The Decalogue of Personal Finance

Roy and Lucas are two young adults, long-time neighborhood friends, who married their girlfriends a little over a year ago. When meeting recently for coffee; Roy commented that he was worried because his expenses seemed to go out of control and that this sometimes motivated discussions with his wife. Lucas, who looked relaxed with his current life, confessed that the secret was in being able to control family finances, for which he was even encouraged to share some advice that he called the decalogue of personal finances

Make a budget: put order to your accounts

Make a budget: put order to your accounts

It is important to match income with expenses. For this, the first step is to identify, if possible, all income and expenses. This allows family accounts to be sincere but also even helps to prioritize some expenses over others. Make a real and honest budget your accounts. Take into account all relevant expenses, even those that you do not see an immediate benefit but that will help you save a lot of money in the future, as is the case with health plans and insurance.

You will clearly set your goals

You will clearly set your goals

The real budget exercise is reflected when we have to project the income and expenses of future months. In doing so we will discover if we will have surpluses or missing ones, which will allow us to plan, that is, to anticipate those events. In addition, when we notice that the money we generate is insufficient, it will force us to put some expenses ahead of others. In other words, it would lead us to clarify our goals (travel, education, purchases of important assets such as a television, etc.). There are immediate objectives and others more delayed; The important thing is to define how we will reach them.

Take advantage of opportunities to generate more income

It is usually impossible for us to achieve all our goals, or at least we can achieve them simultaneously. The scope of them will depend on the resources I have. Therefore, every time I can generate extra income, it should not be wasted because it will allow me to approach my goals in a better way. Every extra sun counts, and therefore we take seriously small or large opportunities to generate more income.

When spending use more head than heart (do not spend to spend)

When spending use more head than heart (do not spend to spend)

We will always be tempted to take advantage of the offers and discounts contained in the advertisements of multiple catalogs that accompany the Sunday newspaper. However, no matter how beneficial many of these alternatives are presented, we need to assess whether our financial conditions will allow us to settle the payments that such purchase entails. Always keep in mind your budget, and above all if some unforeseen expense affects the achievement of your objectives.

You will always honor your debts and obligations

Getting a debt is like establishing a marriage because it must be honored and respected, in health and disease, both in wealth and in poverty until death do you part. Failure to comply with this type of obligations may have very large implications, among which the most important is the restriction of future financing. If we stop paying a debt, this is registered in the risk centers, which will not qualify as a bad payer, so that banks and other financial institutions will see that they will refuse to give us a new loan even if we are in comfortable conditions. to solve it.

Credit cards: fragile, be treated with care

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Credit cards are a useful mechanism as a means of payment (we avoid walking with cash), but very expensive as a means of financing (if you want to borrow, use other alternatives). Therefore, they should be used when they are used responsibly and so that we can always track them. You can earn many other benefits such as miles and the like; but it is wise to cancel the amounts used shortly. That is why we must be attentive and resist temptations to receive new cards that we could not finally manage or will end up complicating our finances.

You will be a forecaster: you will develop a savings and investment plan

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Whenever we have set a goal, the next step is to outline the path to follow in order to achieve it, for this part one includes limiting my unnecessary expenses and the other assessing savings and investment alternatives. This plan must contain a series of savings and investment alternatives that will allow the different objectives to be achieved in different terms
We must be methodical in our savings pattern, that is, month by month, provision part of our income and establish a fund that allows us to maneuver throughout our lives.
The most scarce resource is not money, but time. Even the richest men in the world cannot buy another hour in their day. The idea within our financial management is to start as soon as possible, because the sooner we take the reins of our economic management, the sooner we can order our expenses and start making our resources productive, aiming to achieve our objectives

Know who you are financially: You will avoid copying your neighbor

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The fact that a particular savings and investment strategy is beneficial for one person does not mean that if we apply exactly the same to another person, the results are the same. In the world of finance there is no best investment strategy, instead we have the best investment strategy for each person, because people have different needs and profiles. Each strategy will depend first on the objectives I have set for myself, and second on my attitude towards risk: do I like to take risks when I invest or save or rather I am conservative and very cautious? Always remember that when we save or invest there are certain possibilities that lose some or all of my money (that’s called risk)

Educate yourself financially

In life you never finish learning, much more it is about how to manage money. This is due to the fact that financial systems are becoming increasingly broad and complex. We can only decide better if we are better informed, and for that we can make sure that we take part of our time to educate ourselves on the different financial issues. It is not about becoming experts, but about receiving clear guidance on the alternatives offered to me and how they work. Consider it as an important investment.

Money is not everything

Money is not everything

It will always be important to remember that money is an end to a medium: our well-being. When planning and defining objectives (as a family), expectations and dreams will be shared, and in the process they will enjoy their achievements. The important thing is to control your finances and not vice versa. This will allow them to live better.

Let’s share this story because it will benefit many of us!

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