7 tips for taking good care of your personal finance

Now that you understand the concept of personal finance, we can move on to the tips that will help you on your financial management journey.

Check out the most important ones:

1. Control your earnings and expenses

The first step in incorporating the concept of personal finance into your daily life is having a method for tracking your earnings and expenses.

This is the starting point for taking care of your money, as you need an accurate diagnosis of your financial transactions to create a budget.

The tip is to use our monthly expense spreadsheet for personal financial control, which already comes with all the features you need to record what goes in and out of your account every month.

2. Create your budget for personal finance

Once you know exactly what your income and expenses are, you can now make a personal budget, which is basically an estimate of earnings and expenses that helps you plan financially.

Here on the blog, we have already presented several strategies for budget control, such as the pots method and the 50-30-20 method.

The goal is to distribute your monthly income so that you can cover your essential expenses (rent, bills, health plan, etc.), have money for variable expenses (leisure, delivery, unforeseen, etc.), and still manage to save and invest a considerable percentage (between 5% and 20% of your monthly income).

Want to learn how to organize your money for good? Check out the video below for financial organization tips:

3. Get out of debt

If you have overdue debts, they should be your priority in organizing personal finances. That’s because indebtedness is synonymous with the continuous loss of compound interest, and the situation can get worse and snowball easily.

So, add up everything you owe and look for ways to negotiate with your creditors — if nothing goes well, a personal loan to pay off everything at once and reduce interest may be a way out.

4. Have an emergency fund

The emergency reserve is an amount saved especially for unforeseen events that can save your financial life. It should be proportionate to the risks you are exposed to depending on your occupation and source of income.

For example, a self-employed person has a more unstable profession and must save enough money to cover their expenses for about 12 months, while a civil servant with stability may have a reserve for 6 months.

5. Use credit wisely for personal finance

Credit is an important instrument to take advantage of opportunities when you don’t have the money in sight, but it can turn into a villain when misused.

The biggest risk is to get into debt and end up entering the most expensive lines on the market, such as the famous revolving credit, which can charge interest of more than 300% per year.

Therefore, it is important to know how to use your credit card and plan very well before applying for a loan or taking out financing.

6. Think ahead and resist temptations

The biggest mistake of those who don’t understand the concept of personal finance is getting carried away by immediate desires and impulse purchases.

To have a balanced financial life, you need to learn to control consumerism and think about tomorrow. If you spend everything you have today, you will never be able to build wealth and achieve your goals.

Start small, saving at least 5% of your income, and work your way up until you can save 20% of what you earn for goals like buying a house, taking a trip or retiring with peace of mind.

Of course, these numbers are just suggestions. The important thing is to fit the percentage to your financial reality and always save, even if it’s a little per month.

7. Start investing for personal finance

Learning to invest is another essential personal finance lesson because when you invest your money, you can multiply your equity and make interest work in your favor.

Start by investing your emergency reserve in a fixed income product to have a return above savings, and study the financial market to get options with greater profitability.