The difference between people who retire happy with investments / money in the bank and people who end up poor and relying on social security, is understanding the basics of personal finance. It’s infuriating that most parents and schools don’t teach our youth about managing the one tool that controls so many aspects of our lives, our happiness and our ability to one day be free from the 40 hour work week: money.
Understanding and truly practicing the following five common cents basics will allow you to have a happier and less stressful future.

Spend Less Than You Earn

This is the obvious one, yet clearly most people don’t put it into practice. In fact, the average credit card debt in the US last year was $15,654, with many households paying hundred of dollars per month in interest fees alone. If your money isn’t working for you, it’s working against you. Until you learn to spend less than you make you will never reach your financial goals. No matter how little you earn, you must prioritize what’s most important to you. You will be surprised how little you miss the things you cut out of your life to get your financial house in order.

Track Those Dollars

Track every dollar that comes in, and every dollar that goes out. A budget is a great place to start, but sticking to the budget and keeping your will power to stay focused on the future is key. There are many tools available online and apps you can use to track every purchase. Mint, Level Money, PocketGuard, Mvelopes, and You Need a Budget are just a few. There’s no excuse these days to not track your spending. You will be very surprised to find where your hard earned money is leaving your account for unimportant things. Stop the money leaks across all your accounts -especially monthly charges to your credit card for unimportant services. For a bigger picture of your finances, the free service from is a very useful financial tool.


A new house, a new car, saving for a vacation, all great reasons to save, but your first goals should be paying down credit cards, and having five months of an emergency fund saved away. Doing these two things will put you light years ahead of your neighbors and more importantly allow you to sleep better at night knowing your money isn’t working against you, and you are protected in case of medical emergency or job loss.

Setting Autopilot

Saving money is easier if you never see it in the first place. Set up a certain percentage of your income to be directly moved to a savings account and ignore it. Once you have at least a five month emergency fund, consider taking the extra and investing it. The power of time is on your side to help your money grow. Here’s a basic example: Invest $1,000 in a fund that averages 5% return. By contributing just $150 per month to this fund for 20 years and you will end up with $63,772. That’s the power of interest and time. See why the credit companies love for you to have a large balance?

Get Out of and Stay Out of Debt

If you’re like most americans with massive credit card debt, this is going to take stamina and strategy. First step: stop all spending on your cards, and make a plan to pay down your highest interest cards first, then second, etc. Again, there are many tools and calculators freely available to us to use. I used and recommend this one, it’s free and gives you options such as highest interested first, and Snowball:
Once you have completely paid off a credit card balance, do not celebrate by closing the account. One factor of your credit score is the age of your credit cards, so always keep the very first credit card account you had opened, and without a balance that carrys over from month to month. Very important.

All of the information and tools in the world will not help you and your situation; only Action and self discipline will get you closer to your financial goals.