I’m going to tell you what I do every month and it takes me very little time. I understand that at first it is a bit overwhelming. Carrying out a good initial analysis requires time, but once it’s done, it’s quick, especially if you know what basic indicators are guiding you.
Determining your financial goals will also take time, but don’t fix too much. With your learning you will adjust your habits and your financial goals.
In the end there is always a learning curve at the beginning, but what I want to convey to you is that it is short and that then managing your money will be like nothing else. Besides that you will do it quickly in a short time.
These are the three steps you have to take:
Make a budget
Budgeting makes money management much easier for you. It consists of saying what percentage of your income you allocate to each item of expenses. From the previous analysis you will know how much your income is and where your expenses are going.
So you already know what your current budgets are, but the idea is that you decide how you want those budgets to be.
A basic management is the following:
- Cover expenses and basic needs: 55%
- Create your economic mattress: 10%
- Invest: 10%
- Leisure: 10%
- Education: 10%
- Donations: 5%
This is a basic management, but each person has their circumstances and their particularities, use it as an example, but adapt it to your state. You may not be able to do this because your basic expenses go up to 70%, so it is important to do an analysis and establish your current budgets.
From this starting point you can decide how you want your budgets to be and set goals to achieve them. By setting a budget you will take better control of your economy and in a simpler way.
As you can see, you only have to arrive at the beginning of the month and allocate the necessary amount of money for each game. This is not something static, because month by month you can adjust your budgets until you reach your goals.
Establish a system of accounts
You have already made the budget, it is your economy, it is your money, everything goes together but better than not mixed up. So create a system of accounts so that your games do not get mixed up.
Do it as best suits you, but the good thing today is that electronic banking allows you to do it very easily and for free.
These are the minimum accounts for good management:
- An account for monthly expenses
- An account for your savings, to create your sacred account
These are the minimum accounts not to mix, although depending on your games you can create more.
In the event that you live as a couple, it would be ideal for each of you to have an extra account to manage your own extra money.
However, this is not decisive, since you can always add more accounts over time.In the beginning you may just focus on creating your security cushion, but as you increase your financial intelligence you will take steps in other areas.
In the end, it consists of adapting your finances to your personal situation.
Evaluate and adjust
I have already told you some of this before. Every month review your goals and your budgets. In this way you can make small modifications as you change your habits and improve your financial situation.
You’ll see how you can manage your money in less than an hour a month. It will become automatic. In addition, as you progress you will learn from yourself, which strategies work for you and which do not.
The most determining component is the staff. Therefore, having good control and good management will increase the speed so that you achieve your goals.
This is how I do it
Every end of the month I complete my personal financial statements again. That is, I take all the information from the initial analysis: income, expenses, assets and liabilities. But since I already have good budget management, managing my expenses becomes very simple, because I don’t have to go to detail. Going to the detail of your expenses is done at the beginning to identify ant expenses and be able to change your habits.
Once I have done the analysis, I restructure my budgets. Things always happen that cause you to have to readjust. For example, I ran out of a loan I had for orthodontics. So I had to decide what to do with that money, where to put it. What I did was review my goals and increase the savings item from 10 to 20%, and create an investment item. Over time, I also increased my spending a little bit.
Once I have clear budgets, what I do is make transfers between my accounts. In this way I have everything separated and nothing mixes. Each account pays its expenses and has its goal.
I know where my money comes from and where it goes.
I control my energy.
This may seem heavy to you, but you get immense clarity and tranquility. You stop worrying if you spend a lot or a little money a month on going out or going to dinner or buying clothes.
Now you have a budget for that and you spend the money happily, because that money is for it. In addition, you make sure that you save systematically, not erratically with what is left over at the end of the month, where many months are not left over.
You will see that at the beginning you have to do a more exhaustive work, but in the end it is something fast and that hardly takes time.