Keeping up to date the bills and getting through the month until the next salary is probably one of your big day-to-day tasks, isn't it? I know how it is, and I also know that every penny matters to your pocket. That's why it's important to know some basic principles of personal finance in order to work better with your money and make it in your favor.
That is exactly the goal of this post. With some simple recommendations, I can contribute to this complicated mission that is to manage your money and avoid debts that can make your name end up in the debtor’s register, making access to credit difficult, including loans. Interested? Then, have a good read.
Don't spend more than you earn
If this post was to have only one tip, that would be her: don't spend more money than what goes into your pocket. Constant breakdowns in the budget are the shortest way to debt’s since there will always be money missing for one bill or another and it will be necessary to juggle to keep everything in order.
It may seem silly, but it's quite common that people don't even know how much they earn on average, what their total volume of spending is throughout the month. Some, even, have the illusion that the amount of money that goes in is bigger than the amount that goes out.
Of course, in one month or another it is normal that the bills come higher or that an unforeseen event arises that makes your expenses higher than what you receive. The constancy of this, however, is worrying.
This can make the use of the credit card be constant and beyond what is necessary, for example. As this type of credit usually has the highest interest rates in the market, it is very easy for it to turn into very difficult debts to be paid.
Track your expenses
Therefore, you need to take action to have full knowledge of your financial situation. This care will greatly help you decide what needs to be done to organize your budget.
To keep track of your expenses, the best way is to write them down completely, without excluding anything. As harmless as they may seem, even small amounts can make a difference at the end of the month.
This follow-up requires discipline and organization in order not to let anything pass. Therefore, it is necessary to find a tool that works for you. Many people can get along with spreadsheets, while others prefer mobile applications. However, even the good old use of paper and pen helps at this time.
O que importa é que todos os gastos feitos em um período sejam incluídos nesse seu controle. Do mesmo modo, anote todo o dinheiro que entrar, seja com o salário fixo, sejam eventuais rendas extras. Fechado o mês, sente e faça as contas. Assim, será possível saber se o saldo final é positivo ou negativo, bem como identificar qual o tamanho total das suas despesas.
See where you can cut expenses
If your expenses are less than what you earn, great! Expense tracking can help you plan for the coming months, start forming a financial reserve or even set other goals to accomplish what you want, like buying a new appliance.
However, if your bills don't close and you lack money to front all the bills, the recommendation is to take notes of your expenses and try to understand what is happening. Probably, it will be necessary to take action to cut expenses before the debts appear, as we mentioned earlier.
To help in this decision, which can often be difficult, since it always represents some sacrifice, divide your expenses into categories. First, make the separation between fixed expenses (those that are the same every month, such as rent) and variables (which can be decreased or even cut).
From this, focus on what can be reduced or eliminated. Pay attention to superfluous expenses and see alternatives to reduce them. Think about whether you need such a large cell phone plan, for example, or whether it is not possible to have a credit card that does not cover annuity.
Of course, it can be difficult to give up some habits, but the sum of small efforts will bring great relief to your pocket. To make the actions more effective, don't forget to involve your family members. With everyone aware of the situation, it is easier to reduce your expenses.
Get free of debt
Keeping the budget under control, for sure, is the best way to stay out of debt. Remember that this can lead to restricted access to credit, as is the case with loans.
Another useful measure to get away from debts involves avoiding installment purchases, especially on credit cards. However small the installments are, if they are many, they will accumulate and compromise a good part of your income. Therefore, the idea is to opt for cash payments, resort to installments only in the last case and always ask for discounts.
If it is already too late and the debts are already part of your life, the way out is to try to renegotiate them so that your payment becomes viable. Look for creditors, explain your situation and see if the renegotiation proposal is compatible with your financial capacity.
In some cases, it is worth taking out a loan and using the money to pay off the debt. This option generates savings in interest and makes it necessary to worry only about paying off the loan portion.
Keep an emergency reserve
Do you want to avoid greater suffocation, especially when unforeseen events arise that do not fit into your daily budget? Then, try to keep a financial reserve to have some money to use in emergencies.
In an ideal world, the recommendation is that you keep part of your income and accumulate enough values so that you can maintain your standard of living for a few months - even if you lose your salary.
However, this can be very difficult for those who earn less. Therefore, make your financial reserve with what you can keep, no matter how small the amount. In the long run, the accumulated money can be of great value to solve countless problems that can arise in anyone's routine.
Putting your personal finance in order is not easy, but managing to do so represents a huge step in improving your quality of life. After all, it is an attitude that makes money become an ally, working in your favor.
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