Often in a relationship one partner “owns” the finances while the other has little to no involvement. When couples separate, often the partner not involved with the finances can be lost—at such a critical time in their life.
If you’re coming out of a relationship as the partner who had minimal involvement in the management of finances—fear not, there are loads of places and people to help. As a start, consider the following 10 Rules as a foundation for your goal of better understanding personal finance:
- Rule of Spend/Save: 50% of Income for Needs, 30% for Wants and 20% for Savings
- Rule of Housing and Food: No more than 30% of Income toward housing and 15% for food
- Rule of Long term Savings: At least 10% of Income toward long term/retirement savings
- Rule of Automatic Deductions: Automate a deposit for savings, even for very small amounts
- Rule of 401K Company Matching: Contribute at least as much to get the full company match if they offer this program.
- Rule of Compound Interest: Extremely powerful tool to maximize savings–don’t wait, start saving, regardless of your age!
- Rule of Credit Cards: Always pay off your full balance and NEVER just make minimum monthly due payments
- Rule of Credit Scores: Strive for at least a “good” credit score of 670 or better.
- Rule of Credit Reports: Visit annualcreditreport.com every year to get a free copy of your credit report
- Rule of Diversification: Invest your long term savings so that 100 minus your age is in stocks and the remainder is in bonds!
At this important stage in your life, you have a lot going on. Review these 10 principals and try and get started and address just one of these goals. Then, slowly, add more and more. This type of guidance should give you a great head start in how to manage your personal finances in the years ahead. Taking a proactive role now will make your future easier, brighter, and more secure.