See how to organise your accounts and learn how to make your financial life healthier by following a few essential tips
The first step towards a balanced and healthy financial life is to understand your monthly income and expenditure. Putting this all down on paper will help you identify whether your standard of living fits in your pocket, organise your expenses and adjust them so that you have money for your goals.
Before you know how much you earn, you need to find out where all your money is going. In other words, organising what goes out of your account is sometimes more important than how much comes in.
The first step towards a healthy financial life is to draw a clear line between your essential and non-essential expenses and your investments. By separating them, it's even easier to have extra money left over at the end of the month.
The balance between income and expenditure must always be more advantageous and positive than negative. Spending more than you can afford can lead to a series of debts that later become a snowball too big to organise quickly.
Starting a balanced financial life requires knowing and understanding your monthly net income. Once this is done, it's time to list all your expenses, categorising them as essential, non-essential and investments.
Essential Expenditure, Non-Essential Expenditure and Investment.
Essential expenses include all the basic necessities of life, such as food, housing, water, internet, energy and transport. Leisure expenses such as restaurants/deliveries, monthly subscriptions, gyms, cinemas or beauty salons are non-essential expenses; in other words, although they are important, they are not basic needs.
Finally, in the investments or pending items category, include the amount you set aside each month for your goals (Emergency ReserveDebt Settlement, Real Estate Funds, Private Pensionetc).
Now it's time for the truth: what percentage of your salary do you have earmarked for each thing? And at the end of the month, what is the result of your income minus your expenses and investments? Within an ideal budget, essential expenses correspond to 50% of total net income, 30% goes to non-essential expenses and 20% of total net income is allocated to investments.
Do your income and expenses (essential, non-essential and investments) match up? If so, congratulations! You're on the right track, but if the answer is no, don't despair. Now you're aware of how your financial life works, it's time to start organising it.
5 steps to organise your financial life
1. Write down all your expenses
It can be on your mobile phone or in a notebook, but always write down your spending for the day, this will help you when it comes to making your cash flow and if you can't have total control, have approximate control, after all habits are created little by little. A good way to keep track of your spending list is to pay for everything by card and follow your statement through your bank's mobile app.
2. Set Limits
Now that you know how to calculate your expenses, set limits. If your essential spending exceeds the ideal 50%, reduce non-essential spending and establish within your budget the amount you can spend each week.
3. Take stock each week
At the beginning of each week, check that your actual spending is in line with what you planned and the limits you set. Organise the following week's limits too.
4. Renegotiate debts
If you have accumulated debts with banks or financial institutions and the like, negotiate the amount and the instalments so that they fit into your budget and you can control when the debt will come to an end.
5. Credit Card
Keep in mind that the credit card is a payment vehicle, so spending on your credit card should also be categorised as essential or non-essential and respect the established limits.
Carrying out this financial planning and control every week takes time and effort, but it pays off. A healthy financial life is made up of habits and decisions that focus on the long term.
That's it, once you're in control of your financial life and also your time, everything becomes easier and you can even earn extra income or plan a better trip at the end of the year, so everything becomes easier and healthier in your life.
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