Money smarts: A 5-minute crash course

Lesson 1: Track how you spend and save

Use an app, a spreadsheet, or a piece of paper to track how money comes into and out of your household. Getting a clear picture of your spending and saving is a big step, but it’s worth it. Think of it as gaining control of your finances instead of running to keep up.

There are many ways to build a monthly budget, but here’s a simple rule of thumb:

• Spend 50% on needs (food, shelter, utilities)
• Spend 30% on wants (new clothes, travel)
• Put 20% toward savings or paying off debt

Lesson 2: Know the true cost of borrowing

Cash is king, but that doesn’t mean debt is bad. Most people don’t have $400,000 on hand to buy a home. The key is to understand the total cost of a loan, including interest and fees, so you’re not talked into a $10,000 loan that costs $18,000 over time.

Before you get a mortgage, car loan, or credit card, find a lender who explains things clearly, without jargon, and ask questions until you understand your responsibilities.

If you already have high-interest debt, focus on paying it down so you’ll spend less on interest.

Lesson 3: Be ready for surprises

Adulting comes with unexpected costs, like car repairs and medical bills. Without a cushion, a setback can quickly become a crisis. An emergency fund helps keep things manageable. No one wants to spend $800 on new brakes, but life is much easier if you have the money to do so.

If you don’t have an emergency fund, open a savings account and, little by little, save enough to cover 3–6 months of expenses. Start with a savings account that doesn’t require a minimum balance and makes it easy to avoid monthly fees. As your balance increases, consider a high-yield savings account to grow your money even faster.

Pro tip: Set up regular transfers from your checking account to make saving automatic!

Lesson 4: Keep an eye on your credit

Your credit history plays a big role in your financial life. It can affect:

• Whether your loan or credit card application is approved
• How much interest you pay
• How much you pay for insurance
• Whether you’re approved for an apartment or certain jobs
• Whether you need to pay deposits for utilities like electricity, gas, internet, or phone service

With so much riding on it, it’s important to check your credit regularly. At least once a year, get your free credit report at annualcreditreport.com. Review it carefully and dispute anything that is outdated or incorrect, especially accounts you don't recognize. As scammers become more sophisticated, issues like identity theft and synthetic identity fraud can go undetected for years.

For an easier way to stay on top of your credit, sign into your Flagstar account for real-time credit scores and personalized money tips at no cost and with no impact to your score. You can also set up alerts to be notified of any changes.

Pro tip: Is your score lower than you want it to be? Read these ways to boost your credit.

Lesson 5: Put your money to work

You don't have to be rich to invest. You just need to start. Even with small amounts, the earlier you invest, the more time your money has to grow. Look at options that bundle different stocks and/or bonds together, like low-cost index funds and target-date retirement funds. These options are less risky than investing in a single stock.

Does your employer offer a retirement plan with matching contributions? Try to contribute at least enough to get the full match. It’s essentially free money. If not, consider opening an individual retirement account (IRA) to save for retirement. To learn more, read our jargon-free look at retirement plans and schedule a complimentary appointment with a financial consultant from Flagstar Wealth Services^® within Flagstar Bank.