With some simple tips, you can better organize your finances and make the most of your income.
Before delving into investment and financial management advice, It is crucial to understand some fundamental concepts that will help you better manage your personal finances. This way, you will be able to save more money at the end of each month.
According to Robert Kiyosaki, author of “Rich Dad, Poor Dad,” distinguishing between assets and liabilities is essential. Assets generate income, while liabilities consume income. For example, a paid job is an asset, while monthly expenses are liabilities.
The key to financial stability lies in discipline and order. However, don’t confuse this with avoiding taking risks or looking for investment opportunities. Discipline involves understanding your financial situation, saving effectively and planning your financial future.
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How to organize expenses
Establish clear financial objectives, Defining short, medium and long-term financial goals is the first thing you should do when managing your money.
Then, eliminate unnecessary debt such as impulsive expenses, analyze expenses and reduce those that do not contribute to the desired financial objectives.
It is also important keep track of income. Accurate monitoring of monthly income (salaries, bonuses, rents, etc.) to have a clear idea of your financial capacity and spending limits.
Create a budget based on monthly income that distributes funds effectively and prioritizes essential expenses, debt payments, leisure, education and savings. And finally, invest between 10% and 20% of your savings
Savings can be for investment funds, placed in financial institutions or you can invest in companies that you consider have a future. If you want to know more about how to use your money you can review our article on how to invest.
Source: Ambito
