I’ve been reading Michael Powell’s 101 Things You Should Know How to Do, a cute little user’s manual to life. I never realized how much of my basic knowledge I took for granted until I read the step-by-step guide to riding a bike. I also never realized how much personal finance is like learning to ride a bike.

[1] Learn to ride when you are as young as possible.

When it comes to personal finance, everything is easier when you’re younger.   Learn healthy spending and saving habits early, and you may avoid the long dig out of debt later.  Start saving up for retirement in your 20s, and you won’t have to put in as much money to reach your retirement target as someone starting in his or her 30s.  Of course, just as it’s never too late to learn to ride a bike, it’s also never too late to learn about personal finance.

[2] Lower the seat so you can touch the ground with your feet.

Having the seat that low may not be comfortable, but when you’re just learning to ride a bike, being able to touch the ground will allow you to catch yourself before you take a spill.  This idea applies to personal finance as well: start an emergency fund that will cover a few months’ expenses.  It may not be comfortable to save for an emergency fund, but it is critical for when your life hits a rough patch - a medical emergency, a necessary car repair, a pink slip.  Having an emergency fund can help you avoid high-interest debt when you’ve got much bigger things to worry about.

[3] The first thing to master is balance.

You can make a ton of money, be an expert at juggling balance transfers, and know everything about statutes of limitation on negative items on your credit report.  However, you’ll never be on safe financial ground unless you know how to keep things in balance.  In particular, spend less than you earn!  This is the first thing to master, before you learn about asset allocation, before you choose between Roth or traditional retirement accounts, before you think about buying a house.

[4] At first your helper can steady the bike.  Once you feel safe, your helper can gradually give less support, until finally letting go completely.

[5] Have your friend run alongside you so that as soon as you start to slow down or falter, he or she can catch you if necessary.

The first time my father let go of my bike, I rode half way down the block before I realized there was no one holding on.  Until that moment, it was comforting to know that someone was there supporting my learning efforts.  The same goes for personal finance.  Seek out a money buddy that can hold you to your goals, at least until you’re ready to strike out on your own.

[6] Keep pedaling.  If you get wobbly, pedaling will help to restore balance.

It’s easy to get discouraged when, after months of payments or contributions, it doesn’t look like you’re making a dent in your debt balance or toward your savings goals. Rather than throwing your hands up and giving up, you should keep pedaling.  Automate your payments or savings so that you don’t have to think about it or agonize over cutting a check each month.  Keep at it so you don’t fall off the bike altogether.

[7] After you have mastered balance, focus on steering and braking.

You don’t have to learn a lot about personal finances to be successful.  After you develop smart spending habits, study basic asset allocation (personal finance “steering”) to learn the best way (equities, bonds, or cash) to save for your goals.  When you’re ready to retire (personal finance “braking”), read up on tax-management strategies so you know which account (taxable, tax-deferred, or tax-free) to draw down first.  But again, learn to balance first.

[8] Always wear a helmet and learn the rules of the road.

When you’re starting out, an emergency fund is like letting your feet touch the ground - a way to stay on the bike when you wobble.  When you’ve gotten past personal finance basics, an emergency fund is still important; it is your helmet when you tumble on the road of life.  No matter how much your financial situation changes, keep that helmet on!

As for learning the rules of the road, remember to read the small print: credit card fees, mortgage agreements, fund prospectuses.  Be careful that you’re not giving your money away, 1% at a time.

There you have it.  If you can learn to ride a bike, you can learn to manage your money!