12 Personal Finance Basics Every Beginner Should Master (2024)

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Not everyone wants or needs to be a financial expert, but everyone — no matter what knowledge level — should master some personal finance basics.

It might be challenging to know what to start with since the finance category can be pretty broad. However, there are multiple areas where you must master.

Unfortunately, our education system doesn’t necessarily prepare us for real-world situations, especially personal finance basics.

A large reason for most finance and money issues is a plain lack of financial literacy.

However, learning many of these items included in this list will be on you. I’m sure you can also ask family or friends as well to help guide you too.

Again, you don’t need to be a personal finance nerd or become an expert in everything, but these are the basic checklist items every noob should master for a healthy financial future.

Table of Contents

What Are The Basics of Finances?

The basics of finances include the process of managing your money and how you make use of the funds you are generating. Finances include a collection of areas like credit, investing, banking, assets and liabilities, and more. Each being essential to your overall financial health.

So what should your focus on first that will make the most impact early on? Here are some of the financial basics everyone should learn this year.

Personal Finance Basics You Must Master

1. How Credit Cards and Interest Rates Work

I got my first credit card at 18, which was a smart call by my parents to encourage me to do so. This was key in establishing credit and teaching me responsibility with payments.

Luckily, I was scared at first to do any real damage, but many others lack proper information. It simply comes down to not understanding how to properly use a credit card and how the interest rates work.

It’s critical to learn this information before getting a credit card, as it can keep money in your pocket and help you remain debt free.

Spend some time reading the fine print and understanding what you are looking at with any credit card applications.

Looking for more? Find everything you need to know when it comes to using a credit card vs. debit card here.

2. How to Balance a Checkbook

If you are younger (Millennials or Gen Z), you probably don’t use checks or a checkbook very often. I used to write checks when I was a bit younger when managing my monthly budget, but not so much anymore.

However, it’s still an essential personal finance skill to know how to do. It can really help you learn how to manage your money, know how much is in your checking, and learn about overdraft fees.

While I rarely write checks anymore, there are a few occasions where I do and need to ensure my checkbook is properly balanced.

I recommend having a few checks handy if ever the circ*mstance comes up that you need one. Here’s more info about balancing a checkbook.

If you aren’t using a checkbook and are using banking apps, make sure you are keeping tabs on what is in your accounts. This is also where budgeting matters.

3. The Budgeting Basics

To me, budgeting can be tedious and annoying. But it’s such an essential skill to develop early and can save you future financial headaches.

I focused on budgeting first when I started my financial changes, but now I do not pay attention as much once I had my system in place.

Note: Not focusing on budgeting is my personal preference and works for me. If you need to budget throughout your financial journey, there is nothing wrong with doing so!

Yet, budgeting is a personal finance basic all should master at first. Spend some time on your bills, your living expenses, what you are spending money on, your savings, etc.

You can use a budget calendar to write everything down, put a plan together, and learn why this matters.

4. How to Establish and Fix Credit

This might be one of my top personal finance basics I hope everyone can master.

No matter your feelings towards the credit scoring system, building good credit is so essential. It can truly affect your ability to rent an apartment, buy a house, get a car, etc.

Your bad credit scores can haunt you for awhile, but there is hope.

You can always fix your low credit scores. But everyone should understand how it works, how you can fix mistakes, how you can increase your score, how to maintain a good credit score, and how to monitor.

Check out Credit Karma and create a free account to check your scores, get tips, apply for credit cards, and more.

5. Investing and Stock Market Basics

Don’t be intimidated or scared to invest your money in the stock market. It’s an essential part of your finances, in building wealth and securing your future retirement.

Start with the very basics of investing, how it works, what a 401k or IRA is, etc. Then move on to managing your investment portfolio and what the maintenance looks like on that.

You can learn on your own via investing books or websites, or you can reach out to someone you know who you trust and has been investing for years.

You don’t need to become the next famous investor like Warren Buffett, but you should be savvy enough to be investing and know why you need to stay invested.

Tip: If you want to analyze your 401k or IRA for free, get recommendations, and uncover hidden fees — sign-up for Blooom’s free portfolio analyzer.

6. Managing Your Debt

At some point, you may have debt. Whether that is from student loans, credit cards, mortgages, or something else. It’s essential that you learn how to manage it from day one.

The goal here is to understand how your debt works, what the interest rates are, and how to pay it off faster. As well as how to avoid future high-interest debt altogether.

Understand why paying the minimum every month can drag out payments and cost you money, as well as various debt payoff techniques.

Here are a few articles about debt management you can check out:

7. Maximize Employee Benefits

Most companies (pending who you work for), will have some additional perks you might not realize exist.

Or you might just be overlooking them since your employer will give you a ton of paperwork.

However, it’s important you read their documents in detail and reach out to HR about all the benefits you might be able to utilize.

There could be discounts on specific things, training, or reimbursem*nts that could put some money back in your pocket.

Related: Want to make more money in your job? Learn how to increase your salary with these tips.

8. Spend Less Than You Earn

No brainer, right?

Yet most people will fall into this trap of finances without realizing it!

If you don’t really respect living within your means or pay attention to your spending habits, you can quickly rack up debt or have little money to save.

This concept is preached in every major financial publication, but as simple as it is, it’s very important to ingrain in your mind.

So you need to live below your means and avoid lifestyle creep in order to maintain financial security.

9. Managing Your Net Worth

When you think of your personal finances, you should also be monitoring your net worth too. Your net worth is the value of all assets, minus the total of all your current liabilities.

Previously, calculating on your own may took a little bit of work, but luckily we have technology than can easily manage this for you.

I use Personal Capital and many others do as well. It’s free to use and helps see the bigger picture of your financial affairs and ensures you’re on track for good financial health.

Even if your net worth is currently negative because of debt, it’s okay! You should be monitoring it either way.

10. The Value of Building An Emergency Fund

Saving money is probably the most common item that everyone understands about personal finances.

Yet, so many still don’t think about stacking their emergency funds.

Many experts will say various cash ranges for this fund, but the standard I’ve seen is 3-6 months of expenses.

Understanding the value of an emergency fund, why you need one, and the purpose it serves is the easiest of the personal finance basics. Learn more about emergency funds here.

11. Understanding Your Paycheck

If you work for yourself or you are getting a paycheck from your job, you need to understand the basics of it.

Items like what taxes are taken out, your gross pay, net pay, social security, medicare, etc.

Since it’s your money that you worked for, you should understand what goes where and why.

Again, another simple but crucial area of personal finance basics you want to master. Here is a deeper breakdown of how to read your paychecks.

12. Learn How to Buy A Home

This is one that really needs to be taught in high school or college, but so often when we are ready to buy a home it’s on us to learn.

Things like understanding mortgages, applying for one, signing fees, PMI, the process of putting an offer on a home, etc. There is a lot involved in purchasing a home.

Although it’s not exactly complicated, there are plenty of items to know and different steps to take.

Note: While not explicitly a part of personal finance, buying a home and understanding mortgages will impact your finances and making mistakes can put you in tricky financial situations.

Start to do your research on buying a home, even if you aren’t exactly ready yet. Your potential future home-buying self will thank you.

Final Thoughts

Seems like a lot, huh?

It certainly is, but digested into pieces you’ll find this stuff pretty easy to understand over time. Don’t rush into every category at once, but start on one and really focus on the basics.

Will you become a financial guru overnight? Probably not.

But understanding these personal finances basics and having mastered these money skills, will set you up to improve your financial wellness.

You also do not need to love or be excited about your finances, but these are items you should not ignore throughout your lifetime.

Suck it up, brew a nice cup of coffee (or whatever your drink of choice is) and spend some time every week.

It may be a struggle at first, but looking back you’ll be happy you took the time to master these basic financial items.

What do you think? Are there areas that still confuse you? Are there other basics that should be added to this list? Let me know in the comments below.

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I'm an expert in personal finance with a deep understanding of the concepts discussed in the article you provided. The information shared focuses on essential personal finance basics that everyone, regardless of their financial expertise, should master for a healthy financial future.

The article covers various aspects, and I'll break down the key concepts discussed:

  1. Basics of Finances:

    • Managing money and utilizing generated funds.
    • Includes credit, investing, banking, assets, liabilities, and more.
  2. Personal Finance Basics You Must Master:

    • How Credit Cards and Interest Rates Work:

      • Importance of understanding credit card usage and interest rates.
      • Emphasizes reading the fine print and avoiding debt.
    • How to Balance a Checkbook:

      • Essential skill for managing money and avoiding overdraft fees.
      • Even relevant for younger generations using banking apps.
    • Budgeting Basics:

      • Importance of budgeting for financial health.
      • Personal preference, but crucial for many.
    • How to Establish and Fix Credit:

      • Building and maintaining good credit is crucial for various financial activities.
      • Recommends tools like Credit Karma for monitoring.
    • Investing and Stock Market Basics:

      • Encourages understanding the basics of investing and managing portfolios.
      • Highlights the significance of investing for wealth building.
    • Managing Your Debt:

      • Importance of understanding debt, interest rates, and payoff techniques.
      • Provides articles on debt management.
    • Maximize Employee Benefits:

      • Advises exploring additional perks offered by employers.
      • Emphasizes reading and understanding HR documents.
    • Spend Less Than You Earn:

      • Common-sense advice but crucial for financial security.
      • Stresses living within means to avoid debt.
    • Managing Your Net Worth:

      • Monitoring net worth for overall financial health.
      • Recommends tools like Personal Capital for tracking.
    • The Value of Building An Emergency Fund:

      • Importance of having an emergency fund.
      • Suggests maintaining 3-6 months of expenses.
    • Understanding Your Paycheck:

      • Breakdown of paycheck components like taxes, gross pay, net pay, etc.
      • Encourages understanding where your money goes.
    • Learn How to Buy A Home:

      • Highlights the need to understand the home-buying process.
      • Acknowledges the impact on finances and the importance of research.
  3. Final Thoughts:

    • Encourages taking time to master these basics, even if it seems overwhelming.
    • Stresses the long-term benefits of understanding and managing personal finances.

In summary, the article provides a comprehensive guide to personal finance basics, covering a range of topics from credit cards to home buying.

12 Personal Finance Basics Every Beginner Should Master (2024)


What is the #1 rule of personal finance? ›

#1 Don't Spend More Than You Make

When your bank balance is looking healthy after payday, it's easy to overspend and not be as careful. However, there are several issues at play that result in people relying on borrowing money, racking up debt and living way beyond their means.

What are the 5 basics of personal finance? ›

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.

What is the best way to learn finance for beginners? ›

The Bottom Line

Listening to podcasts and reading books about specific areas of finance that interest you help break down more complex financial topics and speed up the learning process. There are also many paid and free courses out there that offer courses in different areas of finance and investing.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What is the 80% rule personal finance? ›


The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments.

What is the 1234 financial rule? ›

One simple rule of thumb I tend to adopt is going by the 4-3-2-1 ratios to budgeting. This ratio allocates 40% of your income towards expenses, 30% towards housing, 20% towards savings and investments and 10% towards insurance.

What is the 10 20 rule personal finance? ›

It says your total debt shouldn't equal more than 20% of your annual income, and that your monthly debt payments shouldn't be more than 10% of your monthly income. While the 20/10 rule can be a useful way to make conscious decisions about borrowing, it's not necessarily a useful approach to debt for everyone.

What is the 10 rule in personal finance? ›

The 10% rule is a savings tip that suggests you set aside 10% of your gross monthly income for retirement or emergencies. If you still need to start a savings account, this is a great way to build up your savings. You should create a monthly budget before starting your savings journey.

What are the golden rules of personal finance? ›

3) 50-30-20 Rule

The rule says that a person should divide his/her take-home salary into three categories: needs (50%) wants (30%) and savings (20%). “The rule's simplicity lies in its ease of comprehension and application, which enables each person to set aside a fixed portion of their monthly income for savings.

What is the #1 rule of budgeting? ›

The 50/30/20 rule is a budgeting technique that involves dividing your money into three primary categories based on your after-tax income (i.e., your take-home pay): 50% to needs, 30% to wants and 20% to savings and debt payments.

What is the 4 rule personal finance? ›

The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4% of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.

What is the golden rule of money? ›

The basic principle of the golden rule of saving money is to save at least 20% of your income. This includes any form of income, such as salary, bonuses, or freelance earnings. By consistently saving a significant portion of your income, you can build a strong financial foundation and achieve your financial goals.

What is rule number 1 of paying yourself first? ›

Generally, “pay yourself first” means what it says—set aside money for savings before paying bills and making other purchases. But it's still important to keep up with debt obligations. Automatic transfers can make it easier to pay yourself first.


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