Personal Finance in Everyday Life: Making the Most Out of Your Money

Dealing with money doesn’t have to be a tough job — but turns out most people do find it quite overwhelming. 

According to Nerdwallet’s 2022 survey, 4 out of 5 Americans keep postponing their personal finance matters, simply because they find them too overwhelming. 

However, we believe personal finance shouldn’t be that difficult to deal with. But we get it, earning money, saving it, investing it, building wealth, and ultimately protecting your assets, could be tough if you don’t know how to approach these tasks. 

In this post, you’re going to learn how to get started with personal finance from the ground up. Don’t have any experience with personal finance? No worries, we’re going to walk you through the baby steps. 

Let’s start by understanding what personal finance is in the first place.

What Is Personal Finance?

Well, personal finance includes all the matters related to earning money, managing money, investing money, and spending it the right way to build wealth.

It could include simple tasks like purchasing the right things or complex ones like taxation.

All in all, personal finance can help you achieve a better financial life. It’s possible that you are already practicing some of the personal finance tactics — without even knowing about it. But — learning about the right, documented way to approach it will help you get on an even better track.

That said, it’s time to talk about the 12 steps to successful personal financing.

1 out of every 5 Americans tends to postpone their debt planning, which means they have no strategies whatsoever to pay off the money they owe.

Nerdwallet's 2022 survey

12 Steps to Successful Personal Financing

To make everything simple to understand, we have categorized this guide into 12 easy-to-follow guidelines. Let’s take you through them one by one. 

Making Money

The first step is, of course, getting your foot in the door. You can’t manage money until you have money. 

Your career path plays a crucial role in how much money you make. If you choose a more professional and challenging career path, say medical or engineering, you’ll make more. If you choose something simpler, like driving, you will make less. 

However, you don’t have to limit yourself to one career. You can always spread your wings and explore other options to build multiple income streams. 

For instance, even if you have a nursing degree and working as a nurse, you can make more money after your day job through freelancing. You can learn something like video editing, Photoshop, or even offer a voice artist gig. 

Simply put, grab every opportunity you can to drive more money towards you. 

Managing Money

When you have the money coming in, you need to find a way to manage it. Turns out the best way to do it is already readily available, i.e., banking.

Find a suitable bank and open a checking account, as well as a savings account.

The checking account is what you’ll use for your day-to-day transactions. The savings account, however, is where you store your extra money as savings. You need to make the most out of your savings account’s benefits, so make sure to get professional help choosing the right savings account.

Remember, you should always keep some savings in your checking account, too. In case a rainy day happens, you can use that money instead of taking cash out of your savings account. We call it the emergency fund.

Furthermore, if you’re earning online, say freelancing or running an online business, having an account with a few fintech companies could also be quite beneficial. 


If you don’t have any control over where you’re spending your monthly earnings, you won’t be able to save a lot of them. You might end up spending more than you should on things that add no real value to your life. 

So, what you need is a solid budgeting solution. 

There are tons of budgeting tactics you can choose from. However, one of the simplest ones is the 50/30/20 rule. This means you must spend 50% of your money on things you need, 30% on things that you want, and 20% directly in your savings account. 

It’s a pretty easy-to-follow budgeting method that works well for almost all beginners. 

Want to make things even easier? Check out ClearMoney, the only budgeting app you’ll ever need. 

Saving Money

You need to save money for every major expense you might need to pay. Student loans, house purchases, retirement funds — all these require you to save enough money.

Furthermore, you also need to make sure your emergency funds are all saved up and ready to go. Not having emergency funds by your side can leave you in a complicated situation if something tragic happens.

Save your money in the right type of accounts that offer the best interest rates. 

Credit Cards & Loans

There are numerous kinds of credit cards. Cards that help you improve your credit score; cards that help you save money; cards that offer you rewards — which one is suitable for you? Well, there’s only one person that can answer that: you.

If your credit score is damaged or limited, the first kind is what you need.

If you’re having trouble saving enough money for obvious purposes, the second one will be your choice.

If you’re already doing great with your budget and want to earn even more value out of it, the third kind is what you want to get.

All in all, only you can determine what kind of card you want. But if you’re having trouble understanding the situation, get professional help.

If you’re planning to get a loan, research and find the lenders with the best interest rates and easiest policies. Plus, you could also make more money by lending your savings to others who’re looking to borrow. 

Borrowing Money 

Unless you’ve started making a fortune within your early professional years, you’ll probably need to borrow funds for bigger expenses, like buying a car, mortgage, and student loans. 

The rule of thumb here is to find a lender with the best interest rates, plus you need to look for other benefits, like the absence of transaction fees.

We know this job could be never-wracking, so you should probably hire an accountant or a financial advisor and let them do the job for you. 

Credit Score

Your credit score determines whether lenders lend you money and whether credit card companies grant you a higher credit limit. The higher the score, the better your chances of getting a loan or higher credit limit.

There are two factors that matter the most in building your credit score, i.e., paying the bills on time, and using as little as your credit limit as possible.

Furthermore, your current debt and income also play a part in helping lenders decide whether to lend you the requested amount.

If you’ve always been paying your bills on time, your credit score should be fine already. But if you’ve had financial hiccups and difficulty paying your bills before, you may need to adopt some credit repair strategies.

Remember, it’s harder to repair a damaged credit score than to build one from the scratch. So, keep your record clean from the beginning. 


We know, you’re not fond of hearing and learning about taxes — but they’re essential.

You need to calculate and pay your annual income taxes — unless you want to get yourself in trouble.

Now, there are a few ways you could calculate your taxes. First, you could go the difficult route and calculate them yourself by applying taxation formulas. Second, you could use tax calculation software — those are readily available nowadays. Third, you can ask your accountant or financial advisor to do the job for you, and this option is the easiest one. 

Paying Off Debt

According to Nerdwallet’s survey, 1 out of every 5 Americans tends to postpone their debt planning, which means they have no strategies whatsoever to pay off the money they owe. You don’t want to be one of those.

See, making a debt-payoff strategy can help you save thousands of dollars from the amount you owe.

To find out whether the amount of debt is getting out of hand, add up your monthly debt payments and divide the number by your monthly income. The lower the resulting percentage, the better. Generally, a ratio higher than 43% is alarming and a sign that you need to do something about your debt. 


Tragedies can happen, and you may not be able to recover from the financial loss when one strikes. Hence, you need insurance. Insurance essentially lets you transfer your risks to someone else, for a price, of course.

You pay your insurance company at regular intervals, and if something tragic happens, the company will take care of the financial loss or needs.

For instance, if you happen to die unexpectedly, your life insurance can cover your child’s tuition fee. If your car gets into an accident, your car insurance can bear the repair costs.

Research and find out the best insurance options available in your area. 


You don’t want to live your life too boring, do you? That’s why you need to set aside vacation funds.

How often you take a vacation entirely depends on you. Some people believe not taking vacations is helping them grow financially. And while that may be true in a certain sense, it’s really not a great idea.

You see, vacations are important to keep your body and brain stay refreshed. Plus, it doesn’t hurt to spend a bit of money on yourself now and then.


If you’re making good money, you can essentially multiply it by investing it in the right opportunities.

Investing in projects can build you income streams, and the higher the number of income streams you have, the better.

Remember, you can build wealth and earn a fortune only if you explore opportunities and invest your money in them. While letting your money sit in the savings account doesn’t involve any risk, investing is what you can really benefit from — if you know what you’re doing.

After you’ve invested in a good number of opportunities and built multiple income streams, that’s when you can truly relax and enjoy your life.

Now, there are many ways you could invest; you could buy real estate, which is essentially the safest investment. You could buy stocks, which is a nice way to earn long-term rewards. You could invest in crypto, which is a high-risk-high-reward gamble, and you should only get into it if you know what you’re doing.

There could be countless types of investment opportunities, it’s up to you to pick the ones suitable for you.

The Bottom Line 

Personal Financing enables you to make more money, spend it the right way, invest it in rewarding opportunities, and essentially get the most value out of it.

However, we know the thought of handling your own finances, especially if you don’t have any prior experience with it, could be daunting. 

But — after reading this post, you’re ready to go out there and start handling your money like a pro. If you need resources to budget your monetary resources and keep them in check, be sure to check out ClearMoney.

This article was written by

Kent Thune, MBA, specializes in educational investing content. With 25 years of wealth management experience, and writing about finance for 15 years, Mr. Thune's articles have been published on multiple investing websites, including Kiplinger, MarketWatch, The Motley Fool, Yahoo Finance, and The Balance.

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