Top 5 Money Concepts to Master

By:  Karen Schaeffer, CFP®

Published:  April 2021

In honor of Financial Literacy Month, here are the top five money concepts financial planners think everyone can and should master:



1.      Managing and analyzing cash flow. How much money is coming in and where the heck is it going? Now is a great time to compile the numbers from 2020 and calculate a couple data points: What percentage of your income went to taxes? How much did you save or invest? And, since the rest got spent, determine how much went to your fixed expenses and how much of your spending was discretionary. Happy with your choices? Congratulations. Not so much?  Make a list of small positive changes that you can implement in 2021. Spend less on one particular item, bring in a little more income from a side gig, round up what goes into TSP each pay period by $50; you get the idea. 

Need a better system for tracking your data? 
Check out these apps, just to name of few of the many available:
  • Personal Capital
  • You Need A Budget (YNAB)
  • Pocketsmith
  • Mint
  • HomeBudget
2.      The appropriate use of debt. Forget about good debt versus bad debt and set yourself a goal of relying less and less on debt of any kind. Own as few credit cards as possible and pay in full Every. Single. Month. Struggling with that? Contact that National Foundation for Credit Counseling today. For car loans, opt for a short-term loan and once it’s finished, keep making the payment to yourself. Voila, money for next car is ready and waiting. And keep in mind that lenders might approve you for a mortgage that is just too much for you to handle with your other competing goals like taking a vacation or retiring someday.  Back to money concept #1, analyze the real cost of homeownership in your personal cash flow before agreeing to a mortgage. 



3.      Managing Risk.  There’s a risk in just about everything – our job is to manage it. Good news, a great deal of risk can be offloaded to the insurance world at a fraction of the cost of paying for a disaster.  Think through the financial consequences of a health crisis, a disability or death and mitigate the money mess with appropriate insurance policies. And while we’re in the insurance department, are your homeowners and auto policies providing good coverage at a reasonable cost?  A chat with your agent might be the best 15 minutes you spend this month. 



4.      The influence of emotions on money decisions. After giving advice to humans for over 40 years I know decisions aren’t made strictly by the numbers.  We all have feelings that influence us but it’s important to get in the habit of looking at the numbers before falling in love with a big-ticket item or being too afraid to invest in stocks. The National Endowment for Financial Education has developed some wonderful tools designed to reveal the underlying values that drive financial decisions. Want to understand your money behavior? Check out the Life Values Quiz at While you’re there, the Financial Identity Quiz helps young adults identify where they are currently on their journey to financial well-being.  
5.      The miracle of compounding and going for growth. Even if your last math class was a while ago, everyone can get behind the concept of investments earning money on top of the money they’ve already earned. Over time the results can be downright spectacular. A few key strokes on and you learn what it takes to become a millionaire: $5,000/year compounding at 7% grows to $1,073,047 in 40 years.  A smaller contribution and higher compounding rate or a larger contribution with a smaller compounding rate can get to the million mark as well. Head over to the calculators at to make sure your contribution and investment choices are compounding their way to the retirement account you deserve. 
Karen Schaeffer, CFP® is the Managing Member and Co-founder of Schaeffer Financial LLC, a financial consulting firm in suburban Washington, D.C. She has been advising clients for over thirty-five years and has developed a diverse client base including professional women, Foreign Service Officers, foreign nationals, and Federal government employees. She has been presenting seminars for NITP for over 25 years.