Money makes the world go round – there’s no other way around it. As soon as we leave college and engage in independent living, this harsh truth comes creeping up very fast. Those who are not skilled in managing personal finances and well informed about matters of personal loans are in for a very harsh awakening. To illustrate the point, recent research says that as much as 43% of American adults spend more than they receive each month and use their credit cards to finance the shortfall. These numbers are, by all means, bad. Let us then try to find the answers to some of the most common questions regarding personal finances, to see if they can help you improve your understanding of the financial world and avoid potentially costly mistakes in the future. How much do I need to save each month? Speaking in broad terms, adult persons in their 20s should save at least 10% to 15% of their pretax income in order to allow themselves a comfortable and timely retirement. If you have already missed this window of opportunity and entered your 30s, you should considerably increase the amount of money you are going to put aside. According to some estimates, that number should be somewhere between 15% and 20%, or even more. What is a credit score? Essentially, a credit score is a numeric expression creditors use to describe borrower risk when making loan decisions. The number is defined based on the number of your existing debts, your payment history, how many credit cards you own, etc. If you have already earned a bad credit score, getting new loans could potentially be a big problem. That is why you should immediately seek counseling and reach out to companies offering bad credit loans that should help you repay your immediate debts. Which investments are good for retirement accounts? Currently, available investment options are too diverse and complex to discuss all of them in great depth. That is why we are going to focus on the two most popular options – stocks and bonds . As a rule of thumb, younger people usually gravitate toward the more dynamic stock market, so there's no reason not to start your investment journey here. However, as time goes by, you should gradually increase the percentage of bonds in your portfolio. What is a 401(K)? The name 401K comes from a section of IRS code added way back in 1978. What hides behind this ambiguous name is a retirement plan offered by an employer that allows you to determine the percentage of your paycheck that will be put aside for retirement. Once you allocate the percentage of the money, you choose a mix of options where this money will be invested. The money that goes into a 401K fund is removed from your paycheck before taxes, which is good because your taxable income is, this way, reduced. How should I approach paying off debt? If you have already piled up your debts to the degree that they can’t be repaired with quick financial fixes, you should seriously think about refinancing. Putting all of your obligations under the same umbrella with unified interests and deadlines will have a positive short-term influence on your credit score, and potentially open up the doors to more favorable repayment terms. Alternatively, you should use your extra cash to repay the debts with the highest interest rates as soon as possible and then move down the interest ladder. Do I need to make a personal budget? Let us first try to define the budget in the simplest possible terms. Budget is a basic understanding of how much money you are spending each month versus the amount of money you are earning. So, yes – you should absolutely have some sort of personal budget. Putting it into a written form is highly desirable, if nothing more than for the sake of convenience. When it comes to personal budgeting, there are a couple of ways to approach this problem. A tried and true 50/30/20 rule (needs/wants/savings) is a good place to start. We hope these six considerations have provided you with a better insight into some of the most important financial topics and given you an idea of how to sort some of the most common monetary problems. Tackling these issues is a reality of life. The sooner you start addressing them head-on, the better.