Personal finances deal with how individuals or families manage their resources throughout their lives. The analysis that financial news show, it includes not only the income and expenses received or paid during the life cycle but also the tools or financial products available to individuals or families to optimize the management of their resources.
10 tips for personal finances
If you are like most entrepreneurs, you probably have to divide your time between managing your team, getting sales, improving customer service, promoting your business and creating new products or services. The last thing you want to add to this mix is the care of your personal finances. These 10 tips will allow you to make sure your personal finances are in order before continuing to expand your business. Put them into practice and ensure your economic stability.
Take the time to read about personal finances. Each week, schedule “money” appointments while you are alone. You can spend some times by reading financial books, magazines, sites or finance blogs. The more you know about your own finances, the more confidence you will have in managing your money in the long term. The main thing is to give yourself some time to know your personal finance.
Check your credit regularly
Your credit report is like a file on you and your credit history. Basically, it tells the lenders how risky you are, and whether or not they should lend you money. When it comes to buying a car or a house, it is desirable that your credit report is in excellent shape, so that you can qualify for good rates. You should always monitor your credit. Create the habit of reviewing your history at least once a year to confirm that everything is in order.
Make a budget
Having a budget in shape is very important for you. However, you may use digital tools such as apps to monitor your personal finances or simply a document in Excel. No matter which option you choose, make sure it suits your lifestyle. This will help you ensure that you do not spend more than you earn and that you are able to save for your financial goals.
Make an expense plan
To know how healthy your personal finances are, first of all, you have to know how much you earn and how much you spend. To do this an expense plan must be made noting income and expenses. You can find excel templates on your computer but unless you have done an accounting course it can be difficult to know how to write down the expenses.
Pay the outstanding debts
To improve your personal finances you can establish automatic payments of monthly expenses such as the internet. This way you will have to forget monthly to have to pay those bills and avoid possible defaults. As much as possible settle the outstanding debts, take advantage of the savings to solve the debts you have pending. It is very important that debts such as loans, plus the letter of the mortgage and more the microcredit should never exceed 30% of your income.
Build your own mattress
Having a mattress of money is an essential part of your finances. It allows you to use the money to pay for unforeseen expenses or emergencies that may appear in your day to day, instead of increasing your debt or investing in the long term. This will allow you to pay personal accounts and not worry if you need to reduce your income due to business flow.
Invest outside of your business
Although it is very important that you always invest in yourself and your business, you must not have “all the eggs in the same basket”. The most essential thing is diversification. In the long run, it will surely decrease your risk for an investment. You can opt for an expert financial planner to create a long-term investment portfolio that includes stocks, bonds, and funds that align with your own financial goals and your risk tolerance.
The economic balance is the key
The financial situation is probably one of the factors that affect well-being. Having debts and not reaching the end of the month causes extra stress that affects you. Knowing how to organize and improve your personal finances has a direct impact on the quality of life, and having the extra money in your savings account provides security for unexpected situations.
Make a master list
Have you ever dared to make an impulse purchase? There is no need to feel bad about it because the truth is that most people do it and it is more striking when that majority admits that they made an unnecessary purchase. Therefore, before going out shopping it is always good to have a previous plan that can be summarized in something as simple as making a list.
At the last point, monitor compliance with the plan, verify if there are relevant changes in the initial conditions and evaluate whether an adjustment or change in the financial plan is necessary. Carry out the financial plan considering adjustments in the event of unforeseen events. Identify and prioritize short and long-term financial objectives. For example: make the purchase of the month, buy a house, save for retirement, etc.