Do you feel clueless about money? Don’t worry, that’s nothing to be ashamed of. Let’s face it: Few us are given this bit of wisdom early in life. In school, you might learn about the Pythagorean theorem, but never learn how to manage money — not even how to make a budget or understand interest rates. So let’s start on from the beginning.


What is a budget, anyway? And more importantly, how do you make it? While it may seem complicated, it doesn’t have to be.

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Budgeting is all about assigning your money to pay for the different things you need. Let’s say that your after-tax salary is $2,400 each month. A potential budget could look like this:

  • Rent: $600
  • Insurance: $300
  • Food: $200
  • Gas: $100
  • Restaurants: $100
  • Student loan payment: $250
  • Household and miscellaneous items: $50
  • Haircuts and beauty: $50
  • Saving: $350
  • Retirement: $400

This is called a zero-sum budget, or zero-based budgeting. With this method, you assign every dollar you earned to an expense or saving purpose. Budgeting that way can be useful because if you have money left over and don’t assign it somewhere, you can easily spend it without noticing.

You can write out your budget using pen and paper or an Excel spreadsheet, or you can sign up for an app like Mint. The key is to track your spending so that you know whether you're staying within your budget.

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Saving is the process of putting money away for future use. You can think of saving for your short-term and long-term goals.

Your short-term goals might include building an emergency fund with six months’ worth of expenses. Long-term goals might include saving up for a down payment on a house and for retirement, which could be decades away.

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To help make the process easier, consider using a bank like Capital One 360, which allows up to 25 savings accounts. You can nickname each one and align it with your goals. The point of saving is to have money set aside for emergencies and to help you reach your goals in the future. It’s best not to touch your savings, and to only use that money when absolutely necessary.

Credit and Debt

Another important factor in managing money is your credit. When you borrow money, a lender is offering you credit, and it’s your job to pay it back. When you borrow money from a lender, you're in debt. The lender will charge you interest for the convenience of borrowing money.

There are two types of credit: installment loans and revolving credit. Installment loans are things like student loans with a fixed amount given to you. Meanwhile, revolving credit includes tools like credit cards, in which the credit available to you depends on how much you pay each month.

When you're in debt, it’s important to make your monthly payments on time, or you could hurt your credit score.

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Credit scores are comprised of three digits, and they let lenders know if you're a good borrower. A good credit score is typically 700 or above.

You may have heard of FICO, the most popular credit-scoring model. In addition to your credit score, you have a credit report, which offers a full, comprehensive view of your credit history (outstanding loans, closed accounts, etc.).

You can check your credit score on websites like Credit Sesame, and get your free credit report at


The process of investing is often the most complicated part of learning how to manage money. There are so many terms — stocks, bonds, mutual funds . . . — that it can be hard to grasp what they are and what they do.

The process involves putting money aside to grow it and make a profit. Investing in the stock market can typically offer larger returns than your savings account. Whatever you invest in, doing so can help you save and make your money work for you in the long-term.

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More Resources That Help You Learn How to Manage Money

Learning about these four pillars of finance can help you get a foundational understanding of money. A large part of learning how to manage money is reading. Here are some additional resources to get started:

  • Jump$tart
  • Investopedia Academy
  • FoolProof

Regularly follow personal finance websites, and of course, read books on money whenever you can. Some of my personal favorites are:

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  • Your Money or Your Life by Vicki Robin and Joe Dominguez
  • A Random Walk Down Wall Street by Burton Malkiel
  • Personal Finance for Dummies, the Total Money Makeover by Dave Ramsey
  • I Will Teach You to Be Rich by Ramit Sethi
  • The Richest Man in Babylon by George Clason