Personal finance involves the planning and management of an individual’s financial resources. It includes spending, saving, and investing.

It also includes protecting and insuring assets and income. The key to good personal finances is making a plan and sticking to it. Here are some simple strategies for getting started.

Pay Yourself First

Paying yourself first involves routing a portion of your paycheck into savings or toward long-term financial goals before spending any of the rest of your money. This helps prevent you from forgetting about your savings goals or running out of funds after paying your bills. It also teaches you to prioritize savings over unnecessary spending and debt repayment.

Podnos recommends setting up an automated savings account to make this process easy. Alternatively, you can use a budgeting app like HyperJar to divide your paycheck into virtual jars for expenses such as groceries, rent, and utilities, which makes it easier to stick to a budget.

However, this strategy may not be appropriate for everyone. If you live paycheck to paycheck or have significant outstanding debt, it might be better to focus on other strategies to increase your income or decrease your expenses. In addition, the pay-yourself-first method requires discipline, and it can be difficult to follow through on if you’re not used to controlling your spending.

Create a Budget

A budget is a crucial first step to take when you want to start saving money. It will help you understand where your money goes and whether or not you are putting enough of it toward your needs and goals.

Start by organizing your financial documents, including pay stubs, bank and credit card statements, and auto or student loan bills. Next, determine your normal monthly expenses such as rent or mortgage, utilities, food costs and transportation costs. Add in your debt payments like loans and credit cards as well as any savings you plan to make.

Finally, don’t forget to set aside a miscellaneous category for those unexpected expenses that come up throughout the month. The more you stick to your budget, the more likely it is that you will achieve your savings and investment goals. NerdWallet makes it easy to track your spending and stay on target with your goals. You can use our free online budgeting tools or get old-school with a spreadsheet and notebook.

Track Your Expenses

Tracking all of your expenses is the first step toward eliminating unnecessary spending patterns and making sure you have enough money left over to save and reach your financial goals. You can do this with a notebook and pen, an Excel spreadsheet or a free online expense-tracking app. Using the method that works best for you can help keep you motivated to stick with your budget and reach your savings and investment goals.

Start by listing all of your fixed expenses, like rent or mortgage payments, car payments and utilities. Then move on to your variable expenses, which may differ from month to month but you can estimate based on past experiences. Your credit card and bank statements can also help with this since they often itemize and categorize your monthly spending.

If you’re not sure where to begin, consult a personal finance professional. Their expertise can provide a fresh perspective and inspire you to change your habits and get more money in your pocket.

Start Investing

Saving money is a great habit to establish. You can use a savings account, a certificate of deposit (CD) or an online savings tool to make it easy and convenient. It’s also helpful to review your budget and track your progress each month, so you can stick with it and hit your savings goals even faster.

It’s a good idea to save enough to cover three to six months of expenses in an emergency fundOpens a New Window before investing your money. Savings are typically considered a low-risk approach to personal finance and provide easier access to your funds than investing.

However, investing may help you pursue longer-term financial goals. With a long-term investment strategy, your money can potentially grow over time — thanks to the power of compounding, interest payments and the potential for higher returns than savings accounts offer.

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