The 5 Takeaways of Personal Finance

In sort of a carry-over from Friday’s Keep Investing Simple post, I was thinking this morning about what’s most important with personal finance. There’s a ton of information here at Prime Time Money. But if someone were to visit this site just once and never learn any more about personal finance, what’s the stuff I’d want them to take away? I’m not talking about philosophies or ideas. I’m referring to specific steps. What are the specific, simple steps everyone generally needs to make to make sure their financial house is in order. Here’s what I came up with (feel free to add more):

Don’t Carry High-Interest Consumer Debt – If you’ve got this kind of debt on a credit card or personal loan it’s costing you. Therefore, it’s a good move to try and get rid of it ASAP. If you ever have to use credit cards to finance something, make sure you pay it off completely before the end of the month.

Avoid Future Debt by Saving Money in a High Interest Savings Account – So that you don’t have to go into debt in the future because of an unexpected (job loss) or expected (vacation) expense, set up a free savings account at one of the online high-interest savings accounts and set aside some money every month. Do this automatically and it will be easier.

It’s Important to Get Term Life Insurance – If you’ve got people dependent on your income (and they will be for quite a while) it’s likely a good idea to get life insurance on yourself. Term life insurance is the best choice for most people. You can get an adequate policy for less than the cost of your cell phone plan.

Open up a Tax-Advantaged Retirement Account – Saving for retirement has never been easier. There’s plenty of good options out there to help you achieve retirement savings success. Most people have a 401k they can contribute to. Contribute enough to get your employer match every month. If you don’t have one, open a Roth IRA and begin automatically contributing. Shoot for the max every year. Like short-term saving above, this works best if you set it up automatically.

Know Where Your Money is and Where it Goes – At least once a month, take some time to review all of your checking, savings, and retirement accounts. Also review your credit and loan accounts. Do this all at once using a tool like Also, you might want to make sure all your credit accounts are in good standing by reviewing your credit reports for free at AnnualCreditReport.Com.

That’s about it. I think if you only did those things you’d be in pretty good shape when it comes to your personal financial situation. What do you think? Did I miss anything that’s most important?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. Personal Loans Guide SA says

    If you’re an impulse buyer, leave your credit cards at home. Shop with cash instead. Many people tend to spend less when handing over cash than it is when simply swiping a credit card for psychological reasons.

  2. personal budgeting says

    Thanks for sharing such great post, according to me budgeting doesn’t mean that you have to compromise your needs but it is important for planning financial life. Household Budgeting means to create a planning for the money spending. Build emergency fund, minimize the use of credit card, planning, etc. are the tips for making personal household budgeting.

  3. thom young says

    Why I certainly agree that it is not good to have too much credit card debt, having some is not bad, and why pay off the debt while the dollar is still relatively strong? but as you see is getting weaker by the day, so in the long term you will be paying back less because the dollar will be worth less, the credit card companies will be losing money because the dollar will be worthless once it loses its reserve currency status and the world shifts to the yuan or some other global currency controlled the IMF. I certainly do agree that you should pay off your credit cards, but in the long term it won’t matter, so don’t let your debt get out of control but remember the dollar is going to tank. I suggest you get all your money out of the stock market except in gold and silver and its related shares. It will be the emerging markets which soar in the soon future and not the dollar.

  4. @Beth – Yes, most people have a hard time thinking past the next paycheck. A shame.

    Life insurance benefits are not subject to income tax, but they may fall under estate tax rules. But I think that’s a rarity. Retirement plans, like the 401k are tax-deferred. So yes, they are taxed when withdrawn. Earning from a Roth IRA are not taxed at the end. It’s the reverse of the 401k.

    As for insurance, I agree with your comments. A rule of thumb I use is to always treat life insurance as an expense vs an investment. And leave investing to other products, like 401ks, IRAs, etc.

  5. Great blog! I hope people check it out. I will spread the word. 🙂

    My hubby and I were talking the other day with a friend about retirement plans and such. We were surprised to find that in his local office (about 150 employees) less than 1/4 of the people he worked with took advantage of their 401K plan.

    To me, that’s like leaving money on the table! ALMOST ALL employers will match what you put in. CRAZY not to do it!!! I think some people look at it like that’s “more money taken out of my check.” They are concerned with “right now” and not later.

    The thing is, you really don’t notice that money is gone! Sometimes, what is taken out, will knock you in a lower tax bracket so you aren’t getting taxed so much.

    Another point you made that is REALLY good, is get a life insurance policy. If you are relying on JUST your retirement to take care of your family, DON’T.

    Correct me if I’m wrong, but I think retirement plans are taxed when withdrawn and subject to all types of penalties reducing the amount considerably…Life insurance benefits are not taxed (?) and you don’t have to pay ANYTHING. This will ensure your family is taken care of.

    When buying a policy, TERM life is DEFINATLY the way to go. WHOLE life is a rip-off in my opinion. Know the difference! I read somewhere that the difference between Term life insurance and Whole life insurance can be compared to “buying” or “renting” a home.

    You get the same outcome either way…BUT “buying” is always cheaper in the long run. TERM life is like “buying” a home. Your payments are cheaper and you get the SAME benefit. I think when buying a policy, 10 years income of the “primary” breadwinner is good.

  6. Mark – Great points, man. A zero-based budget is something I’ve been meaning to do. Although, I typically just make sure that I save up front for the things I need and give myself freedom with the rest of the money. I think if some of that free money had a purpose I’d be more productive with it.

  7. You may have mentioned this in another blog post but how about the Big One regarding personal finance? That would be making a monthly budget and sticking to it. You gotta sock away a bit of money each month to cover the non-monthly recurring expenses such as property taxes if you don’t have an escrow account, homeowners assocation dues, etc.

    And here’s one that I like but that nobody seems to believe in. Strive to make big purchases, even something as expensive as a new automobile, in cash. Yes, cash. If you can pay the bank $600 a month for 48 months after you buy a car, you can sure as heck pay yourself $500 a month for 48 months BEFORE you buy the car. Put the money in a safe account like a cheap savings account. Even with the minimal interest earned, you’ll end paying a few hundred dollars less for the car in cash. And you do this with lower monthly payments into your new car fund. (I used $600 and $500 as examples. I didn’t figure out the correct amounts for an average priced new car.) Paying interest for 48+ months means you’ll end up paying several thousand dollars more than the cash price for the car. “Pay now or pay later” can be changed to “pay less now or more later”.