How to get started with personal finance

Dec 07 , 2022 7 min

 

Managing your money can be overwhelming, especially if you don’t understand the basics or how things work. If you are here to learn more about how to become more confident in making sound financial decisions with more assurance, you’ve come to the right place. It’s fantastic that you’re taking the first steps to develop your personal finance skills, and we are here to help.

 

Personal finance skills are extremely important because they help you become better at the game of money; without such skills, people can spend their entire lives making money but never getting ahead or achieving financial freedom.

Nobody wants to worry about money all the time, right? According to the American Psychological Association (2022), 66% of adults stated that money is a major source of stress in their life. 

So, what is the best way to combat stress or worry: you take action! In this case, you educate yourself and build the necessary skills to manage your spending, saving, and investing. This will lead you to succeed in reaching your financial goals so you can live a life of purpose without the burden of financial stress.

Say goodbye to long excel spreadsheets and say hello to Crunch App, the app that does the heavy lifting on your behalf making personal finance simple, 24/7 accessible, safe and secure! 

What is Personal Finance?

By definition, personal finance refers to the management and planning of your own financial activities, including earning, spending, and saving money, making investments, and purchasing insurance. The process of managing your own finances can be outlined in a budget or financial plan. 

Managing your money includes understanding several terms such as income, spending, saving, budgeting, debt, and others. We recommend you check out the glossary we have prepared here: Personal Finance Glossary: Terms You Should Know.  

From your day-to-day groceries to the vacation you want to take, the dream home you want to purchase, or even to the retirement you have to plan, it can be hard to figure out how to manage expenses while also planning for the future. 

 

Here are some healthy money habits to start with:

 

Track your spending

It is always important to have a visual representation of your spending habits and finances so that you can hold yourself accountable and take decisions accordingly. It might sound like a tedious task, but with the advancement in technology, it doesn’t have to be. 

Crunch is a personal finance app that empowers individuals to manage their money in a quick and efficient way through a safe & secure platform. Requiring only a few clicks to input basic information, Crunch is able to set you out to seamlessly track your spending. 

You cannot manage what you cannot measure; therefore, knowing what you are making and where you are spending is a critical prerequisite to managing your money.

Set a Budget

First and foremost, one of the most important habits to develop is budgeting. A solid plan, even if high level, will keep you from living beyond your means and act as a guiding compass. It is the major element in creating your overall financial picture and a necessary step to achieve set goals.

Keep an eye on your Net Worth

Your net worth is what you own minus what you owe (assets – liabilities or debt). Staying updated with it, and understanding what it means and how it is changing over time can help you keep track of your progress and hold yourself accountable. Routinely having a snapshot of your net worth at the back of your head gives you a benchmark to set realistic goals.

Get your money in order with Crunch App

Build an Emergency Fund

Life can be complicated and unexpected, that’s why being prepared ahead of time is a good habit and an ultimate money stress reducer. You likely need no convincing that having some money set aside for life’s financial curveballs is essential, but how to create a safety cushion? It all starts with setting a goal for how much protection you want to build, a starting point would be to have at least six months’ worth of living expenses saved in an emergency account.

Pay off costly credit card debt or loans

One of the best money moves is to prioritize clearing high-interest-rate debt, always a good place to start. Unpaid credit card balances can be a big roadblock to building financial security given the “insane” interest rates which can reach up to 17% in some cases. Begin with paying off the balance on your highest interest rate card, and once paid, you can start shoveling the extra payments to the next card and so on.

Save and invest whenever you can

Many people use their salary increase to magnify their lifestyles. Boosting your savings and investments with that raise instead pushes you closer to your goals. Saving and investing consistently, irrespective of the amount is a critical step to making sure your future is financially secure. Little by little, it's never too late to start – begin today!

Educate yourself

Invest in yourself and your financial education – you can take online courses, read books, check different blogs, work with a professional in the field, or even start a side hustle to learn more. No one is going to hold your hand and show you how to succeed with your personal finances, so you need to take action yourself and learn more about money! You can do it!

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