Financial Management,
July 25, 2020

10 Tips for Efficient Management of Your Personal Finances

Gregory Weiss
10 Tips for Efficient Management of Your Personal Finances

I had a long time without writing, because with all the entrepreneurial vortex the blog was left behind, but I think December is a good month to talk about this topic, as it was the subject of all the talks I gave during this year! So in this post you are going to learn all the tips I shared throughout the year in the talks I attended !

The idea of this talk was born after several years of personal research, where I tried to understand how to organize my finances to achieve my goals and my dreams with the money generated by my work.

The road was long but finally here is the summary of all that research. These 10 Tips are the consequence of many books, blogs, articles and notes that I read in the last 5 years. And it is also the consequence of several hours of Podcast invested, if you still don't know the world of Podcast I highly recommend them because you can learn a lot of new things while you go to the office, while you cook, or even while you shop at the super!

I hope they serve you and with them you can start to sort out your personal finances and start 2019 with everything!

Put together a personal financial budget and record all your expenses!

It is fundamental to begin to order your finances that you know very well what are your monthly income and your expenses. And for that your best ally will be the excel! I know that for many it is a totally unknown terrain, but luckily today thanks to Google Drive is within reach of all and everywhere. For me it was the best thing that worked for me because having my budget in the "cloud", I can consult it from any PC with internet access and I can always keep it tidy and controlled!

In general the first budget we put together is quite theoretical and we are missing several or a lot of expenses that we do not have recorded in our heads. To improve our estimates and have control of our finances we need to know the reality of facts and expenses, we need to know how, what and when we spend!

And for that, girls, there is nothing left but to do the daily recording of expenses! It shouldn't take you more than 5 minutes a day, grab a notebook or open the App you like best and record everything you spent on the day, then at the end of the month you can understand how you spent your money and if you have to make any adjustments in your budget for next month. This should be as simple and regular as brushing your teeth every day!

Become an expert in SAVINGS.

This is a key point and it cost me particularly and it is still costing me a lot! I grew up in a family with very little savings culture, so I had to unlearn how to spend and learn how to save which is doubly difficult! However looking for the best way, I found that to save money you have to become a savings expert in every sense!

You have to learn to save time, effort and last but not least money. If we change our mentality and educate it to think continuously about ways to save, naturally you will end up saving money because it will already be part of your habits and your way of looking at life.

For example, how many times do we think about going to the super at a time when there are no people to avoid wasting time in line to pay? or how many times did you look in Waze or Google Maps which was the fastest way to get to your destination and save time? Surely many !! well that same you have to apply to the rest of your life and especially to your expenses and your economy!

You have to transfer that way of thinking to your day to day financial. It is a daily and constant exercise, but with time you will see that you start to do it alone and naturally starting to generate significant savings month by month. And so savings become part of your way of thinking, being and living.

Develop healthy financial habits.

To keep your finances in order, it is essential to develop healthy financial habits, as this is the only way to keep your finances in order over time.

The same way you don't question brushing your teeth every morning and do it naturally, it should happen with your finances. So keeping track of your spending should be as natural as brushing your teeth every day. The only difference is that you were taught that habit as a child and not finance, so you have to make an extra effort to create the habit.

But I assure you that it is not impossible and it can be done! Many of the girls who work with me in the coaching sessions in just 2 months are able to develop new financial habits that allow them to have control of their finances in a simple and practical way. So if you don't have your financial habits developed start doing it because it is part of the recipe to achieve your financial goals.

I invested in financial education.

Learn, learn and keep learning. Knowledge says it doesn't take up space, so we don't have to worry because it will never be harmful to have an excess of knowledge. I am a very nerd person, I love to read, investigate and learn. And I must admit that when I had to sort out the disaster it was my personal finances, the books, blogs, videos and online courses I did were my best companions and my great mentors.

Learning was what allowed me to understand what was going on, how I could correct it and what I had to do from that moment on. No matter how much love our family, our partner, friends, or whoever we dare to tell that we need help in this matter, will never be able to help us enough because it's just not in our shoes. However, learning, understanding, uniting concepts and relating them allows you to gain security, and develop yourself the ideal solution for you.

And I must admit that every time I have a problem that I don't know how to get out of, I use this technique, research, read, find out, ask, google or absolutely everything and so I can find the answers I need to solve my problems.

And in finance education is fundamental, think how many women would not have financial problems if at school or in their families had talked about money and had taught them how to save, how to handle a credit card, how to invest, how to avoid debts, how to have an emergency fund or whatever is related to the financial world. Well it's never too late, so don't waste any more time and spend even 15 minutes a day reading something related to this topic and in no time you'll be able to see the difference!

Plan your future in the long term.

When I was 15 years old, I thought that the 30 would never arrive, and hello that today I am 31 and I still think the same as the 50. However now I am more aware that the years pass and that it would be an act of irresponsibility for myself and my family not to contemplate the passage of time and how finances impact on it. In issues such as education of children, retirement, housing, illness or whatever may happen in the future is highly likely that for some situation we need money.

With what the best we can do today is something our future self can be thankful for. In my case I opted for a 15-year savings plan for my retirement, maybe I don't need it, but I have the peace of mind that by separating 10% of my income I am building my emergency fund for my future self. In the case of people who have children, I as a daughter can tell them how important the issue of life insurance is.

When my father died at the age of 33, he didn't have good life insurance and that meant that we had to go through some unhappy economic situations. And I've wondered for a long time why this happened, if he was an educated, hard-working man who loved his family.

However, I believe that education doesn't quite do the right thing when it comes to family planning, since nowhere do they teach you that you can take out life insurance for your children contemplating the money they might need to live without problems if one of the parents who provides the money at home is no longer there or how you should prepare for retirement contemplating that life expectancy in the world is spreading more and more and the retirement systems of the different governments are not prepared for it.

There are even insurances in which you contribute for example since your son is born for 18 years and if at the end of the term you did not need the money, you can withdraw it and use it for whatever you want, that is to say that it is not even that you lose the money you contributed for the premium all those years, it is a kind of insurance and forced savings. And you can start doing it with only 100 USD per month.

This is a subject that deserves a post apart, anyway I wanted to leave some accounts for you to do and start thinking about their future and that of their families in the long term.

If you are a woman and you retire at 60, in theory life expectancy in Argentina is around 76/80 years, then do you know how much money you would need to live well the last 20 years of your life?

If you have children, do you know how much money they need on a monthly basis to have all their needs covered, food, housing, education, clothing, entertainment, etc. ? And that amount on an annual basis, until the age of 18 which would be the age where they could be arranged by themselves is covered in your insurance policy ?

Do you know the effect of compound interest ? This also deserves another post but I'm going to explain it in a simple way: you have to know that everything you save if you invest it month by month, you generate interest that in turn are reinvested what makes you have more and more money.

For example, today a fixed term has an interest rate of around 3.5% per month. So if I put $1,000 every month, after 10 years I contributed a total of $120,000 but as the interest generated month by month are reinvested along with the $1,000 that I am adding month by month, after 10 years I would have a sum of $1,805,759. And if you don't believe me you can see it in this Link : The Magic of Compound Interest.

Well that was it for this year ! I hope that everything I wrote will inspire you to take control of your finances and start 2019 with many goals to achieve all your dreams :). No matter in what situation you find yourself with organization and effort everything can be achieved and changed ! So don't wait any longer and start today, that time is also money !

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