How to develop personal financial education?
To develop personal financial education, first you need to understand the importance of having more financial control and changing habits. If you are always in debt because you consume too much, especially items you don't need, this is an indication that it's time to change your standard and have a better quality of life.
Let's see some essential tips that will help you on this journey.
Make a good personal planning
If you have no financial control at all, the first step is to start by creating your personal planning. This means putting in a spreadsheet everything you earn and spend within the month. And everything means everything! The more accurate you are in your notes, the more efficient your planning will be: Often we end up disregarding small expenses and end up not writing this information down in the planning however, at the end of the month, when added together, they can have a big impact and be just the difference between what you planned and what actually happened.
Reduce and end your debts
Now that you know, on average, how much you earn and how much you spend each month, you can start getting rid of debt. Separate all the debts you have and classify them in order of importance or higher interest, as these are the ones that you must prioritize the payment. The first concerns services and essential goods, without which it is difficult to live and the second is related to higher interest rates, which can complicate your life if you don't pay attention.
To eliminate debts, planning is also necessary.
he first step is to know how much you owe and to whom, then, you need to understand your ability to pay, that is, how much you can save per month to pay what you owe. And, finally, the negotiation stage, which involves contacting creditors and explaining your situation, being clear about how much you can pay and proposing an adjustment.
It's time to start saving and investing for your dreams. Financial planning is the basis of all these actions. Assess your consumption pattern and find out how much you can save per month. At such times, it may be necessary to make concessions and reduce some expenses. This does not mean that you have to give up everything you like, just review your habits, instead of going out to eat every weekend, you can dine out once every 15 days or once a month and even choose cheaper places.
Have an emergency reserve
As we said, unexpected debts are the main “villains” of financial planning, because they can consume a large amount of your salary or savings - and we are never prepared for these expenses. Here we are talking about a series of situations, such as medical expenses, mechanical expenses, household expenses.... The best way to take precautions, therefore, is to maintain an emergency reserve, that way, you can use that money without having to mess with your monthly planning or your investments. So try to set aside an amount every month to fill your emergency reserve and only use that money when it is really necessary, remembering to replace the amount later.
Learn to invest
It is no use saving a little per month and not investing that money correctly. To invest well, you will need to master some points, such as the market, interest rates, among other issues. Those who are starting to invest can reap good results with fixed income. The idea is to make small contributions every month and increase your assets. Always diversify your investments so you can protect your assets - and always think about your goals. If the idea is to save for retirement, it is important to choose an application with good profitability, without caring too much about liquidity but if you will need the money in a short time, as in the case of a trip, liquidity is an essential issue. As you acquire more knowledge, you can think about other investments, including variable income, such as stocks or investment funds as long as you always diversify, of course.
Try to invest the emergency reserve in an investment with good liquidity, so you can withdraw the money whenever you need, without loss of value.
Are you still with me ? .... i hope so because i'll tell you the most important tip...and that is
Change your consumption pattern
None of these tips will work if you don't learn to consume consciously and live according to your salary. Unfortunately, many people end up in debt because they want to show the world a pattern of consumption that is not in line with the salary they receive. At such times a good reflection is needed. Is everything you buy really necessary? You may, for example, be buying on impulse, to satisfy emotional needs, to assert your self-confidence or for a variety of other reasons, which need to be understood and dealt with properly.
When you learn to change your relationship with money and consumption, financial education tips can be put into practice.
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