Control your Personal Finances
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Time to read 6 min
Women have gained ground in many areas (although we still have a long way to go), but in the economic sphere we may still be at an unequal level. Statistics say that we earn less than men.
Many times money (and the possibility of earning it and making it grow) is tied to other ideas that have nothing to do with economics, but with social issues, with taking control of our finances, with feeling money as something we have earned and deserve.
Learning about finances from a young age.
Money is a resource that is always present in our daily lives, regardless of our chosen profession, and we offer some figures: 50% of adults worldwide have anxiety attributed to financial problems and 40% of people living in Spain do not know, for example, what inflation is (an economic process that causes an imbalance between demand and production and implies an increase in the price level of products and services).
From the age of four we begin to see how adults manage money and we are introduced to concepts such as the exchange of money, the difference between a want and a need, among others to put into practice. Just as we teach our children the basic rules of hygiene from childhood, it is also important to generate positive habits regarding economic issues, without forgetting the elderly.
Useful tips for saving
You need to establish the difference between monthly income and expenses by analyzing your bank account over the last 6 or 12 months. After that, check if you can and are willing to reduce something and set a savings goal that you can meet. Finally, automatically set aside the amount you decide to save in another account at the beginning of the month (out of sight, out of mind).”
Consider monitoring your finances or creating an emergency fund to have a liquid amount of money available to cover unplanned expenses.
We must internalize the habit of keeping our accounts up to date and classifying them will help us to be able to make decisions about whether we want to look for a new source of income or if we want to reduce expenses. This can be done monthly or quarterly, using Excel templates or opting for applications such as Monefy, in which each time we make an expense, we can assign it a category.
Where are our personal finances at?
Whenever we begin any type of analysis we have to clearly determine what our starting point is . In this case, the financial starting point consists of preparing a balance sheet of our financial situation.
This balance sheet will include, just like accounting balance sheets, what our assets are, including savings, money and property, and what our liabilities are, considering as liabilities all debts and payments that we have to make.
Once we have this balance sheet drawn up, we will have to project this picture over time, making a series of future projections on the evolution of our own economy.
In these projections, we must evaluate the risks to which we are exposed, such as becoming unemployed, the breakdown and replacement of a vehicle, or the need to change residence because our family is going to grow.
Personal goals
Our life is not monotonous and we all have goals to achieve in the short, medium or long term . To properly plan our personal finances over time we must set a series of objectives. Within these objectives we can list, for example:
- Eliminate all debts from our current balance sheet
- Saving to change homes
- Improve our domestic economy to give ourselves a vacation
- Preparing our children's studies and education
The objectives to be set are a very personal matter but they must always be coherent . The goals we set must be realistic and achievable and of course, they require an evaluation of the risk and sacrifice that will be required to achieve both things.
Setting goals often involves a series of risks inherent to the path to follow to achieve them, to the financial vehicle we use to achieve our goal, or in the event that our income and expense flows are cut off.
Risk is a parameter that can and should be minimized but can never be completely eliminated, and this factor is one of the main ones when it comes to truncating our financial expectations.
Periodic monitoring of our personal finances
When planning personal finances and domestic economy, two mistakes are often made once we are immersed in the development of our domestic economy.
- Obsession with financial situation, creating a kind of stress or control psychosis that leads nowhere.
- Negligence in following up on our financial planning.
Both cases are two extremes and, as always, virtue lies in the middle. In other words, our financial situation requires periodic monitoring, continuous monitoring of our objectives over time and mechanisms that can correct variations in the financial planning that we had initially planned.
Finally, if our financial situation is relatively complex, we must resort to a systematic method of control , supported by one of the many tools that exist on the market to control our finances.
These control tools can range from a paper notebook, a spreadsheet or any software that truly covers our financial information and control needs.
10 Keys to control your Finances.
- Prepare a personal budget and record your expenses daily.
To start organizing your finances, you need to know your monthly income and expenses very well. To do this, your best ally can be a planner, an Excel spreadsheet or an expense tracking app. It is key to record daily expenses in order to prepare a budget that is as complete as possible, so doing so has to become something as habitual as brushing your teeth.
- What percentage of your income do you spend on fixed expenses?
We consider “fixed expenses” to be everything that we have to pay for: electricity, gas, rent and other expenses such as food or gasoline. Knowing how much these expenses represent will allow you to be prepared to know if at any time your income is at risk, decreases or disappears. It will also help you know how much money you need monthly to cover these fixed expenses.
- Control your debts.
It is important to identify the percentage of your income that corresponds to debts, which may be to family, friends, loans, mortgages or credit card debts. Your debts should not exceed 35% of your total income.
- Create an “emergency” fund.
Once you know your monthly income and expenses, you can start building an emergency fund for possible contingencies: the washing machine breaks down or you have an unusual expense or even if one of the people who generate income in the family loses his job. This fund should cover at least three months of your total expenses and ideally six.
- Define what your objectives are.
In order to keep your finances in order over time, it is essential to define medium- and long-term savings goals (those that last longer than one year). These goals are what will allow you to gain perspective and –according to that– analyze when an expense is necessary and when it is not.
- Be an expert in saving.
We have to learn to save time, effort and – ultimately – money. If we change our mindset and educate it to continually think of ways to save, it will become part of our habits.
- Develop healthy financial habits.
Controlling your expenses should be as natural as taking a shower. The only difference between one thing and another is that you were taught the first thing as a child, but not finances, so you have to create the habit. The three most important habits for managing your personal finances are: recording all your expenses on a daily basis, controlling your budget on a weekly basis, and controlling your finances on a monthly basis .
- Know your consumption habits.
Financial disorder is often directly related to emotions, and that is natural. We are people who experience different emotions and carry certain beliefs about money, and consequently, this impacts our finances. You must admit and know your most common expenses: do you spend money on dining out? On clothes and makeup? Or on sports products? Knowing your habits is very important.
- Invest in your financial education.
How many women would not have financial problems if they had been taught about money at school or in their families and how to save, how to manage a credit card, how to invest, how to avoid debt, how to have an emergency fund? It is key to dedicate at least 15 minutes a week to reading something related to this topic and in a short time you will notice the difference.
- Plan your long-term future.
Whether it's children's education, retirement, housing, illness or whatever may happen in the future, it's highly likely that we'll need money. The best thing we can do today is something that our future selves can be grateful for. Define your long-term goals and identify which financial products can help you achieve them. Life insurance or retirement plans
https://www.somosohlala.com/liderazgo/finanzas/10-claves-para-tomar-el-control-de-tus-finanzas-personales-nid10082022
https://www.bbva.com/es/salud-financiera/manual-para-organizar-las-finanzas-personales/
https://www.consolidatedcredit.org/es/quienes-somos/que-es-la-educacion-financiera
