Starting off right: Here are the things you need to know if you’re new to managing finances

When is the best time to take control of your finances? Obviously, now. It doesn’t matter how old you are or what stage of life you’re in; make sure you know where you stand, and start changing things today. Even if you’ve got things figured out, there are always adjustments to be made. Automate your savings. Increase your 401(k) contributions by 1%. Set aside $20 a week towards an emergency fund. One of the best ways to do this is to create a financial checklist. Depending on where you’re at, not all the of the following checklists may apply to you:

The personal finance checklists

The most important, ‘Where do I start?’ checklist:

  1. Make sure you have a no-fee checking account
  2. Build an emergency fund
  3. Open a fee-free savings account
  4. Create a budget, and stick to it
  5. Contribute to retirement via your employer’s 401(k) option, or open an IRA
  6. Have at least one no annual fee credit card (that you pay off in full, every month)

That feeling when you don’t know where to start…

Most financial institutions do not have truly free checking accounts, but always waive the monthly fee if you have at least two direct deposits (like from a paycheck) or an average daily balance above a certain amount (I don’t usually meet this). If meeting these requirements is an issue for you, Nerdwallet has a great list of free checking account options to explore. Many are online-only, sometimes limiting quick access to cash, but it’s always good to research your options.

Make sure you are saving, whether in a savings account or towards retirement! If you don’t have retirement benefits from your employer, that shouldn’t stop you from saving. You can contribute $5,500 to a traditional or Roth IRA. If you’re self-employed, you can contribute up to 25% of your income to a SEP IRA.

Before you can think about retirement, you should have an emergency fund. I keep a small portion of mine in a savings account and rely on my investments for the rest. Where you put your emergency fund will depend on what your emergency needs are. If you have dependents, it’s probably better to have more liquid funds available in a savings account. Same with if you own a car or a house. There’s no reason to not build up an emergency fund and save for retirement at the same time. If it’s something you can reasonably do, it’s better for you in the long run. Compounding interest, baby!

And of course, budget. Don’t spend more than you have. I love using Mint for budgeting, as all my transactions are viewable there. However, I also have a giant excel sheet that I use for planning purposes. There’s no right way to budget; find a system that works for you and stick to it.

The secondary, ‘Do this next’ checklist:

  1. Get your credit score/report. If you don’t have credit, build it
  2. Pay off credit card/auto/mortgage/student loans, creating a schedule if needed
  3. Start saving for large goals, like a house or car, or maybe a kid’s college fund
  4. Open a personal investment account
  5. Cut out unnecessary discretionary spending

This part sucks because once you start working towards these goals, there’s a lot of waiting involved.

Number one feels a little backward since the important checklist has “get a credit card” on it. Do not apply for a credit card without knowing your credit score. Anytime I hear about people doing that, I scream a little on the inside. For this checklist, I’m talking about knowing your credit score, all the time. Once you do that, you’ll start to become sensitive to how changes in your spending behavior affect this number. If you don’t have a lot of credit history, it’s a waiting game. In time, your credit score will continue to improve, provided you remain in good standing and pay all your bills on time.

There’s a reason I didn’t put pay off debt on the very first checklist. Chances are, if you’re reading this, you’re well aware of your debt and you know that it can’t be ignored. There are many ways you can tackle debt, but generally, you should focus on high-interest ones first. Credit card and personal debt? They’ve got to go. Everyone’s debt journey is uniquely their own. I’ve shared mine, and others have shared theirs, but those are for inspiration and not a guideline.

Once you are making progress towards big and short-term goals, consider opening up an investment account that is separate from retirement. Depending on the type of goal you have, steps 3 and 4 can happen together.

The next-level, ‘I’m a pro’ checklist:

  1. Diversify income streams
  2. Re-evaluate how spending makes you feel
  3. Share information with others, and give back
  4. Re-assess your goals, and adjust accordingly

Once you’re here, it’s all a piece of cake. You’re a boss, now.

The first checklist is focused on immediate needs. In the second, the focus is on long-term goals and debt. This final checklist is focused on future stability, and helping others.

Diversifying income streams is purposefully vague. There are so many ways to make extra money (as a quick Google search can tell you). However, it’s best if you can develop income streams that are not a time-for-money tradeoff so that it can become scaleable. For bloggers, that can mean developing an automated course. You can write an ebook or get into affiliate marketing. Bigger long-term projects include dividend investing and becoming a landlord. For many people, diversifying income streams becomes a way to be job-independent.

Re-evaluate how spending makes you feel. A typical result of this is shifting from buying quantity to quality. When I was younger I would buy a new pair of boots for $30-60 that would fall apart in under two years. Now, I don’t feel guilty for buying a pair of $300 boots that I know will last me a decade. This is a change in mindset that happens. A good exercise is the following: take your last three credit card statements and mark the purchases that you still feel good about today. Keep the purchases that didn’t make the cut in mind as you go on our day-to-day life. Chances are, you’ll start to re-think some of your spending behavior.

Sharing is caring. Once you’re here, help others. The financial world is a complicated one, and people are rarely well-informed. If you’re comfortable where you are, consider giving back. Participate in microloans, donate to charity – if you aren’t already doing these things, start. There’s no requirement in waiting to have all your affairs in order before helping others; do whatever feels most comfortable for you.

Create short and long-term financial goals

Is your goal to max out your 401(k) contributions next year? Open an IRA account? Save up $1K in an emergency fund? Pay down your debt a certain amount? Buy a home? There are no rules here. What you need to do is evaluate your current spending/saving habits, and set reachable goals. Depending on the goal, it may help to share them with others – something that will hold you accountable.

The average person has many goals they’d like to achieve, financially. That’s why it’s important to know what they all are. Create a plan for each goal, prioritize which ones come first, and know exactly how much you’re allocating. When it comes to money, nothing should be a surprise.

Start thinking about your end goal

Everyone has a different relationship with money. The important thing is that the end goal should not be about having more of it. Money is not the end; it is merely the means to an end. If you want to retire early, your financial goals should reflect that. This goal doesn’t need to be about hitting a magic number, either. The best example for this that I have is my father; he’s a bit of a workaholic. Over the last few years, I’ve asked him every so often what he wants/what makes him happy. His answer?

“I want to provide for my family.”

It sounds corny as hell, but as of late I’ve started to genuinely believe him. You see, everything he does is a reflection of that goal. Over the holidays, he spent all his remaining vacation days to help my brother renovate his newly purchased (but very old) house in D.C. Whenever he sees my checking account balance gets low, he’ll drop in some funds (even though I tell him not to and always make him take it back). He wanted to have a large family (my mom drew the line after three kids). He’s a sucker for romantic comedies and has told me on multiple occasions that Father of The Bride is an excellent movie (I mean, he’s def hinting that I should get married soon, right??). He’s happiest when everyone is safe and sound, knowing that he made it happen. What I’m saying is, as important as it is to get your financial life together, it is critical to think about it in the context of what actually makes you happy.


This is just an idea of what types of these you need to focus on when you’re starting out. Although I feel strongly about many of the things I’ve included (which is why they’re here, obviously), each individual’s personal finance plan will vary based on what their specific needs are. The amount of debt you have, income opportunities, number of dependents – these are all factors that affect how much you’ll need in savings, how risky you can be with your money, etc. Let me know if you see anything major that I’ve missed here! What would you change about these checklists?


    1. Author

      Great point! My goals have absolutely changed since I started managing my own finances. I’ll make that addition.

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