7 steps to make ends meet with money and without headaches
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So that money is not a matter of worry and stress in your life, you must understand that it is not about how much you earn, but about how much you keep from your income and what you do with it when it is in your bag. Surely you have reached the end of the fortnight or the month, wondering "how did the money go?"
According to CONDUSEF, ant expenses can represent up to 12% of your salary without you realizing it. These expenses are for example the store, tips or snacks.
Surely those $ 500 pesos that you spend on meals away from home during the month or the $ 40 pesos for cappuccino "from time to time", or 10 or 20% of the generous tip at the restaurant, would help you pay for electricity or telephone . If you are adding little by little, think of all the money that goes to you in emotional expenses and ant expenses.
Make the account of how much is 12% of your salary and imagine what you could be doing with that money.
The best thing is that you define a limit to this type of expenses for each month based on a percentage that you choose and that you can commit not to exceed.
If you are interested in knowing how to optimize the way you manage your money, I give you the 7 simplest steps to follow to simplify your expenses and control your personal finances, in this way you will make ends meet without headaches.
Step 1. Set your goals
Have you ever wondered what motivates you to get up every morning? The answer to this question is whatever the main engine you have to achieve your goals.
Once you have this answer, record it in your mind and do not lose sight of it, because if you do not have your clear objectives you will not know what to do or where to go.
From buying a car, having the house of your dreams or simply getting out of debt can be some of the answers. But it is not enough to want it, you have to work for it.
If there is more than one on your list of goals, focus on only one at a time according to the priority you decide. It will be easier for you and it will prevent you from stressing about getting them all without seeing positive results. Do not despair if by focusing on one you do not see an immediate result, remember that everything takes time and effort to achieve.
Step 2. Analyze your expenses and income
If you asked yourself at this moment what is the exact total of your expenses and income for the month, would you know the answer? Probably not.
Many people believe that making a Monthly Budget is just keeping track of the expenses they make and it is also a waste of time. ERROR!
The true intention of creating it is to have a plan for your money that allows you to take care of your personal finances and make better decisions to achieve the goals you have already set.
I recommend that you keep a monthly budget with the free app that it developed - similarly called Monthly Budget - or in any of your preferences, in this way you will not only be able to keep track of income and expenses and not exceed your budgets, but it will also allow you have alarms for payments that you have to make and at the end of the month you can have reports to see the behavior of your money and be able to make better decisions.
The biggest advantage is that you can take it everywhere and not miss any details of your finances at the moment.
Step 3. Define your fixed expenses and variable expenses
You must understand that the lower your expenses, the easier it will be to stop worrying that your income will not reach you to cover them.
Start by defining what your fixed expenses are, those that represent the highest percentage of your total expenses month after month, such as telephone payments, electricity, car insurance or the monthly payment of pay television.
Those meals that you make outside the office and home or what you spend on transportation from one place to another would be variable expenses and they are the ones that usually make you spend more, because you don't know exactly how much money you are going to spend on them and you end up for dedicating more than your monthly budget to them.
Take into account that if your variable expenses turn out to be larger than the fixed ones, it is because you are probably overspending on things that are not important and you should find how to simplify them.
Step 4. Reduce expenses
The most important question to ask yourself is: is there anything about this expense that you can simplify?
Between buying clothes, that outing with friends or the fashionable electronic device that you do not need, you are possibly falling into the trap of emotional spending.
Start by defining what are the expenses in which you can simplify. For example, instead of watching television more time, you can read a book, thus, while you will be simplifying expenses, you will be adding valuable information to your life.
Rich people only invest in two things: education and investment vehicles.
Using daylight instead of electric, bringing home-prepared food to work, taking public transportation from time to time instead of driving, are some of the simplest things you can do to simplify your expenses and that can generate a big change in your bag at the end of the month.
Step 5. Invest
Remember that the expenses that you managed to simplify are not to be spent on other things that at the end of the day will also involve unnecessary expense. Focus on those decisions that will help you multiply your money through investments.
In general, people with an investor profile will seek to increase their capital and then continue investing and that this generates an increasing cash flow until this flow reaches to cover their monthly expenses without having the need to work thus reaching your financial freedom.
Step 6. Eliminate and / or avoid debt
Acquiring a debt to pay your expenses is not an easy way out and of course it will not bring you any benefit. On the contrary, it will generate an even greater expense and it will sink you little by little, delaying your way to the goal.
If you get to this point, this is where you can occupy a part of the expenses that you simplified, so you can dedicate one part to investment and the other to debt management.
Keep in mind that if what you pay for your debts monthly exceeds 30% of your income, you should look for an expert to help you get out of the problem.
One way to help you pay off debt is to generate extra income. Search your house and if you have an electronic device that you no longer use, clothes that no longer fit or tools that you will no longer use and are in good condition, sell them!
Step 7. Separate your money
You probably have your expenses and income defined, but for a better management of your money, I recommend that you separate it.
In the Financial Reconfiguration book, I propose a personal management system that contains 7 accounts plus one (7 + 1), which will allow you to separate your money in specific areas and allocate it for specific purposes.
These 7 + 1s are: education, investments, monthly commitments, fun, giving (donations), special projects (eg a house), endorsements (money for emergencies), and the + 1, are taxes.
To all these areas you should, based on your monthly budget, allocate a percentage according to your goals. It is not enough just to know the information, remember that once you have it, you must implement it to see the results you expect.