David Lerner Associates News

Basics of Personal Finance

Core Facts

Main Article Image

Friday, December 10, 2021

Personal finance tips abound on the internet, and it can be difficult to sift through the noise sometimes. Navigating the world of personal finances can be confusing when you’re just getting started. Unfortunately, financial literacy basics were not taught to most people in school — and as a result, these skills leave much to be desired across the United States. 

Younger Americans are feeling the greatest burden. A study found growing margins between those who are facing challenges and those who are prospering financially — skewing generationally. Those between the ages of 18 to 34 have the highest levels of financial stress (63 percent) and anxiety (55 percent) and it’s no wonder with 78 percent of Americans living paycheck-to-paycheck, and three out of five Americans don’t keep a budget. 

According to a study by FINRA Investor Education Foundation, there is a clear trend of declining financial literacy. On average, young Americans couldn’t answer a majority of financial literacy questions correctly — four in five youths failed a financial literacy quiz. In contrast, participants 55 years of age and older performed better than in previous years. 

With that in mind, let’s look at some basic tips on the subject. 


Budgeting is one of the most basic and important personal finance skills that everyone should know. Simply put, budgeting is deciding how you’ll allocate your money and working out exactly how much you earn each month and how it will be spent.

The 50-30-20 rule: Using this budgeting system, you allocate 50 percent of your budget to needs such as housing, insurance, and transportation. 30 percent of your income goes toward wants, like eating out, shopping, travel, and more. Lastly, 20 percent of your income goes toward savings and debt. Rafe Klein Senior Vice President of David Lerner Associates says, “This budgeting system is popular and very useful, but could be less than ideal for people with a large amount of debt to pay off."

(1) Keep in mind that no matter what system you use, it is also useful to apply these two ideas: 
Make use of every dollar. In other words, no matter how the funds are allocated, even to savings or paying off debt, there should be no money unaccounted for at the end of the month. (2)Pay yourself first. Figure out how much you want to pay yourself each month, meaning how much you want to put toward your necessities, savings, retirement and debt goals. From there, you can spend whatever is left.

There is an abundance of budgeting apps available to help you plan your spending and track your expenses. It’s no longer an exercise of sitting at the kitchen table with a mountain of bills and a writing pad, late on a Sunday evening at the end of each month. Some of the most popular budgeting apps on the market include:

•    Mint
•    You Need a Budget
•    Personal Capital
•    EveryDollar

Debt and other issues

Debt is a major issue facing today’s society. Consumer debt has risen to unprecedented heights, with US household debt climbing to a new record of $15.24 trillion, according to the Federal Reserve Bank of New York. And as it becomes more prevalent, it is increasingly vital to understand how to manage your debt. 

Ironically, if you budget correctly, you’ll most likely be able to manage your debt better. In fact, if you budget and make smart money decisions, then you’ll most likely take care of multiple issues that fall under personal finance — debt, savings, taxes, investment, credit scores, asset ownership and net worth, insurance, and all the rest. Starting on solid ground can only give you a stable base from which to work. 

Financial Literacy

The key to unlocking financial freedom is education. When you know about a subject and apply the information practically, you can make smarter decisions using that information. If you’re flying blind, you’re likely to crash into a hill. 

There are free courses online that can increase your knowledge and put you in control of your financial future. And if you can get your kids educated on the subject, even better. The point is that as you learn and gain more understanding and add more tricks to your financial toolbox, you’ll become more and more in charge of your own finances.


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. 

Member FINRA & SIPC.

Number of views (433)

^ Top


Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

^ Top

  • Connect With Us