Rules for managing our finances

in LeoFinance3 days ago

In this time of pandemic it is essential to know how we can manage money correctly, since the economic difficulties worldwide are changing, we do not know where we are going to stop, one of the main things that we have to be clear about one's budget and how much can be spent in total per day, to have a balance in the portfolio. Since by having a good administration you will obtain a balance between what we want and what we can do to achieve it. In this post I will tell you some rules that you must take into account in your finances.


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Do not spend more than your income

This is one of the biggest mistakes that the vast majority of people have, we always spend more than we get in our income, the more we earn, the more we spend, if previously you could make your daily purchase with $ 20, but now you are earning 40 $ a day should spend the same $ 20 your expenses also increases. One of the main ways for you to spend more, is to keep a budget of your expenses, be it daily, weekly, biweekly or monthly, the way you want to keep your control. You always have to pay yourself, be it for your savings or investment, never first spend what is left to save or invest.

Avoid overly enduring

Do not go into debt just to satisfy a taste, if you are in debt that it is for an investment or a house, but that it suits the needs and economic capacities, you should never go into debt in something that is above your income.

Before going into debt, ask yourself the following questions: To help yourself recognize your debts, honestly answer the following questions about the product or service you want to purchase:

  • Do you need it?
  • Do you need it now or could you wait until you can pay for it in cash?
  • How much more will it cost to buy it with credit than if you used cash?
  • Can you afford the monthly payments?
  • What other things will you have to sacrifice in order to pay the monthly installments?
  • Is that sacrifice worth it?
  • What interest rate do they charge you?
  • How much is the total cost?
  • How much will the monthly payments go up if interest rates go up?

Never buy things that devalue on credit

If you are going to use your credit card, do not buy artifacts that will devalue tomorrow, you will be paying for a product that is too expensive, when you could see it paid in cash.

Always have an emergency fund

This is a great point that we must keep in mind, I have discussed this issue in previous posts on the emergency fund. An emergency fund will always help you when you have no income, or to make a loan to yourself after you have to pay, it will help you in your time of crisis or illness.

If you are going to invest, find out

Never invest in something that you do not know, you must take into account what the risks are and what your profits will be. As you must invest what steps you have to take, you must find out in each step you will take and in how long you will recover the investment and your profits.

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I find it interesting that the pandemic could be worse for people who make more money. If you lose your 20,000 dollar a year job, you just had to cover expenses you had at that level. If you loose your 250,000 dollar a year job, you are covering a lot bigger expenses: mortgage, car payment, ect, (if that is you were not being smart with your money.)

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