A “Beginner’s Guide” for Personal Finances

When it comes to Personal Finance, we tend to be defensive and mentally create all the basics for the thesis “I do not make savings because I do not make enough for it”; “Savings are made for the rich”; “Save for what if we should live the now”; etc.

This is the time to take possession of your destiny by controlling your personal finances.

Always ask yourself, “How much can I save today so that in the future I will be financially free?”

What differentiates the rich from the poor is not only how much each earns, but how he uses his time and what he does with his savings.

I would like you to stop for a moment and think how often you bought things you did not need, and ended up selling things of value to yourself to cover the expenses created by your unnecessary expenses.

I propose to you some methods that can help you to better manage your finances:

Choose an instrument/method/tool that allows you to organize your finances

  1. The notebook: buy a notebook where you can write down all the money that comes in and out of your account;
  2. The Excel sheet: I suggest you use the spreadsheet available here.

Bet on good planning

  1. Record in your notebook or Excel worksheet that you have found here, your entire monthly spending forecast and follow the guidelines.
  2. Always know where and how you spent your money. This will help you realize if you are spending on necessary or superfluous things.

Always reserve an amount for unexpected expenses

  1. Always try not to spend more than you earn: who invests in a life of expenses superior to his income, spends his whole life paying debts. Invest in your financial freedom and not the opposite.

Know the Method of Managing Finance 50-15-35

  1. Half (50%) of what you earn should be used to cover your fixed costs (house rent, monthly car loan, children’s school, college, water, electricity, telephone, etc.).
  2. Think of an amount to invest in your savings account that is 15% of your personal income (I suggest you to not have a debit/credit card, a check book, or the ability to make electronic payments using this account).
  3. 35% of your income can be spent to maintain your lifestyle: gym, movie theater, hairdresser, weekend out of town, new shoes that you want to buy, etc.

In the same way as you negotiate the discount when you buy products on the Fresh Market, (re)negotiate the interest rates on your loans

  1. Always think that all loans are (re)negotiable and nothing is a final judgment when it comes to what affects your life
  2. The interest rates tend to fluctuate and with that, the cost of your loan becomes higher and higher;
  3. A rule widely applied in banking is that the cost of your loan should not exceed 30% of your monthly income. Use this rule and approach your bank to (re)negotiate the value of your debt.
  4. Gain financial freedom so you can start saving and investing in your future.

Cash for the social security

Bet on financial education

Be financially free by taking control of your personal finances!

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