Most people manage their budget using mental accounting. It is easy to imagine the fate of our salary or what we will do with that money, even before we receive it. But on payday we come back to realize (again and again) that every penny counts and that we have very little money left over to add any additional expenses.
Maybe you’re thinking that you need to increase your monthly income, getting an additional second salary or working more overtime, but it often goes unnoticed that the way you maximize the usage of your income is as important as the amount of money you receive.
Three smart ways to maximize the performance of your salary are:
- Benefit from tax incentives that you could take advantage from.
- Ensure good protection for you and your family to avoid costly bills in cases not covered by public health care.
- Preserve your money by reducing unnecessary expenses. Try reducing your grocery bill and spend less on fuel; reduce your wasteful spending, discard habits of onerous consumption and rethink your social preferences.
In many cases, we prefer to use money for leisure and recreation rather than be earmarked for basic payments, acquiring a good health insurance or reducing mortgage debt. In other cases we acquire a new car or a house in the beachfront, just for the desire to look wealthier and not by necessity. This seems to be the reason why in some societies, credit growth for the purchase of consumer goods has accelerated in recent years, and it is also starting a boost on mortgage lending.
We live in an atmosphere of constant anxiety about money, and that anxiety can affect our personal and family life. We always want to win more to buy more, and as you may have noticed, in many cases the solution to our lack of freedom in the family budget can’t be found by working extra hours or finding a second job. In most cases, it all works out with a little more financial discipline to help you maximize the usefulness and enjoyment of the money you earn.
Try to achieve an adequate financial balance; When you succeed, you’ll notice that money has ceased to overpower you.
If we talk about money is there anything that rich people know that most of us do not? Perhaps in some occasion you’ve wondered what is the key to keep control over money, maximize it, and begin to think and live like rich people do; Well, let’s unravel the mystery; I will begin by telling you that the difference between a rich person and a poor one, is on the manner in which they mix knowledge, attitude and action.
If you’ve always dreamed of having bank accounts of several digits, but you do not make a move because you do not know what to do or you are afraid of where to start, you’ll never make it. To achieve this, heed these 4 tips from people who have managed to overcome the barrier of a million dollars and, most importantly, they remain happy and their wealth growing to be enjoyed by their children and grandchildren.
- Find alternative strategies to protect your money: One of the reasons for the financial success that the rich of today enjoy is that they learned to protect their assets, combining financial products of high returns, while avoiding paying heavy taxes (we are not talking about tax evasion, but tax incentives conformed to the law). Think of life insurance and annuity products.
- Understand the importance of diversifying: Do not put all your eggs in one basket, it is a wise recommendation that we hear from our grandmothers. This popular adage also works for the rich. Wealthy people know the cyclical nature of investments and therefore do not concentrate on a single place to create wealth, but diversify their investments in order to ensure a steady flow of money into their coffers.
- Save money wisely: Financial intelligence is not just about finding new ways to grow money, but also to preserve it by holding off the personal lifestyle. Lack of control in spending is one of the main reasons why some wealthy people, at a given moment of their lives, have ended up losing everything and in absolute poverty (as some athletes and others in the showbiz). Never go into debt just to maintain a lifestyle that is above your means. Do not waste what you have, let alone the money that is not yours.
- Design your action plan and move: Did you ever think of what you want your money to do for you? Getting money is not the ultimate goal of your life; Money is simply a tool to achieve your most important personal goals. Progress towards these goals is more a matter of action than of thought. Do not waste your life imagining a beautiful future with all your personal goals achieved. If you want to be financially free and feel like the protagonist of the future that you dreamed for you and your family, stand up and walk until you get it. Remember that mere desire will not lead you anywhere. Move, find that future, do not wait until tomorrow to start building your own path to wealth.
In short, realize that the most important thing is to invest in your own future. Search precise knowledge, assume the necessary attitude, get going and, even in difficult times, keep on sowing the financial seeds that sooner rather than later will flourish in your life.
We all have a record of our financial life that often goes unnoticed by each of us; and its score will be better or worse depending on the loans we have obtained, our financial performance and the payment history we have built. Based on this information, banks and other financial institutions assess our profile and make decisions on the loans we request to purchase our home or our car; they also take this into account to extend credit limits for consumption.
Obviously we want to have a good credit reputation, and we must avoid some mistakes that will derail this claim.
- Delaying the payment of your bills: This is one of the highest impact factors when assessing your history. Paying late your mortgage, credit cards or car loans (for example) are big mistakes that significantly penalize your personal credit score.
- Skipping payments: Your financial reputation will crumble if you fail to pay off the loans you were granted, credit cards, or even invoices for goods and services (telephone, Internet, electricity, etc.) It goes without saying that it would be catastrophic to your history if you were to file for bankruptcy or suspension of payments, or if you found yourself under a garnishment or foreclosure.
- Overspending with your credit card: Most people believe that if they do not exceed the limit of the credit card or religiously pay the monthly balance (even if it is just the minimum) they already have secured the sky in the financial universe. Is not always that way. Credit risk analysis and policies may vary, but for purposes of your history and reputation, experts say it is best to prevent the card balance from exceeding 30% of your credit limit.
- Not getting into debts: Although it seems like a contradiction, this is one way to damage your credit score. If you have never asked for a loan before how do you tell if you are responsible and trustworthy? It is not the same for a 21 years old person to apply for a loan for the first time than it is for another of 35 or 40 years old. If you’ve avoided during the course of your life to go into debt and have always had an aversion to the banks, then when you apply for a loan you need you will not have great things to show. Remember that the greater the age of your credit score, the better you can prove your financial profile.
- Not using your credit cards: If you are of the people that breaks credit cards just as you receive them, hide them not to use them, or if you just settle for simply using them occasionally to keep them active, then believe me you’re not doing yourself any favor to your financial reputation; that way it will be very difficult for the Bank to increase your credit limit, or worse, chances are you won’t get your card expiration date renewed; therefore, your financial history will not be the brightest, and it may even lose some points.
Avoid ruining your financial history, because it is the only way to show the world that you are trustworthy in money matters. Important: If you have economic problems to make ends meet, do not throw overboard what took you years to build, assume your situation and talk to your creditors; perhaps it may cost you some score points, but eventually you will see your sincerity and responsibility rewarded.
It is no secret that compulsive shopping and the obsession for purchasing the latest models of technological fads are fast tracks to the financial collapse, but there are certain habits that appear to be harmless and can also cause great damage to our personal economy, and even some financial havoc with the passage of time. Three apparently innocent but potentially harmful habits are:
1 – Making many small purchases: Common sense tells us that no one will stop buying coffee or a small sweet candy at mid-afternoon, thinking that that decision could be driving him into bankruptcy; but we probably have not realized the tremendous economic impact of these innocent whims when they are recurrent and become an habit. If you’re not convinced, simply add up all the “little” expenses you did for one month, and you’ll see it. The morning coffee, dessert in the afternoon, the small water bottle, the daily newspaper with sports news, the package of candy, the weekly magazine to find out the love life of celebrities, goodies that you take your home and many other examples like that. The expenses on all these consumptions should invite you to prevent these recurring consumption habits.
2 – Being overly generous: Generosity is a personality trait that moves you to offer and share your wealth with others. It’s okay to be generous, even more with those who really need your understanding and help, but you must be careful because your generosity may be affecting your pocket amazingly. Calculate the total amount of tips you leave in the barber shop, in restaurants, in taxis; sum the donations you regularly give to your church, or the times you’re asked for a contribution for certain charities. Complete calculation with coins you offer to street musicians, or to people who ask for alms. You can continue adding what you spend in sponsoring social projects or protecting certain endangered animal species; include also the money you gave “borrowed” to acquaintances and co-workers when they asked for help to solve a need. All those little expenses (and many others) affect your economy. We do not ask you to stop being generous; we just warn you and invite you to calculate the economic impact of your generosity and benevolence.
3 – Using your credit card for everything: It is true that a credit card avoids the need to go out with a lot of cash (with the benefits that entails), not to mention many other benefits associated with its use; but it is very dangerous to get into the habit of paying all your purchases by credit card, because by doing so you can lose sight of the economic and emotional impact associated with spending, and this will lead you to spending more than you need or buying more than what you should. Keep in mind that many establishments conditions for accepting credit cards is that you have to make purchases for a minimum amount, so you may feel the need to buy even beyond your means. Do not forget that every time you use your credit card, you are acquiring a debt.
If you really want to start making good financial decisions, take care of these three habits and avoid making excuses that could tie you to them; that way you’d be fooling yourself and you would not be acting wisely to protect your net worth nor your family’s.
On many occasions we have heard very encouraging expressions such as:
- Starting tomorrow I will begin to save more.
- I am convinced that I should not spend so much.
- I’ll start saving for retirement.
- I will pay all credit cards debts.
And so many others like them, which represent a good start to bring order to financial matters. People tend to promise things for themselves, but sometimes something comes up that requires that financial goals to be relegated to the background.
Just like there is a large group of people who have good intentions to straighten their economy and set their financial goals, there are others who do not even speak about these issues, much less take the minimum actions to enjoy a better financial situation . These people are not aware of the need to set goals, they believe that the world of finance is not for them or, worse, have mental laziness to think about such issues even if their financial health is critical. These people are genuinely “financially lazy”.
By their way of thinking and their attitude towards money and finance, financially lazy people own certain qualities that prevents them from achieving higher levels of welfare and economic conditions. I invite you to review your financial attitude in search of some of these signs:
- You do not have sense of urgency. If you feel that there is no reason to worry now by financial issues, or your favorite phrase is “someday” (someday we will think of retirement, someday I’ll have more money, someday I’ll be able to start saving, someday I’ll have my own house, someday we will live without debts), perhaps you are financially lazy. Never think that this is not the right time to think about money savings, loans, retirement and investments. Every day you must think in financial terms, because if you do not, your life and your family will be increasingly exposed.
- You think things are fine just as they are now and so they should stay that way. Some financially lazy people do not have a strong desire to improve their financial situation, which makes them to remain happy and static in their comfort zone. Remember that there are always opportunities for improvement; there is always space to enjoy greater welfare, but financially lazy people do not find the incentive to take the first step; They think that what they have is good enough for them and prefer to keep things as they are.
- You feel you do not progress because you are looking for perfection. Many people who want to approach perfection end up paralyzed and being financially lazy. Those people, very demanding and too harsh with themselves, are devoted to go through the same ideas over and over again; they are happy thinking and analyzing, but they fail to act, and when they finally manage to complete a mental puzzle on their financial goals, they may not know how to prioritize, they are out of ideas to take the first step, or are unable to accept mistakes and tolerate failures. Remember that fear paralyzes and the end result of thinking too much is inaction.
A minimal financial education, self-esteem and good attitude in front of uncertainties may prevent you from being financially lazy. Always act with a sense of urgency (starting today); enhance everything you can improve (never get complacent) and do not devote much time seeking perfection, because in the end who is perfect in this world?