Personal finance can be an extremely complex topic to approach. After all, it covers everything from saving and investing to mortgages and insurance policies.

Budgeting is essential to financial control. Through spreadsheets, templates, bullet journals or apps you can keep an accurate record of every cent that comes and goes out.

1. Understand Where Your Money Is Going

Financial literacy refers to your understanding of money management basics such as banking, budgeting, debt and credit management, saving for future expenses or retirement and investing. Understanding these fundamental concepts will enable you to avoid costly surprises while making smart choices about spending and savings – eventually helping you reach your goals over time.

Needs-related spending includes things such as housing costs, utilities payments, transportation expenses and grocery costs; while discretionary expenditure includes dining out, entertainment and shopping expenses. It is essential that you recognize the difference between necessities and wants so you can budget appropriately and save more money.

Establishing a budget is one of the top personal finance tips for young professionals. Doing this will allow you to track both income and expenses to determine how much discretionary spending money there is available for purchasing items that you find necessary or want. A budget will also enable you to create an emergency fund, pay off debt and save for retirement.

2. Create a Budget

Budgeting is an exercise in organizing all of your income and expenses into an easily understood plan. Begin by collecting as much data as you can find – such as bank and credit card statements, pay stubs, investment account statements etc – then utilizing free budget worksheets/templates/apps to keep tabs on spending habits.

After you have calculated all your income, subtract all expenses (fixed and variable such as rent or mortgage, utilities, insurance and childcare). Any leftover funds can go toward meeting your financial goals – be that starting a side hustle, pushing for an increase at work or cutting down on discretionary spending like dining out or gifts.

3. Create a Bullet Journal

If you like planners but prefer something a bit more flexible, consider creating a bullet journal. This simple system lets you keep track of everything that would normally be included in a planner but allows more customization options.

Bullet journals typically consist of three basic parts, namely a daily or weekly log, monthly calendar and collections pages. The daily/weekly log consists of bulleted lists that detail tasks, events and notes with symbols representing them so you can quickly spot what needs to be accomplished at a glance – for instance tasks may be represented by dot symbols while events by open circles and notes by dashes.

Collects are individual pages dedicated to specific subjects, like habit and mood tracking or creating an index page of books you plan on reading. A collection can begin anywhere in your journal; once established it can be managed through its index page.

4. Create an Envelope Method

Envelope budgeting is a straightforward yet efficient method for staying on track with your spending plan. This approach uses physical envelopes containing cash to identify and limit spending categories like groceries, entertainment, clothing and dining out. Digital budget apps may also work, but using real cash as part of this exercise can serve as an even stronger motivator.

Each month, you should withdraw the amount that has been allotted for each envelope and use only that money to spend. If your spending exceeds what was budgeted for, that could be an indicator that it may be time to change spending priorities or adapt your system – perhaps including family members in this process can create an engaging learning experience while imparting lessons about money management!

5. Pay Off Your Debt

Paying off debt, be it credit card debt, student loans or mortgage debt is one of the key principles of finance 101 that anyone should follow. Not only will it lower stress but it will help achieve long-term financial goals as well.

To create your debt repayment strategy, start by compiling an inventory of all existing debts, recording their balance, interest rate, minimum payment amount and billing period for each. It may be beneficial to gather physical statements for all accounts into one convenient location for easy reference.

Subtract your income from expenses to determine how much of a payment toward debt you can afford each month, taking into account recurring costs like food, insurance and transportation in your calculations.