I have a good friend who has had a lot of trouble with her finances. My boyfriend has trashed his too. His stupid brother makes 6 figures, and is still so damn broke that he sometimes has to borrow money to pay for groceries at the end of the month.

I am constantly frustrated with finding out just what my friends *don't* know about personal finance. I'm not talking about investing in stocks, etc. Just simple things, like how to maintain a little savings, manage their credit cards, shop for basic insurance, etc.

I hate the fact that society somehow assumes you lear about money management at home, but the fact of the matter is that most people's parents aren't capable of giving the advice their kids need. Now that people get married when they're older, a lot of people have to figure out how to get their finances off to a good start when they're still single, while their parents may have already been married and living off two incomes at their age. Also, let's face it, the economy has changed a lot since most of our parents were 25.

The number one piece of bad advice that too many of my friends have tried and failed at: "Make a detailed budget and stick to it."

Ha!

Only the most compulsive among us can actually make that work. That's not to say a budget isn't a valuable tool. I have one. I break costs down into general categories, and use it not to plan future spending, but instead to track retrospectively where my money goes.

The simple fact is that purchases expand to use all available money. I get paid twice a month. So on the first of the month, I pay all of the bills due in the first half of the month, and on the 15th, I pay all the bills due in the 2nd half of the month.

Also on the 1st and 15th, I have a set amount automatically transfered into my savings account. Personal Finance books call this "paying yourself first". After my savings is taken care of, I spend whatever is left however I want with no guilt.

Anyway, it's true what they say. If you take it out at the beginning, you really don't miss it. When you're worried all month about coming in under budget, it's stressful. When you know you've already taken care of savings, money management is much more straightforward day-to-day. Even if you just put $25 out of each paycheck in the bank, in a year, you'll have $600 in the bank. And even though that doesn't sound like much, it represents a helpful financial cushion in case you have sudden expenses. If you can slowly increase the amount you put away, you come out even further ahead.

As for a budget... At the end of every month, I download all of my transactions from my bank, pull it into excel, then sort them all out into categories: Rent/Food/Gas/Bellydance/Eating Out/Etc. Each month I sit down and go over them, and take stock of where my money is going. If I find that something is out of balance, I try to make practical changes. For example, if I see that I have been going overboard on eating out, I make that something to be conscious of in the following month. I don't aim to be compulsive about my spending, just conscious of it.

I think that is most of my friends' biggest problem. They spend unconsciously. If they just asked themselves, "Will this item be worth as much benefit to me as the amount of time I have to spend working to make the money to pay for it?" - BPAL, a great vacation, etc are things that meet that criteria for me. More brightly-colored knicknacks from Target don't.

Anyway, I'm done ranting now.