Adulting 101: Personal Finance Tips You NEED to Know

Adulting 101 is something I think about probably too much.

I parallel it to the Home Economics class that we took in high school. 

I don’t know about you, but in that class I learned how to write a check, how to address a letter, how to sew a purse, how to bake, and more.

While I’m not sewing purses much these days, Home Ec really laid the foundational skills for some necessary principles of life. At least in a far more realistic and applicable way than studying the periodic table of elements or the Pythagorean theorem did.

When I was in school, Home Economics was a mandatory class – at least in my district. But that isn’t the case anymore.

In fact, a 2021 article in The Southerner describes how Home Economics rarely shows up in classroom curriculums.

The essential life skills of cooking, cleaning, household management, and finance have been replaced by more advancing technology-oriented classes like coding and engineering.

And sure, there are circumstances where knowing the atomic number for Iodine or understanding descriptive function and method names for codes come in handy, but it’s unlikely to move the needle in most adult’s day-to-day lives.

Adulting 101: Who Should Teach It?

It quickly becomes a complicated conversation – What should or should not be taught in school? Is teaching life skills a good use of public educators’ limited time? What is a parent’s role versus that of teachers? 

To be honest with you, I’m not sure what the right answer is. In truth, educators are already stretched thin – with nearly 50% of K-12 workers in the United States report “always” or “very often” feeling burned out at work.

And, frankly, as a parent, I feel like it is my job to teach my kids how to cook, clean, manage a household, and generally be a solid, functioning human being in the home and in society.

I certainly can’t teach them the Pythagorean theorem or build a prototype of… well, really anything. But I can teach them how to boil water and cook up some noodles or how to increase their emotional intelligence.

The one area, however, that seems to be the most gray – that is, whether it should be taught in schools or mostly at home – is personal finance. 

Personal finance is a life skill. Hell, it is THE life skill. Making enough money – and learning how to manage it – could mean you don’t have to clean your toilets or make a single meal for the rest of your life. You can just pay people to do that stuff for you.

I’m joking… a little. 

The reality is, personal finance is a life skill that should be taught in the home. It should have been taught in your home. 

Personal Finance Principles

Unfortunately, few people have had any real education about personal finance. Not in the home or in school. Many American adults truly do not understand basic personal finance principles.

According to the World Economic Forum, “The [P-Fin] index explores eight functional areas across finance, such as earnings, savings, insuring, and comprehending risk.”

Data from the 2024 index shows how financial literacy in the United States has hovered around 50% for eight consecutive years, dropping to 48% in the past two years.

So you can get a better understanding of what types of questions are on the questionnaire, these are two questions posed on the P-Fin:

“Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow?”

And 

“Do you think the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.”

(If you read last week’s post, How to Invest for Beginners, you know the answer is false and you also know that an index fund is even better than a mutual fund.)

But I digress.

Because so few people truly understand basic personal finance tips, in many homes, the learning wouldn’t be sufficient. Therefore, personal finance is a subject that should be taught in school, and I would argue, mandatory for graduating high school. 

We can get into a far deeper understanding of why Americans historically haven’t been taught money, but let’s save that for a later post. 

The reality is, I’m 32 and when I was growing up, personal finance classes were not mandatory. The class wasn’t even an option because it wasn’t a thing.

Hardly anyone was talking about money, much less any schools teaching finance classes. 

Personal Finance Mandations in Public Schools

Luckily, that’s changing. In 2024, 35 states now require students to take a personal finance course to graduate. That number more than tripled since 2020, when only 8 states were requiring students to take a personal finance course.

All of this is fantastic news for future generations. But what about you? What if, like me, you’re well beyond your K-12 years, and never took a personal finance class.

And what if, instead of teaching you how to balance a checkbook and to pay off credit cards in-full and on-time every month, your parents taught you vague, fragmented messaging like “money doesn’t grow on trees” and “money can’t buy you happiness” instead of any real, useful, tangible personal finance tips.

Is there still hope? Can you still be a real-life, financially functioning adult?

The answer is, of course, yes. 

It is funny though. In the client work that I do, I often ask, “How are you feeling?!” This is true for when they pay off credit card debt or use their spending planner for a week. I ask, “How does it feel?!” And a common response I get is, “I feel like a real adult!”

With intentionality and a desire to understand how money works, you can be an “adult.”

What is Adulting 101?

That leads me into this: What really is Adulting 101?

As I was doing research for this post, many people are wondering the same thing. With over 30-pages of search results on Google, it became abundantly clear that people have no clue how the hell to be an adult.

Heck, even as I was having coffee with a couple friends the other day I very sheepishly admitted I don’t even know if I’m washing my face correctly – giving them an entire rundown of how I stand in the shower with a steaming hot washcloth fully draped over my face, hoping it opens my pores and somehow magically exfoliates my delicate face skin. 

The thing is, as this story proves, there are dozens of categories for which Adulting 101 can cover.

From how to iron a shirt to how to properly wash your face to how to stay (idk – relatively happily?) married to the same person for 60 years, Adulting 101 is a wide-ranging topic.

For the purposes of Financial Self-Care and because I have no idea how to properly iron a shirt, we’re keeping the discussion to Personal Finance Tips for Adulting.

If I were to host an Adulting 101 class (which I am absolutely not doing), I would tell you there are really 5 phases of how to be an adult, from a personal finance vantage point, that is.

Adulting 101: Changing a Mindset (Phase 1)

The most important place to start is changing your mindset.

I can give you all the practical and tangible personal finance tips a girl could want, but if you were raised in an ultra Catholic household and the message, “The love of money is the root of all kinds of evil.” 1 Timothy 6:10 was constantly being forced upon you, it’s possible that deep-down you (or someone who raised you) has warped and twisted that message into meaning you should reject money or that money should be avoided because wanting or having money makes you bad.

I’ll give you another example.

Many women that I work with come to me saying, “I’m just not good with money.” Oftentimes these women, especially those in heterosexual relationships, proceed to tell me just how good with money their male partners are. 

If that’s the story you’ve told yourself over and over and over again, it’s hard to see that that narrative might not even be true. 

But in many cases, though the woman has told herself for years that she’s just bad with money and he’s good with money, once I get deeper into the work, especially into the numbers with the couple, I often find that the money has, in fact, been mismanaged.

She, actually, is far smarter than she gives herself credit for, and he is actually not very good with money. 

Because, like me and like you, he wasn’t taught personal finance in his home or in his school either. Yet society has led us to believe that men are better at math, they’re better at money, and they’re better at – or should be better at – being the “provider.” He’ll take care of it.

And please hear me when I say, this way of being isn’t the man’s fault.

Think about how hard that must be. To be told your whole life that you need to be good with money and be the provider, the one that we can all count on to bring in a substantial income and to manage all the spending, savings, and investing. Buuuut we’re not going to teach you how to do it. 

Oh, and by the way, you can’t ask for help, be emotional, or let anyone in on the fact that you have absolutely no idea how to do any of this.

Let’s just say, I certainly don’t envy any man who feels that way. On the contrary. I want him to know that it’s okay if money management isn’t his favorite thing in the world and that success isn’t defined by your ability to provide. 

The point is, there are very few people – man or woman – who don’t need to change their money mindset.

In order to change a mindset, you need to be self-aware. Are you starting to see how nuanced and layered money work is?

At a recent social workers conference, one of the presenters said: “95% of people believe they are self-aware, but research tells us that only 10% of people actually are self-aware.”

This actually shocked me, but sure shit, Harvard Business Review conducted a study on Self-Awareness and How to Cultivate It.

In their research, two broad categories continued to show up: internal self-awareness and external self-awareness.

Internal self-awareness was defined by Harvard as, “[. . .] how clearly we see our own values, passions, aspirations, fit with our environment, reactions (including thoughts, feelings, behaviors, strengths, and weaknesses), and impact on others.”

External self-awareness, on the other hand, means understanding how other people view us, in terms of those same factors I just listed.

In this first phase of Adulting 101, when you’re changing a mindset, we’re primarily interested in internal self-awareness. Self-awareness, specifically internal self-awareness, could be an entire blog post on its own. 

But one through line you’ll see when researching how to improve self-awareness is using introspection – observing your own mental and emotional processes – to generally increase self-awareness.

However, Harvard’s article unexpectedly found – and I quote, “one of the most surprising findings of our research is that people who introspect are less self-aware.”

Before you get all up in arms, there is an explanation for their findings. Harvard says, “The problem with introspection isn’t that it is categorically ineffective — it’s that most people are doing it incorrectly.  To understand this, let’s look at arguably the most common introspective question: “Why?”” 

They say, “As it turns out, “why” is a surprisingly ineffective self-awareness question. Research has shown that we simply do not have access to many of the unconscious thoughts, feelings, and motives we’re searching for. And because so much is trapped outside of our conscious awareness, we tend to invent answers that feel true but are often wrong.”

So in the case of changing a money mindset and using introspection for self-awareness we’re going back to the woman who has told herself, “I’m just not good with money.”

When she asks herself “Why? Why do I think and feel like I’m not good with money?” The answer she comes up with is: “I feel like I’m bad with money because I can’t get my spending under control.”

That’s a fine and understandable answer, but it likely isn’t the full truth.

A more accurate and thorough conclusion is:

“I feel like I’m bad with money because there are both internal and external factors that have a greater influence over my spending choices.” 

An internal factor might be that you want to give your kids the things you did not have when you were little. 

Or it might be that your parents put great emphasis on the importance of hard work and pulling yourself up by your bootstraps – doing things on your own and never asking for help because asking for help is a sign of weakness. 

External factors, on the other hand, might include your Target entry fee of getting a latte for yourself and a cake pop for your kids at Starbucks before you even begin the actual shopping trip. 

Unbeknownst to you, that latte is actually making you spend more money.

According to research out of the University of South Florida, after studying more than 300 shoppers, “People who drank a cup of caffeinated coffee before shopping spent roughly 50% more money and bought almost 30% more items than people who drank decaf coffee or water.”

Furthermore, “Caffeine also influenced the types of products people bought: Those who drank coffee bought more non-essentials, like scented candles.”

Not to mention the various advertising campaigns and social media marketing that is hard at work convincing you to spend money.

See, dear reader, it’s not simply that you’re bad with money because you spend too much money. Again, that may be true to an extent. But it’s certainly not the whole picture.

It’s important to note, these internal and external factors will vary for everyone. These bits and pieces of you – especially your internal factors – are a big part of your money story and your money story is as unique to you as your DNA.

Having this level of awareness takes work, time, practice, and likely help. It’s why financial therapy works. Because having a deeper, truer, more full picture of why your spending, saving, and investing habits are what they are. 

The Harvard Business review says rather than asking yourself: “why”, You need to change the question and ask yourself: “What…?” “What are the situations that make me feel terrible and what do they have in common?”

If the Target Trap we talked about in Financial Stress: 5 Tips for Coping with Money Stress, is your spending demise, then maybe it’s time to take a break from going inside Target.

If Amazon’s “1-click to buy option” makes spending haphazardly too easy, ultimately leading to fights between you and your spouse, start recognizing those patterns. 

Then ask yourself: “What do I need to change in order to make my spending habits more intentional?”

Developing self-awareness to change a mindset is a beautiful, ever-evolving process. 

The Harvard article concludes with, “[. . .] no matter how much progress we make, there’s always more to learn. That’s one of the things that makes the journey to self-awareness so exciting.”

TL;DR, in this Adulting 101 personal finance lesson, you’re to assume that if you think you’re just not that good with money or even if you think you’re amazing with money, there’s always more to learn.

That’s true for me and it’s true for you. We can always improve the way you feel, think, and behave with money.

Adulting 101: Developing North Stars (Phase 2)

Now, moving on to phase two of the Adulting 101 lesson. Developing your North Stars. AKA your goals.

If you haven’t yet gathered, these phases are actually almost exactly what I do with my clients. We get a solid understanding of what’s going well and what’s not. Then we start looking at their money story to reveal what internal and external factors are at play. Then, we set goals.

Similar to your money story, your North Stars should be for you. This sounds relatively uncomplicated, right? Your goals being yours and no one else’s. 

But the truth is, we often follow in the footsteps of those that came before. Meaning, you’re goals, consciously or unconsciously, might be a reflection of how you *think* you should be living your life. Not necessarily how you want to be living your life.

I’m referring to the general idea of the American Dream. And like all things I seem to talk about, this too is a complicated, stratified topic.

But the American Dream, promising upward mobility, also known as the American success story paints this picture:

A happily married (heterosexual, white) couple who are loving parents to two adorable children. They live in their 2,300 square foot house in the suburbs with their two vehicles; one truck and one mom-mobile primarily used for taxiing the kids to and from school, playdates, sports, and church. The self-made man (never the self-made woman) is the breadwinner of the family and works hard to provide the money so he can pay for soccer league and his stay-at-home wife can cook healthy meals for the next 30 years of life. Until retirement age, where he will golf as much as his wife will let him and she will volunteer at the nursing home to her heart’s content (because women should never stop living a life of servitude). 

The truth is, there’s actually nothing wrong with this dream. I’m not here to shit on this dream. 

If you see yourself in this dream, even in parts of it, that’s okay, good even.

I mean, let’s be real. I’m happily married in a heterosexual, white partnership and consider me and my husband loving parents to two adorable kids. And we do have a truck and mom-mobile, two vehicles we love. For a long time, my husband was the breadwinner. I even stayed home with the kids, not doing any paid labor, for a while. 

This isn’t a bad dream. You just have to make sure it’s your dream before just slipping into it. You have to make sure you know what you want in this life. 

For a long time, I’ll say the “traditional” American dream was the only dream you could have without repercussions. In many ways, in many states, in many households, that’s still true.

Being unmarried is still generally seen as undesirable. But for some, staying single or being divorced is the best choice they’ve ever made. 

A childless, particularly childless by choice, woman is viewed as selfish. Lord knows, those childless cat ladies (Read: Kamala Harris and Taylor Swift) are the demise of our country. (I hope you hear the sarcasm dripping from my voice.) But on the other end of the spectrum, people with 6, hell even 3 kids, are seen as crazy for having the audacity to try and raise more humans than you have arms.

These same arguments can go for anything in life: 

• Owning a house versus renting
• Sending your kids to public school or private school or homeschooling them
• Being a stay-at-home parent or a working parent or both or neither

The list is endless, but the point is, everyone – especially your family – will have strong opinions (conscious or unconscious; said or implied) about what’s right or wrong; about how you should or should not be living your life. 

I cannot stress enough the importance of this phase of Adulting 101.

Because when you can start to feel confident in how you want to show up in the world, you can feel confident in what matters to you. And once you know what matters to you – what your values are – you can spend your money in accordance with those values. 

I urge you to take time, solo or with your partner to analyze your current life situation. Is this what you want (not what’s been thrust upon you)? Are you living your dream life or at the least on the road towards the most contented version of you?

Adulting 101: Make a GOOD Plan (Phase 3)

Once you have a solid understanding of your dream life, we start laying the foundation for that life.

It’s much like building a house. In phase one, you have land. It’s just there, raw land. But you realize you don’t just want raw land, you want something different. You want to build a house. To do so, there are some things you need to do on the land like clearing the trees and there are some things you need to do off the land like getting zoning and building permits to make the land buildable. 

Once that’s done, you can start phase two – the dreaming phase. You get to dream up the house you want to build. The house can be small and simplistic or a massive mansion. It could be a geodome or a tiny house or a log cabin. The possibilities are endless. And of course, some things will change a bit along the way. That happens. But you have a pretty solid, clear idea of what you want.

In phase three of my housing-building analogy, we get to the dirty, murky, taxing part of digging up the soil. This is the getting-out-of-debt phase. We call this the GOOD (Get Out of Debt) plan. And the first thing you need to do is know just how much debt you’re in. You can use my Intentional Spending Planner to do this – I’ll link it in the show notes.

But I want you to list out all your debt. Make a list of what the debt is (credit card, student loans, medical debt, car note, mortgage, anything). Next to that, you’ll write how much you owe (total). Then, what the monthly minimum is. And finally what the interest rate is. 

I will forewarn you, this activity can go one of two ways. Actually, usually both feelings come up. The first is, “Wow, this sucks.” The next is, “At least I know what I’m up against.”

For some, as you’re digging that plot of land, you’re moving annoyingly heavy, medium-in-size rocks. They can’t be there, but it won’t take a ton of time to get them out of the way. For others, you start the dig, and there are boulders to be moved. Big, huge, boulders. Depending on how big the boulders are, it might even be worth calling in reinforcements to help get the boulders out of the way. 

If you’re the person with metaphorical boulders to move, stay tuned. Soon I’ll be speaking with Adrienne Hines, a bankruptcy attorney who helps you find debt relief with dignity.

Adrienne does a great job of de-stigmatizing bankruptcy and clarifying when it might be right for you to file. So keep an eye out for that conversation in a couple weeks.

If you’re one of the people who is moving those annoying rocks, and able to do so on your own, then it’s time to strategize a GOOD Plan.

Dave Ramsey certainly doesn’t take the same approach as I do.  By that I mean he is shaming in his approach. (I swear that man thrives on shaming people.) But there’s one thing he certainly has done well and that’s create a debt pay-off plan.

If you’re unfamiliar, I’ll briefly speak to the two types of GOOD Plans that Dave talks about. Then, I’ll tell you the secret third way that I do it. None of these are bad, they’re simply options.

Type of debt	Total Amount Owed	Monthly Minimum Due	Interest rate
Credit Card 1	$1,000	$50	25%
Personal Loan	$2,000	$400	20%
Credit Card 2	$3,000	$150	30%

The Avalanche Method

The first option is the Avalanche Method.

For the Avalanche method, you will look at the interest rates of all your debt. Anything with an interest rate of 7% or higher is high-interest debt, and we want that gone.

You will choose the debt with the highest interest rate, and pay that off first. Continue paying the minimums on your other debts.

Once you pay that first debt off, you will choose the next highest interest rate debt, and work towards paying that down.

So for example: You have three debts with high interest listed on your GOOD Plan. Credit card one has $1,000 on it with an interest rate of 25%. Debt two, a personal loan, has $2,000 balance with an interest rate of 20%. Your last debt, another credit card, has $3,000 on it with an interest rate of 30%. 

For the debt avalanche method, you’re choosing to pay down credit card number 3 because it has the highest interest rate (or APR) of 30%. Once that’s paid off, you’ll pay credit card number 1 because the APR is 25%. Finally paying the personal loan with the lowest APR of 20%.

Mathematically, this makes sense. High interest rates will eat you alive. So the math will say, pay-off the highest APR debt first.

But as we know, money isn’t just a math problem; there is always so much more to the equation. 

The Snowball Method

We have to consider the second debt pay-off plan, called the Snowball Method. The Snowball Method will have you list all the debt the same way we originally did. But instead of looking at the interest rates, you’re going to look at the total amount owed for each balance. 

For the snowball method, you would choose the lowest hanging fruit.

In this case it’s credit card number one because the balance due is $1,000. Again, you’re going to be making the minimum payments for the other debt you carry, while trying your damnedest to pay off that first credit card. 

Once that’s paid, you’ll take the extra money you were putting toward credit card number one, and start paying more toward your next lowest debt (in this example, your personal loan of $2,000).

The idea here is that you’re gaining momentum and motivation by seeing quick wins or progress made against smaller balance debt. 

Finally, the third option. I don’t have a name for it, but we probably should come up with one. You can message me on Instagram with ideas. 

Now, for you to fully understand this method, you’re going to need to understand phase 4 of our Adulting 101 class. Don’t worry, we’ll circle back to my debt pay-off method, but let’s parking lot it for a minute.

Adulting 101: Live Within Your Means (Phase 4)

Phase 4, Live Within Your Means, gives you tangible money rules to live by. The first is you need to know your gross and net income.

Gross income is the salary or number you make before taxes. Net income is the money you actually see, post-tax. Think of net income as what you catch in your bank account.

Now, again, you can get my Intentional Spending Planner, it’s on sale for $15, which lays this all out nicely for you to just plug the numbers in. 

Live Within Your Means: Housing Costs

Once you know your gross and net income numbers, you need to know these money rules. The first is housing costs.

The cost of your housing should stay under 28% of your gross income, your pre-tax salary. Housing costs include mortgage, property tax, property insurance, and if you have a HELOC, a home-equity line of credit OR rent and renters insurance.

An example of this would be if your salary is $60,000, your housing costs should be less than $16,800 per year or $1,400 per month.

Another example: If your household income is $140,000 per year, keep housing costs under $39,200 per year or $3,267 per month.

Live Within Your Means: 60-10-10-20 Rule

Next money rule for living within your means is the 60-10-10-20 Rule. The 60-10-10-20 Rule is a percentage-based breakdown of how to “live within your means.” This is the building-the-house phase. 

Using your net income (so post-tax income AKA the money that gets deposited into your account), you should be:

• Spending 60% on fixed costs,
• Saving 10% into a high-yield savings account (HYSA),
• Investing 10% in post-tax investments,
• Spending 20% on shame-free, fun money

I want to give credit where credit is due. Ramit Sethi has a similar plan, and it’s great.

Let’s break this down a little bit further.

Spending 60% on Fixed Costs

60% of your monthly fixed costs include categories like housing, utilities, insurance, cell phone, groceries and essentials, transportation, subscriptions, childcare, pets, and debt minimums.

Think of it as anything that, if it wasn’t paid, would have consequences.

Like if you didn’t pay your mortgage, you’d be unhoused. If you didn’t pay for gas, you wouldn’t be able to drive very far. If you didn’t pay for Netflix, your subscription would be canceled. 

Get my point?

So for example: If your salary is $60,000 per year. Your net pay is $42,000 per year or $3,500 per month – meaning, you’re bringing home $3,500 every month. Your fixed costs should stay under 60% of that, which would mean staying under $2,100 per month.

Another example: If your household income is $140,000 per year and your take-home pay is $98,000 per year (or $8,167 per month), your monthly fixed costs should stay under $4,900.

Saving 10% in a HYSA

With the 60-10-10-20 Rule, you would then be saving 10% of your net pay in a High-Yield Savings Account (HYSA). My favorite is Ally, an online bank with a yield of 4.2% (at the time of this recording). I have a referral link that will get you a sign-up bonus, too, in the show notes.

You can think of this as saving for your emergency fund or vacations or whatever you want to save for.

Using the same examples as before, someone making $60,000 salary and netting $42,000 a year, would be putting $350 in their high-yield savings account every month.

A family earning $140,000 per year, netting $98,000, would be putting $816 per month in their high-yield savings account.

Investing 10% in Post-Tax Investments

The same percentage, 10%, is true for post-tax investing. 

If you’re unfamiliar with post-tax investment options, I encourage you to go back and listen to my podcast episode, How to Invest for Beginners, or grab my FREE Investing for Beginners guide here! 

Spending 20% on Shame-Free, Fun Money

And finally, you get to spend 20% of your net pay on whatever the heck you want.

You want DoorDash? Go for it! You want Starbs? Get that Pumpkin Spice Latte, girl. You want concert tickets? They’re yours!

This is your fun, frivolous, no-shame spending money. Do with it what you want.

Live Within Your Means: Other Considerations

Now, as with all things personal finance, these are guidelines more than they are a rule. You can fudge the percentages a bit to make them make sense for your dreams and desires – your North Stars.

If your dream includes retiring early at age 55, then you’ll likely have to turn the dial up on your investing category. If you turn that percentage up, then you have to turn one of the other percentages down.

Similarly, if you want to save more to fully-fund your emergency fund, you’ll have to turn the dial up on your savings rate. Which means turning the dials down in other categories.

I will tell you: Once your fixed costs go up, it’s really hard to turn that dial back down. Doable, but difficult.

Remember, these are things like housing costs, transportation costs, and groceries. No one wants to sell their house because they can’t afford it. No one wants to trade in their car for one that might fit within the spending parameters a bit better. 

We get really accustomed to living life at a certain threshold, a certain tier of living, and turning the dial down on fixed costs can be really challenging.

And this is the part where I bring us back to Phase 3, your Get Out of Debt Plan. Because I operate within the 60-10-10-20 Rule, I want you to keep your fixed costs at 60%. Within the parameters of your Fixed Costs falls your total monthly minimums do on each of your high-interest debt. 

Type of debt	Total Amount Owed	Monthly Minimum Due	Interest rate
Credit Card 1	$1,000	$50	25%
Personal Loan	$2,000	$400	20%
Credit Card 2	$3,000	$150	30%

So, going back to that Get Out of Debt (GOOD) Plan chart, you’ll remember: Credit card one has a balance of $1,000 on it with an interest rate of 25%. But your monthly minimum owed on that card is only $50 per month. Debt two, that personal loan of $2,000 has a minimum payment of $400 every month. And finally, your last debt, another credit card, has $3,000 on it, with a monthly minimum of $150. 

If you need to get your fixed costs down, within the parameters of the 60-10-10-20 Rule, then you need to consider how the monthly minimums are impacting your ability to sustain that plan.

If you’ve hovering around already spending 60%, but the total monthly minimum you own on debts each month is $600 – that’s a lot of money eating into your spending plan!

However, if you can knock out that $400 monthly minimum payment, you’re down to owing just $200 per month to debts, which will help you breathe a little bit faster.

This is why it’s so important for you to have a clear, overall picture of your finances. It’s not simply going on a financial diet, cutting your spending like crazy for a short stint of time to get a debt paid. Because that’s not a sustainable plan. 

It might work for a month or two to get the ball rolling on paying debt, sure. I’m all for that. But money work is a journey. And one that lasts your entire life. I want it sustainable and simple and fun.

Adulting 101: Building [Generational] Wealth (Phase 5)

And because it is a long-lasting journey, it’s time to make the house a home. Phase 5 is building wealth. Better yet, generational wealth.

In the final phase of Adulting 101, you’re simply tracking your wealth, your net worth. 

As I was writing this post, I originally launched into a whole thing about how your net worth does not equal your worth as a human being. I decided to save that for a later post. 

But please hear me loud and clear: Whatever your net worth is – a negative number, a small number, or a large number – it says nothing about who you are as a human being. Simply put, numbers can not define you.

With that said, tracking your net worth sucks for the first 7 or so years. It sucks because it doesn’t really seem to go up very much month over month.

Then one day, you’re truckin’ along and you notice, you’re making a significant amount of money each month in your investments. I’m talking a few thousand, even tens of thousands of dollars a month. And all of a sudden it becomes very fun.

You start realizing that all those financial experts were actually on to something. Retirement is possible. Helping your kids through college is possible. Not having a mortgage is possible.Not looking at the dinner bill is possible. Taking your extended family on a week-long Italian vacation is possible.

Your North Stars are coming to fruition, your house has become your home, and it’s really, really fun.

To track your net worth, list the value of all your assets (home, cars, etc.), list all your investments (401(k)s, IRAs, brokerages, etc.), and write down how much you have in savings. Add all those numbers together. Then subtract how much debt you have. That number is your net worth. 

Again, I have this listed on my Intentional Spending Planner. You can simply plug all your numbers in, and at the bottom, it will give you your total net worth.

The Wrap Up: Adulting 101

That was a whole lotta information, so let’s do a little re-cap, shall we?

Adulting 101 is a broad topic, and just being completely frank here, no one knows what they’re doing in every category of being an adult. Facts are facts. I may not know how to iron a shirt, but I know how to do personal finance. 

Adulting means facing things head on and taking accountability for our actions. No more avoiding the numbers. No more making excuses.

t’s time to enter the 5 phases of Adulting 101.

Phase one is where you choose to change your mindset through self-awareness. Asking yourself, “What ?” instead of, “Why?” can be a great place to start. “What can I do to change my financial situation?”

Phase two is developing your North Stars. Taking a good, hard look at what’s going well in your life and what isn’t. Then, decide if this is the life YOU want to be living.

Phase three is getting out of debt; laying it all out and making a GOOD (Get Out of Debt) Plan.

Phase four is the meat and potatoes of it all – living within your means. To do that, you have to know what your monthly income is and what your expenses are. Following the 60-10-10-20 Rule is a great place to start. 

Finally, phase five is building wealth. I said this before, but I cannot emphasize this enough: Net worth does not equal self worth. Your net worth is a number, a metric to help you understand what options are available to you at this point in time.

And that, my friends, is how to be an adult: personal finance tips edition.

Remember, this is not a race, Adulting 101 – the home you’re building – is a journey.

As always, I hope you found this information helpful. If you did, please share it with a friend. 

Now go enjoy the rest of your day!