I started really learning about money a bit late in life, around 27, when a good friend loaned me a copy of Smart Women Finish Rich. I was making plenty of money at the time but was many thousands of dollars in credit card and student loan debt and living paycheck to paycheck. It helped me start thinking right. Then I Will Teach You To Be Rich gave me actionable tasks to make progress. That was years ago, and I worked towards paying my credit card off each month, but I still didn’t have a good idea what my money needed to do each month until recently. Also, as one half of a married couple, it became more important to be accountable for our spending to avoid stupid arguments and surprisingly high credit card bills while planning a bit ahead. Here are my favorite tools:
Personal Capital – It’s similar to Mint but more comprehensive and helpful in my opinion. Both are free, and both allow you to see all your accounts in one glance. I recommend focusing on getting any and all checking, savings, and credit cards in there first, then add investment accounts, mortgages, etc. But just knowing your account balance doesn’t mean you know how much of it you can actually spend. Enter …
You Need a Budget (YNAB) – This software is awesome. It’s not free (unless you’re a college student), but there’s a 34 day free trial then it’s just a one time fee of $60. After a few days with the trial version I was hooked. It takes a bit of time to get going with, but it’s the most comprehensive and accessible software I’ve seen for budgeting. You do need to commit to recording or importing every transaction you make. This was daunting at first but their interface and their mobile app make it super easy. It also simplifies some other tasks I was doing manually. For example, I used to spend a good amount each month on books and such that was reimbursed through my fellowship, so those transactions get categorized as “reimbursable” instead of being recorded on a separate spreadsheet. This works similarly for tax deductible items like charity contributions and business expenses. If you are tracking all your expenses, you are much less likely to miss these things. Also, you can instantly see what your balance is in different categories. For example, I started out making a budget in Excel a while ago, but never actually added up how much I was spending on groceries, etc. relative to my budget. Dumb, I know, but YNAB makes it easy.
Do not let the title of this post fool. I may look like a grown-up from the outside, but I certainly don’t feel like as much of a grown-up as I thought I would when I had a baby and a mortgage. But since I’ve taken over as family CFO it has been smooth sailing. I wish I read some of the books and used some of the tools above much earlier in life.
Once you know what you have (Personal Capital) and you know where your money needs to go (YNAB), you start working on an emergency fund. Since inflation outpaces interest rates right now, a savings account is not the best place to keep a chuck of cash. Enter Betterment. It’s amazingly easy to invest your extra money with them. Extra money you say? What’s that? Enter Mr. Money Mustache. This ridiculous sounding personal finance blog is all about modifying our usual spendy lifestyles and focusing on what’s important. But it’s not about extreme frugality or being cheap, but about being more mindful and logical in order to free up time and retire early. It’s an entertaining read.
If you have other favorite tools that I don’t know about, please share!