How to get to the end of the month – 06/06/2021 – Marcia Dessen

Stretching out the money so it doesn’t run out before the month is over and the next paycheck is credited is a battle many face month after month.

Some healthy practices help us avoid money problems and have financial security. For that, you don’t have to be rich, just limit your expenses and spend less than you earn.

We have financial security when we can maintain a certain standard of living, save for unforeseen expenses, and plan for the future. This will only be possible if we control expenses, save something every month and avoid debt.

Sounds challenging, doesn’t it? It is, but with planning and determination, the challenge will be overcome.

Budget

It all starts with the determination to take control of the situation. And the first step is to create a personal or family budget, the most effective way to get the most out of our money.

We first identify net income, our sources of income, and expenses, all cash outflows, periodic or occasional, small or large, not forgetting any, otherwise the budget will not be realistic.

The next step is to adjust expenses to income, trying to limit expenses to 90% of income, saving at least 10% a month, making the habit of saving for future projects and the necessary financial reserve.

There are three types of expenses: fixed expenses that we cannot avoid, such as mortgage or rent; variable and necessary expenses, such as food and health; and other expenses, which we can more easily reduce or eliminate.

Advice: classify savings as a fixed expense, pay yourself before you pay all your bills. Don’t expect to have leftovers, put family savings among your priorities.

Review the budget periodically, income and expenses vary over time. If income increases, don’t increase expenses by the same amount. The ideal is to save part of this increase, since, with inflation, everything will become more and more expensive.

Emergency reserve

How to face an unexpected situation? Life surprises us with small events, like fixing the washing machine or car, and high-impact events like a divorce or job loss. An emergency reserve allows us to handle these situations without borrowing.

The reservation should be enough for us to feel secure. It must be kept in safe, short-term investments, with the lowest possible risk and daily liquidity, so that it can be accessed quickly.

It may seem unrealistic, how can you save if the salary is barely enough to pay the bills? Without the reserve for the unexpected, it is difficult to reach the end of the month without resorting to loans, and the following month will inevitably be compromised.

beware of debts

It’s easy to spend more money than we have, just finance your credit card bill, pay out your purchases in installments, or use the overdraft limit.

This is a dangerous and expensive path, very expensive. In the end, we will pay you much more than the product or service purchased is worth. Whenever possible, we should save before buying and pay only what the product is worth.

Wise those who use borrowed money only to buy necessary things that last a long time, such as a property, a car, or opening a business that could be a new source of income.

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