I first started getting financially savvy by (yes, this is true) reading personal finance blogs. But I had a little bit of trouble with it, because there was just too much information – and a lot of it didn’t apply to me, at least until I knew where to start.

So, if you anything like me, you might need it boiled down before you can start digging in and trying all the tips, tricks, and plans outlined on the internet and in personal finance books. Hey, I understand – I was there, and I feel like I wasted a lot of time just trying to figure out how to start.

So, to save you a little time, I’ve thrown together this Quick Start Guide, pieced together from my favorite bits of other personal finance blogs and books (links at the end), and from my own experience. It’s only three steps, so don’t panic! Enjoy!

RULE ZERO: SPEND LESS THAN YOU EARN

Rule Zero is at the heart of everything else – everything in this guide, everything on this site, everything on the other PF sites and in all the books. Spend less than you earn, and save the difference. But how? HOW?

Step #1: Track what you spend

In order to spend less than you earn, you have to know what you spend, and what you earn. Knowing what you earn is generally pretty easy – for most people, you just add up your paychecks, and you’re done. Boom. But what you spend? That tends to escape most of us unless we write it all down.

I don’t care how you track it. I use a simple Excel spreadsheet that I made. A lot of people use a little notebook and pencil that they carry around with them at all times. Some people keep all of their receipts in one place and then write it all down at the end of the week. Some people carve it into a wooden block, because those people are crazy.

This step is rather important, so I implore you not to skip it. Of all the tools I have made for myself on my journey to financial freedom, none have been as useful to me as my spending list has been. I’ve been keeping it for over a year now, and I still wish I had more data. (I love data.)

Step #2: Don’t pay the bank, make the bank pay you

Once you start tracking your spending, you’ll probably see a few expenses that you just wish you weren’t paying. If any of those expenses are bank fees, stop. Stop now. If you really like your bank, go in and ask if you can have the bank fees waived for your account.

If that doesn’t work (or if you just want to switch banks), shop around for a free checking account. You can usually get a free checking account pretty easily if you’re a student, or if you can do a qualifying monthly direct deposit. Or you can use ING’s Electric Orange checking account, which has no maintenance fees.

Also, make sure you have a savings account, and that it’s paying some actual interest. Most brick-and-mortar bank savings accounts offer interest rates around .2% (that’s POINT two percent, or one fifth of one percent), and considering inflation averages out at about 3%, that makes your “real” interest rate around -2.8%. That’s terrible. Online savings account offer rates upwards of 4%, which beats average inflation and gives you a little something extra. I have online savings accounts with Emigrant, E*Trade, Citibank, and ING Direct, and although I’ve never had any problems with any of them, the one I recommend more than any of the others is ING’s Orange Savings.

Step #3A: Take down debts

(If you’re debt free or your debts all have interest rates of less than 8%, skip to Step #3B.)

Debt – your future money that someone else has a claim to. Ick – let’s get rid of that. Use this calculator to snowball your debts – whether you pick the “interest order” or the “balance order” depends on whether you feel better knowing your saving the most amount of money, or feel better knocking down debts as if you were shooting in Duck Hunt.

If you have some wacky debts that make it impossible for you to use the snowball calculator with any sort of accuracy (for example, you might be like me and have student loans that are in deferment), then just rank them for yourself on a piece of paper. But no matter what, pay the minimum payment on all of your debts every month and throw whatever else you can at the debt on the top of your snowball list. 

 Step #3B: Save up some savings

Start with an emergency fund. You probably know better than anyone how much of one you should probably have, but the rule of thumb that’s generally thrown around is “3 – 6 months worth of expenses,” more if you have dependents. If you’re a college student or anyone else with strange, unpredictable, lower expenses, you might just want to pick a nice round dollar amount, like $1,000.

Don’t feel like you have to build this all up as fast as possible, although it is important, so don’t shrug it off either. How much you throw into your savings probably has a lot to do with whether you have a lot of debts from Step #3A or not. If you’re paying on a lot of high interest debts, it makes more sense to worry about knocking those out, and only build your savings up by about $10-$20 a week (or per month, if you’re a college student or younger). Otherwise, try to save at least 10% of your income, bare minimum – more than that is better.

It might hurt at first, and you might not even be able to save that much at first. Don’t freak out – just save something. Even if it’s $5 a month. Or $1 a month. Get in the habit and try to increase it each month. The habit is 90% of the process, the dollar amount is only the other 10%.

(It might seem obvious to some people, but this savings should be going into a high yield account, like one of the ones I suggested in Step #2.)

Beyond (Thunderdome)

Once you’re tracking what you’re spending, your bank accounts are in order, you’re snowballing your debts, and putting something aside into savings, you’re ready to start sifting through the vast amounts of information out there. Time to move into budgeting and frugality and retirement accounts and all of those things that might seem very daunting right now. Once again, don’t panic. You’re already ahead by having made it through this guide, the next steps are just as simple.

Like I said, this quick start guide is borrowed and pieced together from the things I read when I was starting out, and the things I’ve read since. Once you’ve made it through this guide, here are three other guides that you might want to try out:

• I Will Teach You To Be Rich » 2006 Makeover – This link leads you to Step 4 of Ramit’s makeover, which includes links to the previous three steps.
• The Simple Dollar » 31 Days To Fix Your Finances: A Wrapup – Trent’s super-comprehensive guide will have you examining your goals and developing a definitive vision of 
• 8 Ways to Take Control of Your Finances in 2008 ∞ Get Rich Slowly – As usual, JD says more than me, better than me, in less words. Check it out!

Photo credits: YTaP’s “Eat Money”, Kris Taeleman’s “Money, i has it!” and Digital Sextant’s “Money”