1. Budgeting 
One of the first steps in this journey is to know how much money you have coming in and how much you spend and where it’s going. Budgeting means sitting down and really looking at your money and your spending habits.
To figure out how much money you have coming in, you’ll need to find out how much you’re being paid after taxes, which is the amount that you actually take home. Your paychecks should give you this information.
From there, you’ll make a plan. Gather together all the bills you need to pay in the month. Keep in mind that your utility bills may go up and down depending on the season. It takes more energy (and money) to keep your home cool in the summer and warm in the winter. Similarly, spending in areas like groceries will likely go up and down as you buy different items. You probably can’t know the exact cost for each month on these types of things, but having an average amount in your plan will help keep your budget on track.
Then, you’ll put your plan into action using whichever system makes the most sense for you and your family. Some people use a zero-based budget. That doesn’t mean you spend all of your money. It just means that all of it will be allocated whether that’s to bills, needs, wants, or savings.
2. Debt Management 
A big part of understanding debt and debt management is knowing how things like credit cards and loans work. Before you take on a debt, you need to know things like annual fees, late fees, and interest rates (known as APR). This will help you determine if you can afford to pay back the loan.
For example, payday loans often come with very high interest rates. In Indiana, the average is 382%. So, if you take out a $500 loan at 382% you’ll owe $580 two weeks later, but many borrowers need to “rollover” their loan multiple times. So, inside of three months, you owe nearly $1,000.
3. Taxes 
Paying taxes can be incredibly confusing, but a basic understanding of things like deductions, credits, and withholdings gives you control over your money and less of a surprise when tax season comes around.
For example, a solid understanding of withholdings will impact your paycheck and any tax returns or bill. Withholding allowances are a percentage of your paycheck your employer sets aside to cover your taxes. This is a number that you likely filled out on a W-4 form when you first started your job. Let’s say you were married with two kids, you can claim up to four allowances on that paperwork.
In general, the more allowances you claim, the fewer taxes are withheld from each paycheck. This means you will get more money each paycheck so you can use it when you need it. But it also means that you will receive a lower tax refund or no tax refund.
4. Credit Scores
Your credit score can have a powerful impact on your finances. Knowing what your credit score is, what it means, and how to repair bad credit will help set your up for better rates on loans, mortgages, and credit cards.
Here are a few organizations that allow you to check your credit for free:
Experian
AnnualCreditReport.com
NerdWallet
Here’s a breakdown of what your scores mean:
300-579: Very Poor
580-669: Fair
670-739: Good
740-799: Very Good
800-850: Exceptional
Understanding these four steps will help you in your journey to financial literacy. With financial literacy, instead of your money controlling you, you control your money. It can be a scary, confusing road, but luckily there are a lot of people who can act as your guides.
We know this might feel like a lot, so if you’d like more information, have questions, or would just like to sit down with someone who can help, schedule an appointment with a financial coach.
