Begin a conversation about personal finance, and some people’s eyes glaze right over. Not everyone enjoys talking about the steps to financial success. Even as adults, many people feel uncomfortable discussing money. First and foremost, remember that there is no shame in being new at something; remember that most people aren’t taught about managing money in school. 

If you want to give yourself the best chance to achieve financial security, it’s vital to grasp a few core concepts. Believe it or not, the world of personal finance is not as complex as it appears. Most anyone can better understand how it all works by taking a little time to read up on the finer points.

In this article, we present the top four finance topics you need to understand for success.

BudgetingComposition of calculator with paper money and notebook with pen

There’s a reason why most financial planning articles begin with the subject of creating a budget. Budgeting is the most critical part of managing your personal finances. It allows you to plan out what expenses are coming up and how much money (if any) you can save.

If you haven’t started budgeting yet, you can begin by simply tracking your expenses in a notebook or a basic computer spreadsheet. It’s a simple way to see where your money goes each month, and it’s good practice for when you want to create a more formal budget later on.

As you become more familiar with budgeting, you can utilize free budgeting apps like Mint or Pocketguard to help you manage your finances. Apps like these were designed for beginners and can help you get on a solid schedule where you feel in control of your budget instead of the other way around.

Understand the Different Types of Debt

Debts are your financial obligations to another person, business, or entity. That someone else is called your creditor—you owe them money. Not all debt is bad. For example, many people would say that a monthly mortgage payment is a fantastic type of debt to have!

There are two types of debt; secured and unsecured.

Secured debt is a type of debt that has something tangible (called collateral) to offer the lender if you do not pay back your loan. Mortgages and car loans are both types of secured debts because the lender can take them away from you if you don’t make payments. A mortgage foreclosure or vehicle repossession is obviously serious and something everyone wishes to avoid.

Unsecured debts are those that are not secured by any asset (like a car or house). You can still go to court over these debts, but there is nothing the lender can take from you as collateral. However, not paying your unsecured debts can result in an inability to borrow in the future, along with dramatically reducing your credit score. Examples of unsecured debt are credit cards and student loans.

Another type of debt that is less discussed is psychological debt. Obviously, nobody likes to be indebted for any reason. While in many cases, debt is unavoidable, your goal should always be to pay off your financial obligations as soon as possible. Too much debt can make you feel like you’re carrying a huge weight around. The stress and anxiety resulting from this financial instability can be crushing. 

Learn How Credit WorksPhoto of a Woman Holding Shopping Bags

Another thing you should understand if you want to be financially successful is how credit works. Quite simply, credit is the ability of an individual to borrow money. Those with excellent credit typically have an easy time getting approved for things like credit cards, mortgages, or car loans. People with poor credit have a more challenging time acquiring these basics. Most individuals fall somewhere in between.

Usually, those who discuss credit talk about one of two things—your credit score or your credit report.

Credit Score 

Credit scores are numbers that are represented with the words Poor, Fair, Good, Very good, and Excellent. The numbers themselves range from 300 to 850, with 300 being the worst possible credit score and 850 being the best credit score a person can attain. The lower the number, the harder it will be to get approved for mortgages, credit cards, or loans. 

Sometimes, prospective landlords or employers will look at your credit score before deciding to let you have an apartment or a job. 

Higher credit scores are also often associated with better rates on insurance, credit cards, and other services. Therefore, one of your primary financial goals should be to improve your credit score and keep it in the good to excellent range.

Credit Report

Your credit report is a complete list of all your current debt accounts, including how much you owe, who you owe it to, and the monthly payments made. The list also includes any negative information, such as if there have been any collection agencies or bankruptcies filed.

There are three primary credit reporting agencies—Equifax, Experian, and TransUnion. By Federal law, everyone is entitled to a free copy of their credit reports from each of these companies once a year. Many people check out their reports more frequently. Examining your credit report can help you find inaccuracies or errors that could be affecting your credit. If you see something is amiss, you can file a dispute with the agency that issued the report.

Surprisingly, inaccurate information on a credit report is more common than one might think, so it’s a good idea to check for errors since you might be able to raise your credit score just by having mistakes removed. 


You’re probably not surprised that saving money would come up in a list of the most important finance topics to understand. You’ve heard since you were a kid how important it is to save money. Having an emergency fund to cover unexpected expenses like car repairs, lost income, or other unforeseen circumstances is just an intelligent thing to do.

After you’ve established an emergency stash, you can start saving for something a little more motivating, like a down payment on a house or your dream vacation. But what do you do when you’re barely scraping by? How can you save extra money if there’s nothing left over at the end of the month?

For many people, a side gig is a perfect opportunity to build up a savings account. As freelancing and remote work opportunities increase, the chances of finding a side hustle to fit in with your regular work schedule are also better than ever.

Some people do paid online surveys for cash, while others use their vehicles to make money on platforms like Uber, DoorDash, or Lyft. Everyone is good at something. The trick is to find a part-time opportunity that fits in with your regular schedule. Then, be vigilant about saving your side-gig earnings. Every little bit adds up!

Closing Thoughts

There are plenty more tips for financial success that you can learn and implement throughout your life. However, armed with an understanding of budgeting, debt, how credit works, and the importance of saving, you will be well on your way to building a firm foundation for life. Choose to rule your money instead of letting your money rule you, and you’ll be the master of your own financial destiny.