Brian Walsh

Class #1 Notes: Understanding and Taking Control of Your Personal Finances

On Wednesday, September 9th, we sent you back to school (virtually) for the first course of our five week personal finance program. If we were on campus right now, I’d ask for us to meet in the library to exchange notes and recap our last class, but just as our first class was virtual, we’ll have to take the recap digital as well.

We mentioned that 75% of people we recently surveyed1 admitted to feeling anxious about money in the current COVID-19 environment, so we dedicated our first class to walking attendees through the steps to take to get a handle on personal finances. Here’s what we covered:

Understanding and organizing your finances:
In order to understand and organize your finances—which almost half of our survey respondents admitted to needing help with—you should ask yourself these three basic questions: what do I OWN, what do I OWE, and how much do I SPEND?

What you own consists of various things including cash, investments, retirement accounts, personal property, and even real estate. The total value of everything you own is helpful, but you can gain a better insight through understanding your balance by category. For example, someone that has everything they own tied up in real estate is in a much different place than someone who has money in a variety of categories. You can understand what you owe by understanding what debt you have from credit cards, personal loans, auto loans, student loans, and home loans. Again, the total is helpful, but it is important to pay attention to each category. Last, but certainly not least, is your spending, which is inclusive of factors such as debt payments, essential expenses, discretionary expenses, waste, and money you are putting toward your goals.

Assessing where you stand:
Some key measures to assessing where you stand with your personal finances are: spending, liquidity, and debt.

When it comes to spending, the most important measure is how much you are spending compared to your income. As you look to refine your spending, we recommend following the 50/30/20 approach to budgeting—50% toward essentials, 30% toward discretionary items, and 20% toward your financial goals. For liquidity, a general safety net is one month worth of expenses, and an emergency fund should ideally have 3-6 months worth of expenses. To get a grasp on understanding your debt, we learned that “bad” debt (Interest Rate >7%) can accelerate consumption and easily hinders your paydown progress, and “good” debt (Interest Rate <7%) can increase your ability to earn or save and help you get ahead in life.

Determining your next money move:
Taking your dollar to the next level is important in the days ahead, so determining your next move may be challenging. We learned to: narrow your focus, focus on the right goal, and break down your goal.

Narrowing down your focus is a critical aspect to making progress over the long-term. As we talked about, many people try to focus on accomplishing multiple goals at the same time. The problem is this approach can make it seem like you are making progress and progress leads to persistence. It is important to understand human behavior and focus on one goal at a time so you see progress as quickly as possible. When you only focus on one goal at a time, it is really important to focus on the right goal—and that might mean building that safety net, attacking any bad debt, or increasing an emergency fund. Once you’re focused on that goal, break it down: focus on your big picture, understand the key drivers, and most importantly, make sure it’s realistic.

Be sure to tune into our next class on Wednesday, September 16 at 12pm PT/3pm ET with Lauren Anastasio, CFP® at SoFi, where you’ll learn tips for how to manage your debt. And remember, if you want to learn more or create a special plan for yourself, SoFi members can schedule a session with one of our SoFi Financial Planners here.

Thanks for joining us this week!

1Survey conducted via SurveyMonkey of 1,230 people ages 18 to 74 during August 19, 2020 to August 20, 2020.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See for more information.


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Brian Walsh Brian leads the financial planning team at SoFi and is a CERTIFIED FINANCIAL PLANNER™ professional. As a self-proclaimed financial planning nerd, he leverages research, member feedback, and past experience to deliver advice that is both meaningful and practical.

TLS 1.2 Encrypted
Equal Housing Lender