Personal Finance Cheat Sheet

Budgeting Basics

• Track Your Spending: Know where your money is going. Use budgeting apps, spreadsheets, or even a notebook to record every expense.
• The 50/30/20 Rule: Allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. This is a flexible guideline, adjust to your situation.
• Set Financial Goals: What do you want to achieve? Saving for a down payment, paying off debt, early retirement? Define your goals to stay motivated.
• Create a Realistic Budget: Don't set unrealistic limits. A sustainable budget is one you can stick to. Review and adjust it regularly.
• Automate Savings: Set up automatic transfers from your checking account to your savings and investment accounts. "Pay yourself first."

Debt Management

• Prioritize High-Interest Debt: Credit cards and payday loans often have exorbitant interest rates. Focus on paying these down first.
• Debt Snowball vs. Debt Avalanche: The snowball method (smallest balance first) offers psychological wins, while the avalanche method (highest interest rate first) saves you the most money. Choose the method that best suits your personality and motivation.
• Negotiate Interest Rates: Contact your credit card companies and loan providers to see if you can negotiate a lower interest rate. It's worth a try!
• Avoid Taking on More Debt: While you're working on paying down debt, avoid adding to it. Delay purchases if necessary.
• Consider Balance Transfers: Transfer high-interest credit card balances to a card with a lower interest rate (but be mindful of transfer fees).

Saving and Investing

• Emergency Fund First: Aim to save 3-6 months' worth of living expenses in a readily accessible, liquid account (e.g., high-yield savings account).
• Take Advantage of Employer Matching: If your employer offers a 401(k) match, contribute enough to get the full match. It's free money!
• Diversify Your Investments: Don't put all your eggs in one basket. Spread your investments across different asset classes (stocks, bonds, real estate, etc.).
• Invest Early and Often: Time in the market is more important than timing the market. Start investing as early as possible and contribute regularly.
• Consider Low-Cost Index Funds or ETFs: These offer diversification and low expense ratios.
• Understand Your Risk Tolerance: Are you comfortable with risk? Choose investments that align with your risk tolerance and time horizon.

Credit Score Maintenance

• Pay Bills on Time: Payment history is the most important factor in your credit score.
• Keep Credit Utilization Low: Aim to use less than 30% of your available credit on each credit card.
• Monitor Your Credit Report Regularly: Check your credit report for errors and fraud at least once a year. You can get a free report from each of the three major credit bureaus (Equifax, Experian, TransUnion) annually at AnnualCreditReport.com.
• Don't Open Too Many Accounts at Once: Opening multiple credit accounts in a short period can lower your credit score.
• Avoid Closing Old Credit Accounts: Keeping old accounts open (even if you don't use them) can improve your credit utilization ratio.

Important Reminders

• Review Insurance Policies: Make sure you have adequate insurance coverage (health, auto, home, life) to protect yourself from unexpected events.
• Create a Will or Trust: Plan for the future. Ensure your assets are distributed according to your wishes.
• Regularly Review Your Finances: Make it a habit to review your budget, investments, and financial goals regularly (e.g., monthly or quarterly).
• Seek Professional Advice: If you're feeling overwhelmed, consider consulting a financial advisor.