A beginner’s guide to smart money moves

December 13, 2023

Suhas Joshi
PM & Financial Advisor

If the world of personal finance feels like an overwhelming labyrinth of choices, you’re not alone. With countless decisions to make—from budgeting to investing—it’s crucial to have a strategy in place. But what if we told you that embarking on your financial journey could be as straightforward as following a road map?

This guide is your first step toward making informed and impactful financial decisions. Whether you’re figuring out how to allocate your first paycheck or someone looking to improve your financial literacy, we’ve got strategies to set you on the right path.

Where to start? Know thyself (and thy money)

Before you embark on any journey, you need to know where you’re starting. The first step in your personal finance adventure is understanding your income, expenses, debt, and savings. Era, an all-in-one financial management tool designed to help you make more of your money, can help analyze your accounts to give you a birds-eye view of your finances. Ultimately, it’s up to you on where your money goes each month — but Era will always have ideas created uniquely for you.

Era curates its advice for you, but budgeting is the first, foundational step to sound money management for everyone. And honestly, way too many people skip it. So make a budget, stick it on your fridge, or track it with Era’s help —whatever works to make it tangible.

Start by tallying up your income and expenses. This isn’t a vague exercise—get precise numbers for what’s coming in and what’s going out. You can do this yourself, but we promise it’s much easier to use Era. We can even help you categorize expenses, like how much you spent on going out to eat each month. No matter how you do it, once you have a budget in place, Era can help you track your income and expenses, identify savings opportunities, and set realistic goals.

It’s easy to overlook the importance of a structured approach when you’re just starting out. But remember, personal finance isn’t just about making money—it’s about making more of the money you have. The right strategy can serve as your GPS, guiding you through decisions big and small.

Build your financial safety net

If you’re worried about covering an emergency expense, you’re in the majority. That’s why an emergency fund is not just an option, it’s a necessity. Unexpected events are a fact of life, and a financial safety net can make all the difference when they happen.

A general rule is to allocate 20% of your overall income to saving — whether it be a safety net, investing, preparing for retirement, or paying off debt. As part of that, aim to save up to three to six months’ worth of living expenses in an easily accessible account to use for emergencies.

This can seem daunting, but having this cushion is your first line of defense against life’s curveballs. Era can craft a personalized plan to help you build the savings you need. Once you have the plan in place, you can tell Era to move money on a monthly or weekly basis to a high-yield savings account — so you’re saving while you live your life.

Eliminate high-interest debt

Once you’ve got a budget in place, the next big question is: where should your money go? If you have debt, you’re not alone. Entrepreneur and finance educator Tori Dunlap recommends prioritizing high-interest debts first. “After your emergency fund, your second priority is to pay off your high-interest debt,” says Dunlap. “I define high-interest debt as anything over 7% in interest. The reason 7% is our magic number is because 7% is the average return you can expect in the stock market. So, if your debt is higher than 7%, it is costing you more money than you could be making by investing in the stock market.”

List down all your debts, figure out which have the highest interest rates, and tackle those first. In many cases, Era automatically understands your liabilities and can discuss debt advisors, especially if you’re struggling with multiple sources of debt.

Make a long-term plan

Retirement might seem like a long way off. Whatever you want to call it, next up is long-term savings. The key to financial independence is saving. While many will recommend automating your savings so that 20% of your income goes straight into a high-interest savings account, Era can help you fine-tune that percentage and identify which accounts are right for you. Treat your savings as a non-negotiable expense, investing in your future while also paying off lower-interest debt.

Invest in your future

Investing might seem like a game for the wealthy, but it’s not. It’s for anyone willing to understand the basics and make informed choices. We’re here to help you demystify assets, risk, and return so that you can start building your wealth.

You can ask Era something like, “I’ve never invested before. What are some ways to build a balanced portfolio?” And Era will help you research and understand where to start, what you’re investing in, and your risk tolerance. With Era, you can ask real questions no matter your background, and you’ll get answers in plain English — no expertise required.

Make the call

Decision-making in personal finance is often bogged down by the fear of making a wrong move — especially when other apps give you a dashboard and expect you to do all the work. That’s why Era is designed to empower you, offering insights and options that align with your financial goals. You’ll not only make choices but understand why they’re the right ones for you and get it done all in one app — no matter where you bank.

There you have it — a financial roadmap for smart money moves. This may seem like a lot, but the best way to get started is to start. We’re here to help — with strategies backed by trusted guides and experts. Soon, you’ll be well on your way to becoming a master of your financial universe.