My Beginner's Guide to Personal Finance (Step by Step)

This is my guide to Personal Finance. If you're a beginner just learning about Personal Finance, or you're already a pro wanting to solidify the basic principles, this video is for you. In it, I cover budgeting, methods to pay down debt, establishing an emergency fund, saving for goals such as retirement or buying your first house.

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In this video I talk about the 6 different phases of how I view Personal Finance. Each phase depends on where you are in life, but in general can be summarized below.

Phase 0 - I view this phase as someone who is still in school or just out of school and has somewhat of a safety net to learn skills, build credit, and establish some independent income. In this phase, I think the most important goals are to establish credit (with a secured credit card), paying bills, and also to start learning how to make money.

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Phase 1 - in this phase, you're hitting self sufficiency. Which means that you make more than you spend. It's in this phase you want to start building your EMERGENCY fund which is about 3-6 months of monthly expenses saved in a bank account that you will NOT be touching unless its specifically for an Emergency, as the name suggests. This will really help you have a safety net for yourself. It's also in this phase you want to continue to build credit.

Phase 2 - in Phase two you're completely self sufficient, you pay for your living situation, and your goal here is to increase your income whilst finishing off your emergency fund and pay down debt using either the avalanche or snowball methods.

Phase 3 is all about finishing off any debt that you might have, starting with the highest interest rate first, starting to contribute to retirement accounts such as an IRA, 401(k), ROTH IRA, or ROTH 401k. It is also possible that you may qualify for a 403(b). Continuing to keep your expenses low in phase 3 is really important as well.

Phase 4 you should be saving still - pride yourself on your savings. Also you should be building skills, other investments, and saving for bigger goals such as a house or income property.

Phase 5 is a phase that I haven't reached yet. I'm currently still in Phase 4 but I am hoping to get to Phase 5 which is that I will hopefully have big goals out of the way (buying my first home) and then I can work on figuring out how to get a high ROI out of my investments and continue to save and leverage my savings for investments into the future. It's also in this phase that you can really think about giving back. I would try to give back throughout all the Phases, but in Phase 5 you can start to focus on it a bit more.

I hope this video was helpful to you all.

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Disclaimer: I am not a financial advisor, any investment commentary are my opinions only.