# 💰 Cheatsheet: Personal Finance: From Spending Spiral to Financial Freedom

By Better Wise

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A lookup card for the whole course. Use it to refresh formulas, decision rules, and checklists fast.

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## Module 1: Track, Understand, and Direct Your Spending

### 1.1 Track Spending and Build a Budget That Sticks

**The core loop**

```mermaid
flowchart LR
    A["📋<br/>Track"] --> B["📊<br/>Categorize"]
    B --> C["🔍<br/>Review"]
    C --> D["🎯<br/>Direct"]
    D --> A
```

**Tracking methods: when to use what**

| Method | Effort | Best for | Watch out |
| --- | --- | --- | --- |
| Manual spreadsheet | Medium | Beginners who want to feel every dollar | Falls off after week 2 if too detailed |
| App auto-import | Low | People with many accounts | Miscategorized merchant names |
| Envelope / cash | High | Overspenders on discretionary items | Inconvenient for online bills |
| Receipt jar + weekly log | Low | Testing the habit first | Misses subscriptions |

**Budget formulas**

- **Zero-based budget:** Income − (all assigned categories) = 0. Every dollar gets a job.
- **50/30/20 rule:** 50% needs, 30% wants, 20% savings + debt. A starting frame, not a law.
- **Pay-yourself-first:** Savings line is assigned before spending categories.

**Budget that sticks checklist**

- [ ] Pick 5 to 8 categories, not 30
- [ ] Separate **fixed** (rent, insurance) from **variable** (food, fun)
- [ ] Set one "guilt-free" category with a real number
- [ ] Review weekly for 10 minutes, adjust monthly
- [ ] Track net worth, not just spending, to see progress

> **Tip:** 
> A budget you abandon is worse than a rough budget you keep. Start with last month's actual numbers, not an ideal month.

**Fixed vs variable vs irregular**

| Type | Example | How to budget |
| --- | --- | --- |
| Fixed | Rent, phone plan | Exact amount each month |
| Variable | Groceries, gas | Average + buffer |
| Irregular / annual | Car registration, holidays | Divide by 12, save monthly |

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### 1.2 Consumer Psychology and Lifestyle Inflation

**Common mental traps**