03/29/2024
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by Danna Martínez

 

Managing money can be a complicated and often frustrating task. The reality is that money is present in multiple aspects of human life that cannot be avoided, such as food, clothing, and lifestyle in general. For this reason, it is important to keep adequate control of resources, income, and expenses. Besides, having more knowledge and better management of finances can help avoid financial problems and frustrations.

 

Finance is the functional process that optimizes economic resources to achieve, manage and plan financial objectives, such as protection in case of unforeseen expenses, investment, monthly liquidity, or savings. Implementing a series of plans, budgets, and commitments that allow you to have control over income is the basis for money management.

 

Personal finances consist of each person’s management of money, either personally or for a company or business.

 

Knowing how to manage money allows you to achieve a set of fundamental factors in your lifestyle. Here are five main elements:

  • Save money.
  • Economic Peace.
  • To invest.
  • The satisfaction of interests.
  • Improves Life quality.

 

An essential tool for finances is planning. This tool helps prevent economic risks, calculate income and expenses, and save future eventualities resources.

Through good planning, it is possible to get a better return on the money and avoid having economic instability. Here are some tips for managing money:

  • Expense plan. Begin to administer finances requires knowing the income and the fixed expenses. Among the income can be found; salary, pension. And among the expenses; mortgage, rent, loans, transportation expenses, shopping expenses, insurance, bills (water, electricity, internet, etc.)

 

  • Education. Spending time studying and understanding personal finance is an investment too—activities such as attending a talk about finances or reading about them in books, magazines, websites. By knowing more about finances, the security in managing money will be greater. In case you need more help, you can consider hiring a financial expert.

 

  • Create a budget—monitor monthly income and expenses. Allocate time and energy to update the budget every period using digital tools such as applications or an Excel document. Making sure you don’t spend more than your income and having the ability to save is one of the essential factors when managing money.

 

  • Pay debts. In case you have debts, the ideal is to create a plan to pay them off as soon as possible. It’s a good idea to make a list of debts, review your budget, and determine how much money can be added to debit payments from time to time. While managing your finances can avoid debt, you can also create a savings fund that, in the event of force majeure, can be used to pay off debt.

 

  • Reduce expenses. Keep a balance between expenses, income, and savings. Do not buy compulsively. Review the subscriptions (Gym, internet, social networks, etc.) and cancel the unnecessary ones.

 

  • Check personal credit regularly. Review personal credit regularly to know expenses and money available. Checking allows you to decide and prioritize purchases.

 

  • Save and invest. Save as much as possible. Set a savings goal in personal finances and establish a plan to achieve it, for example, saving for clothes, a car, or a vacation. It is crucial to start with small savings goals for personal satisfaction.

 

Responsibility and organization in managing money is an essential field of study in many aspects of lifestyle. Knowing about finances is necessary for employees, entrepreneurs, young people, retirees, among many others; it is never too late to learn to manage finances.

 

And remember, “Money doesn’t make decisions, you do.” – Dave Ramsey.

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