Finance is one of the most important parts of our life; we spent the majority of our time working, trying to make money, so why don’t we stop a few minutes and think how to manage our money properly.
In the next lines I want to share 10 tips that have helped me with my personal finance with great results
1. Make a budget
Use a paper sheet, a file or a software on your computer or your preferred tool and write down your fix incomes and make a list of your fix and expected expenses, when your list is done just make a simple arithmetic operation, the total incomes minus your total expenses, in that way you can control your finance in a better way and be aware if there is a need to adjust some of your expenses or if you will need credit in the future.
2. Saving, saving, saving
It’s the main rules when we are talking about personal finance, try to save at least the 10% of your incomes, if you cannot save this amount determine a percentage that could be good for you, but always save a part of your incomes. If your salary is $1,000, change your mind and think that you earn $900 and make your budget in base of that income, and save the $100 in a saving account exclusive for this purpose. I know that its sound like a romantic idea in those days of crisis and recession, but it’s very grateful when you need the money and it is there.
3. Never spend more than you earn
Be aware with this fact, because sometimes we start spending, buying things we need, using our credit cards, and when we realize the only thing we have left is a big debt.
4. Use a bank account
Try to have the money you will use in a bank account, even if you receive your salary in cash. This will be useful to control your expenses, because it will be an automatic record of all your transactions. It is difficult remember when we pay everything in cash, use a little notebook and take note of each purchase.
5. Check your spending periodically – Make a balance sheet
Now ii’s time to check if you are achieving your budget. This is a monthly exercise, take note of your incomes as well as your expenses. Classify them like: housing, meal, telephone, clothes, fun among others. Do not miss anything, do not throw away the invoices or receipts, make a list of your spending in a detailed way. At the end you will have the result, the total incomes minus your expenses; it will be very useful to control your finance, and to see where your money goes and to be conscious about how you are managing your economic resources
6. Check your capital
Your capital is the total of your possession less your debt. As a financial consultant my main goal in finance is to increase our capital or at least keep it. You should realize this operation monthly to see if your capital grows up or decreases, if it is decreasing pay attention to your decisions and to those areas you are spending more. Check your total expenses of the year, sum all the expenses categories of each month, in that way you will notice what area of your finance requires more attention and where you can start cutting back.
7. Save the additional money you earn
When you get some additional incomes, deposit at least the half in your saving account, and use the rest as you wish. By the way, it is good think about the future but without forgetting enjoying the present, therefore buy something special for you, that gift that you have always desired, because you deserve it.
8. Pay attention to your credit card
I have known people who think that credit card is the tool of the devil, but believe me, it is not. Keep in mind that the money you spend with the credit card is not yours, it’s a loan from your bank, and you will have to pay it in the days coming, therefore try to make sure you will have that amount on due date to pay your credit card. Having this in mind your credit will be clean, and you will avoid paying interest.
9. Make a contingency fund
Life is always unpredictable, for that reason it’s good make a contingency fund. Dedicate a percentage of your incomes to this purpose. It is better be prepared in case you lose your job, get sick, in case of robbery, maybe to pay the annual insurance, the school of the kids, among others.
10. Focus on your priorities
We always have a lot of needs, but often our resources are not enough for all of them, that’s why we have to focus on identifying our priorities, especially if we are on a difficult situation. Spend your money wisely in those areas that are mandatory, watch out with the debts and interest payment, keep them in the minimum.
Johanny Urena
