Personal Finance For You


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Chapter 1

Getting advice on personal finance can be a bit confusing, as you introduce terms that are not as common. Therefore, the following list is focused on making things simpler and obtaining the best keys to manage your money well.

1. Define financial goals

It is very difficult to get to a place if you don't know where you are going. The first step to managing your money well is knowing what you want to achieve with it. Goals should be short, medium, and long term.

2. Identify all of your income

By identifying where your income comes from, you can assign a better value to your time, so that you can dedicate special attention to the activities that make you earn money. 

3. Make a list of all your expenses

Making a list of all your expenses is one of the most important points, as it helps you realize what you are spending your money on and how much you are spending. If you have trouble, you can help yourself with technology, as there are mobile applications to record your expenses.

4. Divide your expenses into fixed and variable

Fixed expenses are those that allow you to survive; Variable expenses are those that relate to your lifestyle. Making the difference between one and the other will help you to know which activities you can avoid spending money on.

5. Consider how to reduce, as much as possible, your fixed expenses

Fixed expenses are, for example, rent, electricity, water, food, or gas. Spending less on fixed expenses is possible because you just have to be aware of the use you give them and identify if you can save a little on them.

6. Consider eliminating as many variable expenses as possible

Variable expenses are those that are not necessary to survive. To reduce them, you must eliminate those that do not pay back positively in your life.

7. Analyze if you have a positive balance at the end of the month

A positive balance is that at the end of the month, your expenses are not greater than or equal to your income. To find out what type of balance you have, subtract all of your expenses (fixed and variable) from your income. If you have money left over, it is positive. If you do not have a surplus or you go into debt, it is negative.

8. Prioritize all of your expenses

Your expenses must be prioritized and prioritized. For example, you should never stop paying your fixed expenses by using the money for your variable expenses. Among your variable expenses, there are some that are more necessary than others. 

9. Make a monthly budget aligned with your goals

A budget is a guide that should dictate how you spend your money and it will tell you precisely how much you have for each day and for each activity. Aligning your monthly budget with your goals will allow you to chart a more precise path to achieve them.

10. Set your limits and learn to tell yourself "I'm not enough"

If any expense or activity is out of your budget, avoid it entirely. The importance of saying "I am not enough", lies in knowing precisely what are the unnecessary expenses that are out of your budget.

11. Create an emergency fund and anticipate risks

Emergencies can undo all your actions to save your money. The best way is to prepare for them. While it is true that it is impossible, to know what is going to happen, you can make a fund that is used when an emergency requires it.

12. Identify your debts

Debts are financial duties that you must cover in a timely manner so that they do not cause serious damage to your financial health. To identify them, you must write what each of these obligations consists of so that you are prepared to fulfill them.

13. Prioritize your debts

A good way to prioritize is by the date they must be met, another way is to prioritize those that will have the worst consequences by not covering them and another way is by those that can be covered more easily. 

14. Analyze acquiring debts that work in your favor

Going into debt to obtain returns allows you to capitalize on a debt. It is important that you analyze well before starting an action like this because you must be sure that your investment will be profitable.

15. Do not go into debt to cover other debts

If you already have debts, acquiring new ones to pay off old ones is not the best idea. It is true that there are consolidation or refinancing methods, but the truth is that they should be the last options and should be accompanied by a good analysis of the implications.

16. Don't go into debt

The ideal is not to go into debt beyond what you can pay. However, it is quite common to get into debt thinking that you can meet those obligations. You must keep debts under control and use credit options to your advantage. 

17. Analyze the months without interest

Interest-free months are great ways to buy without paying more for what you buy. However, caution should be exercised about the conditions under which a plan of this nature is purchased or the number of these plans that can be met at the same time.

18. Avoid excesses

In life, no excess is good. When it comes to personal finances the rule applies just as strongly. Do not overspend; do not go into debt, always seek to achieve a good balance in life and in your financial health.

19. Beware of "ant" expenses

Ant expenses are those that do not represent a large outlay at the beginning, but the sum of them makes them become a large drain of money. They must be identified, as they are very difficult to eradicate.  

20. Avoid impulse purchases

Buying on impulse is very dangerous. Impulse purchases are similar to ant expenses because they are made when unnecessary products are purchased. The difference is that, generally, they are more expensive products and it will not take long to realize that you did not need it.

21. Distinguish between wants and needs

To avoid impulse purchases or unnecessary expenses, we must be very clear about what the whims are and what the needs are. 

22. Buy only what you need

To avoid overspending and going out of budget, the recommendation is to only buy what is necessary and plan purchases.

23. Do it yourself

If you do the repairs of your home you can not spend more and save. Obviously, if something with a lot of specialization is required, you should hire a specialist.

24. Talk about your financial strategies and listen to those of others 

Sharing your financial strategies is a great way to get other ideas that complement the actions that are already taking place. 

25. Pay taxes

Remember that you must be current with the payment of taxes. Make sure you set aside enough money to pay and that you can do it before the deadline. This will save you money.

26. Save

Probably one of the most important tips. In order for you to achieve your goals, you must have the backing of good savings that will allow you to enjoy it in the future.

27. Invest

To grow your money you have to save. However, depending on your goals and objectives, you should consider putting your money to work taking advantage of the different investment plans on the market.

28. Cultivate your talents

If you are good at something, you must keep working to be the best. Once you stand out from the crowd, you can use those skills to generate profit. 

29. Constantly learn about financial education

Fortunately, financial education is a topic that is constantly improving. To keep up to date it is necessary to be in constant education; not just learning, but reinforcing what is already known.

30. Take care of your physical health

Taking care of your financial health is just as important as taking care of your physical health. In fact, they go more hand in hand than what we can see with the naked eye, as they are complementary. 

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