Personal finances are important when having income (salary) and wanting to save, plan and spend over time taking into account the risks and different expenses throughout our lives, just like any investment. The combination of all these aspects is in order to achieve financial stability, which in turn, generates tranquility and security.
To be able to achieve all these terms it is necessary to know the basics of finance, either through a financial course, articles on the internet or by approaching someone who can talk to you about the subject:
1. Income and Budget
You cannot start planning your financial stability without defining a fixed budget that suits your possibilities. This should be based on your income amount and at the same time considering your financial responsibilities (fixed household expenses, debt disbursements, or unexpected expenses).
It is important that your income and your financial responsibilities are hand in hand to avoid generating unnecessary debt and being able to generate wealth. If the expenses exceed your ability to save, you should identify the red numbers, that is, where you spend the most and reconsider whether these outlays are necessary or not.
A relevant recommendation is that you determine your savings in the long, medium and short term; for example, for a fund for emergencies, another for a vacation and lastly and most importantly, retirement.
2. Savings and Credit Accounts
As mentioned above, it is important that your fixed income (salary) matches with your savings plan, however, when you are forced to change a goal because your salary is not enough to cover all the necessary aspects, the accounts of savings and credits.
At the time of obtaining a savings account they give you a debit card, with which you can deposit your money destined for savings and at the same time generate interest and the most important thing is that they will be available when you need it either by doing ATM withdrawals, transactions or transfers.
On the other hand there are credits, which are a little more complicated and risky but with the necessary financial management you should not have any problem. When processing a loan it is important that you consider your employment perspective, that is, the stability of your income.
One of the points that generates fear in people when processing a loan are the interest rates that must be fixed to avoid market volatility. These interests modify the final cost and by not giving them importance they could generate losses that you could have avoided.
In addition to this, you must always remember your cut-off date, that is, the last day where your purchases are recorded for each month. And your payment date, that is, the last day you have to make at least the minimum payment so that the bank does not charge you interest or commissions. If for some reason you forget to pay on your deadline, interest will begin to accrue, which sometimes becomes very high.
3. Investments
Once you have managed to save a significant sum of money, it is considerable to find where to invest it, this in order to generate interest, that is, create more money. The bills that we have saved in the little pig need to go at least to a financial institution that is in charge of generating these interests since having it in cash will only devalue it; therefore, today's 20 pesos will not be worth the same tomorrow.
The financial market offers various options to invest your money, however it is important that you consult an expert before so that they can advise you in the best way in relation to your goals and what you have in the present.
The sooner you start saving and investing your money, the faster you will start to see your money grow.
4. Risks and Insurance
As mentioned previously, it is important to allocate your savings to different terms, such as the short term, which could be like an improvised fund.
Throughout our lives and our daily routine we are exposed to different events that could make us disburse a considerable amount of money that even with our unforeseen fund we could not cover, however, there is insurance.
Insurance should be considered as investments to help your finances to have stability, that is, they help you have financial support in case of an emergency so that it does not affect your assets.
There are different types of insurance such as life, medical, auto insurance, home, and so on.
Insurance not only protects you, but your family and your money.
5. Extra Tips
- Continually analyze your savings accounts, since some unexpected could have caused them to fall out of balance, generating debts. Make a budget, but mainly stick to it. Avoid ant expenses, these refer to unnecessary daily expenses, such as coffee in the morning or the pack of cigarettes for the week. Keep an accounting of your daily expenses, go hand in hand with ant expenses and help you identify where you are spending your money and if there is any leakage of funds. Keep a financial agenda, this referring to the dates mainly of the credits you requested.
Financial stability has several benefits, at first it can show something difficult to achieve but in the long run you will notice that all the effort you make in the present will help you in the future and not far away. Your current peace of mind and your future security, as well as that of your family, depend on forming an equity based on the discipline in your expenses and savings.
Bibliography
Anonymous. (-). The art of budgeting. July 3, 2018, from Finanzas practices Website:
CONDUSEF. (-). THE BASICS OF YOUR PERSONAL FINANCE. July 3, 2018, from condusef Website:
