Personal Finance: What is and how to change Your Financial Life

Personal Finance: What is and how to change Your Financial Life

Discover the best strategies to control your personal finances. Apply now and change your life as soon as possible!

Our financial situation impacts every area of ​​our life. Therefore, it is essential to organize our personal finances. With that in mind, we wrote this complete content to help you!

Not having a financial plan can cause many problems in your personal life. That’s because, those who don’t have control over their own money can end up:

Wrapping yourself in debt and interest;

Spending more than what is necessary and what is owed;

And, of course, making your situation worse and worse, and even ruining your finances completely.

Therefore, it is more than essential to have organization in your personal finances.

But if you still don’t manage your money correctly, don’t worry! Putting together a financial plan is nothing out of this world.

After all, the important thing is to just get started, because with a little dedication and the proper knowledge, it is possible to change this situation once and for all.

What is personal finance?

Personal finance is nothing more than the study and practice of applications that contribute to managing the expenses of a person or even a family group.

These expenses can be:

Essential: Such as housing, food, transport, health, education, etc.;

Personal desires: Involves more superfluous expenses, such as a fashionable outfit or cell phone, etc.;

Investments or Debt Payments: Category focused on the completion of financial goals.

Thus, through spending management and studying financial education, it is easier to achieve the health of finances.

How to manage personal finances:

Now that you know what personal finance is, how about learning to deal with your financial life?

1. Learn to handle money

How you spend your money has a big impact on your bottom line.

So even if someone earns a high salary or earns a high profit, if they don’t know how to use that money, they’re likely to find themselves in financial trouble.

On the other hand, those who know how to spend well, earn more and more easily.

But what does it mean to spend well?

First, understand that there are decisions in your life that will have a big financial impact, some of which are:

  • Take a great trip;
  • Finance a new car;
  • Having children without family planning;
  • Finance a property.

If each of these decisions is made recklessly, it can wreak havoc on an entire family’s finances.

And yes, we are aware that, for example, owning a home is the dream of most Brazilians, but that is not why we should not plan to achieve this goal. Do you agree?

2. Find out how much is spent per month

Being able to save each month, avoiding debt and having the ability to build an emergency reserve are fundamental attitudes for your financial health.

On the other hand, it is undoubtedly impossible to organize your personal finances if you do not have exact knowledge of how you are using your monthly money.

Therefore, try to continuously record everything you spend.

There are several ways to do good financial management, they are:

Personal financial control applications;

Notepad; and Spreadsheets

3. Set financial goals

This strategy is critical to our financial success.

Creating goals allows you to direct your efforts and have the discipline to achieve your goals.

 

4. Create a monthly budget

Having a defined route is just as important as knowing the destination.That’s why it’s critical that you create a budget that matches your goals.

But first, we need to understand what a budget is.

How to set up a budget?

Budget is an estimate of income or expense for a given period.

In this sense, you must adjust your expenses and your earnings in such a way that you are able to reach your goals.

Therefore, it is also very important that you decide how much you will spend in each category: transport, food or anything else.

With an organized budget, it’s much easier to be in control and keep up with the evolution of your financial life.

5. Start cutting unnecessary expenses

If your monthly income is lower, or close to what you are spending, it is essential to make a careful analysis of your budget, and see where you can make cuts.

6. Review your habits

There are families that have the habit of going to restaurants, cinemas, malls, etc.

None of these things are harmful by themselves, but if you want to change your financial situation, you will probably have to change some behaviors.

This step will make the previous step possible, as many of our financial decisions come from bad habits.

7. Seek to increase your income

We already know that just earning more without knowing how to spend it is not financially healthy.

However, if you’ve made it this far, you know the importance of using your money well and you already have your budget in place. Is not it?

Thus, an increase in your income will be very beneficial to your finances as it will increase your ability to save and invest.

So, if you want to earn more, you can go two ways: focus on core income or create extra income. Learn more below:

Focus on main income

If you already have a source of income, then you should work to increase your earnings from it.

For this, you can pursue a specialization: a technical course, a postgraduate degree or a certification.

An alternative is to create other sources of income.

With the evolution of the internet, thousands of opportunities have emerged to earn money beyond your main activity and working in your spare time.

8. Avoid debt and always try to buy in cash

If you have debt, work to eliminate it as quickly as possible!

Negotiate better terms with the lender and seek to pay them off, prioritizing the payment of those with the highest interest rates.

9. Use software to control your personal finances

In order to organize your financial life, the help of a financial control system can be essential.

These software are practical, automatic, intuitive and help to show you more clearly your current financial situation.

10. Always check how your performance is going

Don’t forget to check your progress each month!

Make sure your personal finances are in line with your plan.

If not, reassess and determine where you need to change as needed.

Taking on this strategy not only helps keep your finances in order, it also helps you identify what’s wrong quickly and effectively.

11. Save a portion of your income each month

If you haven’t already done so, we strongly recommend not to waste your time. Set a portion of your income to be saved each month!

In the beginning, it doesn’t have to be a lot, but keep in mind that the recommended amount is that the amount to be saved is between 10% and 30% of your entire monthly income.

12. Build your emergency reserve

We cannot forget that unforeseen events can happen at any time.

Therefore, it is very important to set aside part of the monthly income to build your financial reserve. If you don’t have one yet, this should be your first goal.

This reserve will be used for situations where it is necessary to use the money with some urgency, such as those caused by health problems and unemployment.

This way, with a reserve for unforeseen events, you will be more secure and will not need to resort to loans.

13. Seek knowledge about personal finance

Learning principles is more important than memorizing rules, that is, it is more important for you to know the fundamentals of a healthy financial life than trying to memorize a series of rules.

Learning principles will let you know how to act in any situation involving money, regardless of whether you’ve heard of that specific situation or not.

With this article, we believe that you are learning a lot, since all these tips present lessons that will help you to better deal with your personal finances.

However, don’t limit yourself to this text alone. Read books , watch videos or take courses that will facilitate the development of a correct mindset.

14. Study how to invest what is saved

To be able to manage your savings intelligently, you need to make it pay off, as there is no point in adding an amount if it remains idle.

Therefore, it is very important to think about investing your money in investments that provide you income consistent with your financial goals.

15. Learn Accounting With Risks

Risks will always exist, and not for nothing!

One of the main factors that sets successful people apart is the incredible attention each one gives to their personal finances.

And since knowledge means power, these people know enough about every aspect of their money.

In this sense, one of the most important aspects, usually ignored by most people who cannot get rich, is the notion of “accounting”.

Thus, it is important to understand the accounting fundamentals to be able to hire a good accountant and avoid losing money.

But calm down, we are not talking about anything illegal, quite the opposite!

The richest people know accounting in order to avoid unnecessary taxes and taxes, money that in their hands is capable of multiplying their patrimony.

Note that every time you read a biography of a millionaire, part of his secrets always go through impeccable accounting and, above all, tax knowledge.

That’s because, the secret of those who have money is: Never lose money when it can be avoided.

How to recover personal finances?

When dealing with personal finances it is very important to set clear goals.

Therefore, if you want to make up for lost time and take control of your financial life, it is essential to first make a financial diagnosis and set clear and achievable goals.

For the diagnosis of finances, ask yourself:

What is my net monthly income (tax-deducted income)?

What are my main expenses?

Do I have debts? How many? What the value?

How can I save money monthly?

After that, set your financial goals. Ask yourself: Where do I want to be in 2 years? What do I want to have/be in this period? Also think about a medium and long term perspective, up to 5 and 10 or more.

That way, you’ll be able to more easily follow our other tips for managing your personal finances.

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