Adulting

Growing up made easier

The Basics of Personal Finance

Finance isn't complicated (but it may be difficult). Here's the basic outline:

  1. Don't buy anything you can't afford. Don't buy a house if you can't afford it. Scrutinize all purchases. (This is what makes this difficult, even if it's simple.)
  2. Save $1000 as quickly as possible.
  3. Get insurance. Probably choose a high-deductible health plan.
  4. Your employer probably offers a match on contributions to a 401(k)/403(b). Contribute to these funds up until you maximize this match (it's free money). Buy only low-cost index funds and hold them forever.
  5. Pay off all debts except your house. Pay off credit cards monthly.
  6. Save 6 months of living expenses (how much money you'd need if you lost your job for 6 months) and don't touch it.
  7. Save for retirement by contributing to tax-advantaged accounts. Decide if a traditional or Roth account is for you.
  8. Pay off your house early.

These steps are a consensus of information from these sources: