated to do so on your own. But you — and anyone — can teach themselves to succeed with money.
You don’t need to be an expert to manage your finances and you can have little to no previous background, but still improve your financial health.
Below, I’ll share some of the steps I took to teach myself and hopefully you can apply this to your own personal finances. Will it be easy? No. But it’s certainly not extremely challenging either.
Changing Your Money Mindset
Before we get into my Personal Finance 101 steps, I think a big gatekeeper to managing your money successfully is your mentality and mindset.
Firstly, many times the media or financial experts make this stuff seem like complicated rocket science. Surely some aspects to finance can be, but the majority is really not.
This can mess with your financial literacy, mindset, and feelings towards money from day one. I know it did for me.
Other times, it’s easier to be in-denial about our financial situations. If you don’t pay attention to the problem, it doesn’t exist, right?
But as you know, that temporary “solution” will inevitably snowball in the future where it becomes a much more challenging problem.
Another way your mindset might be hindered is maybe you are relatively on the younger side, say 20’s to early 30’s and your financial education is just not a priority to you. The “I’ll worry about it later” mentality creeps in because you have time on your side.
Whatever it is, your understanding of personal finances and dedication to managing money has to start with the right mentality. Otherwise, it won’t be a priority to you nor will you dedicate time to learning.
I unfortunately can’t give you the magic “aha!” moment or steps to get on the right mental path. We are all unique in what works.
Personal Finance 101: Teaching Yourself About Money
Hopefully, the section about mindset made sense and did not come off has some “self-help” preaching. My intent is really to ingrain that mindset is the first key ingredient to determine your success with teaching yourself about money.
We all know that you should save for retirement, have an emergency fund, and invest, yet so many fail to take any action. This includes myself until 2014. Why?
Nothing will change if your mindset is stuck and you lack the willingness to erase the misconception that personal finances is “too hard.” The cycle of change has to come from within.
Usually a moment in your financial life can be the motivation and drive you need, but even then there is no guarantee.
If you don’t think you are there mentally ready yet, the steps below won’t be impactful in the long-term. And that’s okay!
Work on how you can motivate yourself and get in the right frame of mind to pursue teaching yourself about money.
I realized I needed to make changes in 2013, but it took me until 2014 to make a financial plan and feel ready.
But if you are stoked, truly motivated to make changes, and understand that it will take some dedication — then you are well on improving your financial wellness.
1. Create Financial Goals
Before you start to teach yourself, you must understand the reason why you want to learn about money.
What is it that you want to change financially? How will this benefit your life now and your financial future? Why is learning about money so important to you?
If you don’t know your financial goals, it might be hard to know where to start learning or why you are doing this in the first place.
The more motivation and understanding of the impact it will have, the better off you are when it comes to putting in the work to learn.
2. Numbers On A Spreadsheet
Okay, one more thing before we get into the learning steps. After your goals, it’s also a good time to put a bunch of numbers down in a basic spreadsheet.
I’m talking your salary, monthly take home, total monthly expenses, what you have saved (if anything), what you have invested (if anything), etc. Nothing fancy needed, just a simple and organized data dump of this info.
When I saw this all in one location, it helped me adjust my goals and make a spending plan. This was actually another wake up call when I realized how much I’d overspend on unnecessary things.
3. Read Personal Finance Books Based On Your Goals
You want financial knowledge? Then reading books about money is crucial. The idea of reading books — especially about finances — may sound like a snoozefest to you.
But, there are tons of great books out there that are interesting and make learning about money easier.
Dedicate 1-2 hours minimum each week reading a money book.
If you are afraid of distractions or that you’ll forget, mark your email calendar for reminders or set an alarm on your phone.
There are plenty of books about money out there, so here are a few that I think are the best to start with (these combine things like mindset, banking, investing, saving, etc):
- I Will Teach You to Be Rich by Ramit Sethi
- Rich Dad, Poor Dad by Robert Kiyosaki
- The Millionaire Next Door by Thomas J. Stanley and William D. Danko
- MONEY Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins
- Your Money or Your Life by Vicki Robin and Joe Dominguez
4. Read Personal Finance Blogs
If you are reading this, then you already are making the right move! Wink wink.
But seriously, personal finance blogs can really expand your knowledge and viewpoints.
However, let me put a caveat to this: not all personal finance blogs are completely accurate or have info that relates perfectly to you!
Meaning, if something resonates with you, make sure you do further diligence before blindly following any direct financial advice. Same goes for content you read from me!
But early on when teaching myself about money, I found a handful of blogs that were really insightful and realizing it came from people like me was inspiring.
These blogs can help you think differently and understand the personal finance basics from people who are not always authors or industry experts.
5. Open An Investing Account (Brokerage or IRA)
Wait, you’re telling me to open an investing account when I don’t know jack about that yet!? Don’t worry, hear me out here.
Whatever your financial institution of choice (I recommend Vanguard), you can open an account for free and not fund it right away. But, you can contribute a small amount to start learning too, like I did.
If you are like me, I tend to be a better learner when I practice what I read at the same time. So opening an account got me familiar with investing terms, understanding fund types, how the account works, and more.
Never put all your money in or risk investing in individual stocks to start. The goal here is to take steps to do something and begin learning how things work.
5. Watch Interviews With Well-Known Financial and Money Experts
Similar to personal finance blogs, never blindly follow advice from well-known finance people either. Many will also have things you agree with and some advice where you won’t.
But, you’d be surprised what you learn, how you start to speak about money, and where your mindset can go by watching interviews and discussions.
Dave Ramsey, Warren Buffet, and Tony Robbins are some popular names in the space. No they aren’t perfect, but you get exposure to different ideas, strategies, and steps with finances.
Same with any authors of financial books, listen to their interviews or watch them on Youtube.
6. Talk To Someone Who Has Mastered Their Finances
Sometimes the best advice and knowledge comes from someone who really has a handle on their personal finances already. Maybe it’s a colleague, a trusted family member, or even close friends.
And no, not advice like the latest investment or comments from the Bitcoin bros who say, “go all in and get rich!” Not hating on Bitcoin, but you know the type of money advice I’m referring too.
You want someone who actually has a proven track record of knowledge and success. They can help you stay motivated and teach you what’s worked for their own finances.
7. Use Money Tools to Help Your Journey
As you start to make better financial decisions, there are some tools that can help you manage your money effectively. Many of these will be useful for tracking important financial data, others will help you understand more about your money.
YNAB: If budgeting and spreadsheets still scare or confuse you, there is a great solution to try. It’s called You Need A Budget (YNAB). You can try it free for 34 days, but can be a financial game changer if you need some help while you become the master of Personal Finance 101.
Personal Capital: Keep track of your net worth, cash flow, investments, and get advice all within Personal Capital. This free tool is vital to becoming more financially aware and ensure you are on the right path. Sign-up and use it for free!
Blooom: If you have a company 401k currently, but do not know or understand much about certain aspects, Blooom’s free analyzer can help. The platform provides insights, recommendations, and more about your retirement account. Get started for free here.
Acorns: One of the best ways to get in better financial habits with saving and investing is to use an app like Acorns. The service uses your spare change to invest in different portfolios made up of ETFs. They also offer a lot of expert articles and advice to help you learn further. Sign-up for Acorns here and get a $5 bonus added to your account.
8. Take A Finance 101 Course
While I’m a DIYer when it comes to learning, you may want additional support with your finances. The topics around money is broad and there are many categories you may want to learn about like:
- Credit Cards
A bit overwhelming, right? If so and you are unsure of how to organize your learning, then take a finance 101 course!
If you search for options you can find quite a few being offered by various universities. Of course, that can be fairly expensive and you don’t necessarily want a degree in finance (unless you do, then by all means go for it!).
The other option to become a financial success is taking lessons from experts on places like Udemy, Lynda, or Coursera. Now these are not free as you will have to pay for a subscription on these outlets.
But if you can afford it, these can be a great option and you’ll learn plenty if you need more structure. Plus, most offer a decent free trial (up to 30 days) that you can take advantage of as well.
Hopefully, you weren’t looking for any secret recipes when it comes to teaching yourself about money. The above is the exact method I took which helped me achieve the following in a few years:
- On my way to saving and having invested $100,000.
- Knocked out 95% of my student loan debt and fully paid off my car.
- Increased my full-time income by 120% and escaped the 9-5 cubicle life.
- Maintaining close to a 65% savings rate when the average American saves less than 5%!
- I’m self-managing all my investments and finances
Will you know everything about money? Probably not. But the goal is, you’ll become a Personal Finance 101 master, which is plenty to make huge strides in your life.
And while I’ve taken control of my finances, I’m still learning to this day! I re-read books, I find new ones, I still chat with friends, watch documentaries related to money, etc.
You should never stop learning, but you have to take steps and be consistent if you want real results. Good luck on your financial journey!What do you think of the above? Have you taught yourself about personal finances or parts of personal finance? What did you do to help yourself learn? Let me know in the comments below!