If you need to solve financial problems and need tips on getting out of debt, stay calm. This personal finance guide was developed precisely to help you achieve your long-awaited financial stability by achieving a more peaceful life.
Here, you’ll have access to incredible tips on how to keep your personal finances under control. We will teach you how to analyze your personal finances, show how you can know your level of financial maturity, what steps to take in case of debt, and how to control expenses by better organizing your daily expenses. Check out!
How to analyze your finances?
The first step in organizing your personal finances is to conduct an analysis, so that you know exactly how your financial situation is going. Start by doing a study of all your expenses and find out if your monthly income is enough to cover all your expenses.
To keep your personal finances up to date, it is crucial that you come to understand this scenario, because only then, you will be able to know what is the ideal budget that can cover everything you need to live.
In making this analysis, if you identify that what you earn is not enough to pay off everything you spend, it’s time to stop and rethink your strategies for controlling your money. Changes in attitude will be necessary in order to plan a budget in which you can increase your income, decrease your spending or both, which would be the ideal scenario.
Throughout this personal finance guide, we will give you important tips on how to conduct your spending control, so move on to the next topic.
How do I find out my level of financial maturity?
We can divide a person’s financial maturity level into five basic levels. Next, let’s explain each of them, so you know which one fits. Follow us!
Level 1: disorganization
The person who fits that level lives in a situation of financial chaos. She has no control over her expenses or her income, even though she does not know the bank balance of her checking account.
This is a level that represents a lot of danger, after all, any type of problem can lead to serious financial complications such as the lack of control of high-value debts. Something that happens a lot at this level is the person spending more than he earns, but without having this perception, precisely because of the lack of organization in his accounts.
The lack of such control makes it impossible to prioritize certain expenses, as well as knowing which accounts need to be paid.
Level 2: Small Control
Having a little control means that the person has a certain organization regarding the control of how much he spends and how much he earns, through annotations in a book, a spreadsheet or even some application in the cellular.
Those who fit into Level 2 already have the practice to rank and prioritize certain important expenses, which helps a lot to plan your budget in the short term. Therefore, this person no longer has so many surprises with bills to beat and that she did not know they existed, and also can understand what kind of expenses need more attention.
On the other hand, the budget forecast is just beginning, because this person still can not spend less than he earns and also does not know exactly the value of all his future expenses.
Level 3: Medium Control
This level represents a person who has an intermediate control of your finances, always comparing the balance of your bank account with the balance of your control of expenses and earnings. The big problem here is that anyone who falls into the middle control level still does not plan in the long run. For this reason, this person still suffers from lack of money.
Level 4: Good control
Whoever identifies with this level is already in an advanced stage of financial maturity. Your finances are no longer in danger because of the lack of planning, because the control of expenses and gains is already well aligned.
At level 4, the person already knows how to manage his resources well, reaching almost the level of full maturity. She knows exactly how much money she needs to shoulder all her monthly bills, balancing how much she earns and how much she spends.
Level 5: total control
This is the level of total financial maturity, reached by few people within our society, who is still so lacking in financial education. It is when the person has total and absolute control of their accounts, in addition to planning and accomplishing what they will do in the long run with the money they have been able to save.
When you know your level of financial maturity, you can take action to get your personal finances healthier by identifying what needs to be improved and what you can do to make your money pay more.
How to organize the expenses of the day to day?
When you understand the importance of keeping your financial life healthy, you can realize how crucial it is to make smart decisions about your money. To help, below, we will give some easy and practical tips to organize the expenses of your day to day. Check out:
Do a financial planning
Planning personal finances is crucial for you to take control of your financial life. By doing this type of planning, you can know in which months the expenses will be greater and also what time will you have the most money coming into your bank account.
At the beginning of the year, for example, you may have to pay the IPTU, IPVA and children’s school supplies, while at the end of the year you can have that extra income with your thirteenth and with the return of the Income Tax.
So having an overview of spending and earnings over the months makes it easier for you to make decisions than you do with your money.
Set financial goals and set goals to achieve them
After doing your financial planning, it’s time to outline the goals you will achieve with your money. Experts advise that 30% of your income is directed towards some type of investment, for example. In addition, you can analyze what are the superfluous expenses that can be cut.
What is important is that you strategize to achieve your goals within the timeframe you have set. For this, it is recommended to do weekly reviews to see if the steps outlined to accomplish your goals are being met.
Keep a regular check on your finances
In order for you to maintain the organization of your financial life, it is vital to regularly monitor your money. Therefore, try to write down your current account and credit card expenses, as well as resource inflows. The most important thing here is to never ignore those small day-to-day expenses. You can believe that when added together, they can make a big difference in your monthly budget.
Still thinking about effective control of your finances, you must set goals of how much you will spend in each category defined in your planning, keeping track of whether you are actually fulfilling what you have determined.
Getting organized and keeping your financial life up to date is a task that needs to be seen as a habit in your routine. In this way, you will be able to know exactly how you are spending your money and how much you are saving to achieve your goals.
How to control expenses?
Knowing how to control your spending is not just about your financial health, but your quality of life as a whole. After all, when you have your finances organized, get rid of debt worries or bills to pay.
That way, you will have more opportunities to make pleasant programs and focus on important projects such as that at home or the dream trip you want to do. Here are some things you can do to control your spending:
Get rid of debt
A person without debt is already on the right track for a good control of their personal finances. If you are on the list of defaulters, on the other hand, getting rid of debts should be your priority.
When you have overdue bills, they represent more expenses because of interest, making it harder for you to raise money. After all, any money that comes in ends up being destined to pay the backlog. So, one tip is to try to renegotiate or install your debts.
Know your income
Knowing exactly how much you earn is imperative in order to effectively control your financial life. Here, you need to consider not only the government benefits received, but also income from leasing real estate or any other kind of money entry into your account.
If you are retired, try to understand how the minimum wage influences the value of your benefit. Now, if you received some kind of inheritance or any other resource that will not be repeated monthly, these values should not be considered as income but as an “extra”. In that case, you should think about investing to have a security reservation in case of any surprises.
Know what your cost of living is
To organize all the bills you have to pay throughout the month, try to list each of those expenses that are repeated monthly. Here, there should be payments that do not change their value or that suffer little variation, such as rent, electricity bill, water, internet, among others.
The average cost of all these accounts is what will show you what your cost of living is. Precisely for this reason, it is critical that you do this calculation correctly, because a portion of what you earn every month is already committed to these payments.
What’s left is the amount you have to spend on other expenses, to make an investment or even to save.
Know your extra expenses
You already know how much you earn and how much you spend on your fixed expenses. That is why the time has come when you need to know where your extra costs are and how much your most significant expenses.
Doing this is simple – just jot down everything from the cheese bread you bought at the bakery to your friend’s wedding present. That way, you will know exactly how your money was spent, eliminating the feeling that it simply disappeared from your account.
Divide your expenses by type
The next step is to separate your expenses by category. This task will be very important for you to understand how you are spending your income. Here are some examples of categories you can use to organize your personal finances:
- internet, television and telephone;
There are several free, super-easy-to-use online financial managers that help you identify which percentage of what you receive monthly is spent in which category along with the amount in reais. Thus, it is much easier to measure your average spending and excessive spending.
See where you can save money
By categorizing your expenses, you will be able to realize savings much more easily. If you find, for example, that transport costs are committing a large part of your budget, a good alternative is, whenever possible, to change the taxi for a walk, or hitchhike with a work colleague and share the costs with the fuel and parking.
The attitudes to be taken to economize vary from person to person, and must conform to what is feasible for your reality. Try to reflect which of your expenses are really needed and which ones can be avoided.
That way, you’ll be able to put together the resources you need to achieve your goals, invest, and live a more comfortable life.
What to do in case of debt?
Many people look at their finances and lose sleep because they do not know how to act in the face of debt. So in this part of the personal finance guide, we’ll give you important tips for getting out of the red. Follow us!
How to get out of debt?
Create a savings goal
Whenever we want to be successful in some endeavor, we must have goals. To get out of debt, the dynamics are the same. Determine a goal of how much you need to save monthly to get your debts back.
Goals make our lives much easier. Imagine if you were able to reach them before the time you stipulated? It will be very motivating, will not it? If you look at your financial planning and realize that you are far from getting where you want, you need to redouble your efforts to get out of debt and start a new phase where you can raise money.
Buy using cash
An important step to get out of debt is not to make more purchases in installments, as they are one of the main problems when it comes to delinquency. When buying installments, we get the impression that we do not spend as much, because the total amount did not leave the account immediately.
By splitting the card, you inhibit a psychological factor, which is activated when you take money out of your wallet to pay something. It may sound like bullshit, but it makes a difference to anyone who wants to pay off debts.
In addition, buying using cash allows you to make more advantageous deals as there are usually larger discounts for this type of payment.
Pay the highest interest debt first
Try to map all the debts that you have, to choose the ones that have the highest interest as a priority to be removed. After all, they consume their money faster.
To organize this prioritization of payments, list each of your debts along with the amount of each interest rate that is being charged over the amount owed. With this type of control, you will already be saving money, because the interest expenses will be lower.
Renegotiate your debts
Depending on your level of indebtedness, renegotiating your debts is a key step for you to achieve stability in your financial life. Contact your creditors to make a deal that is advantageous to both parties.
Think they want to get the money and you want to get out of the default list, so there is always room for renegotiations. Try to focus on getting the lowest possible interest rate, and commit to installments that fit your budget.
Try to consolidate your debts
A good alternative for those who have multiple debts is to try to unify them into one loan. In this case, you search for a line of credit with the total amount of your overdue accounts and use the money to remove all of them, leaving only that loan to be paid.
Nowadays, there are very interesting online loan options, which have low bureaucracy and attractive interest rates, especially in the form of payroll loans. Listed below are 3 benefits for those who decide to consolidate their debt:
- Have only one debt: even if the amount you owe is the same, with a single debt, it becomes easier to focus your attention on that single monthly payment;
- Lowering the interest rate: Normally, when someone has several debts, they include debits with the credit card and overdraft, which are the most expensive for interest. So when you consolidate everything you owe, you will be able to reduce how much you are paying in interest on the new loan;
- Reducing monthly payments: By unifying your debts, it is easier to negotiate smaller installments that are compatible with your monthly budget. Ideally, you should not commit more than 20% of your earnings to this type of expense.
Let go of consumption for a while
Try to eliminate expenses that are not essential for you to live. Want to have a healthy life? It may be possible not to pay for gym, after all, you can always choose to exercise on the street or at home.
If the package of paid channels is too expensive, spend some time just watching the open channels and cancel that expense. Cell phone bills can be replaced by prepaid plans, among other attitudes that generate considerable savings at the end of the month.
Leaving aside the expenses that can be avoided will help you get out of debt faster.
How to avoid new debts?
Make it a habit to write down everything
People who have achieved the much-desired financial independence are very organized with their finances. Their main habit is to write down everything they spend in detail. In this way, they can get the exact idea of their expenses. By knowing your daily expenses, it is much easier to know when you will be able to pay off your debts.
Trade before you buy
Always try to negotiate what you really need to buy. This applies to both the final value and the forms of payment. If you can use money, better still, there is a great chance of paying less for what you are taking, as well as optimizing your financial control.
Good negotiation is always one that leaves both parties satisfied. The cash payment represents saving rates for the seller with the card carrier and features for you. Great, is not it?
In this personal finance guide, we have gathered for you extremely useful and relevant information on how to organize your financial life. As we have seen so far, it is very important to analyze the current situation of your finances and find out your level of financial maturity, so that you know each other a little more.
Remember to organize your day-to-day expenses by following our practical tips and easy application in your routine. Since a stable financial life can not afford to spend more than earnings, you have to know how you can control your expenses.
Lastly, in order to avoid having more debt, to achieve a more peaceful life, have attitudes that will help you get off the list of defaulters, taking practical actions to avoid new debts, in order to keep your personal finances properly organized.