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Financial Education

Spend effectively

It is with great satisfaction that we launched the second chapter of our financial education page, aware that the previous steps have already been completed.
 
In this chapter we will address the topic “Spending in an Effective Way”, after all, when we spend in a disorganized and unplanned way, the most likely is to exceed the budget or buy superfluous goods. Therefore, at this stage it is important to understand some points that will help you to spend intelligently. Follow:
Preparation of the family budget
To address this topic, we’d like our readers to remember something they’ve already bought and regret. The good news is that these situations can be avoided when spending is made on a scheduled basis and within the stipulated budget. 

This means that buying on impulse and without an advance organization of finances, can lead to wrong decisions and poorly invested money. You may be asking yourself, but how do you prevent these situations from happening or are they less frequent? First of all, you should prepare a family budget that will guide you when it comes to spending your money. How to do it?

See the topic below:

To turn dreams into reality, it is necessary to establish clear and objective goals, which generally need financial resources to achieve them. Therefore, controlling the personal or family budget is vital.

For good financial planning it is important that all the movement of resources - including all income, expenses and investments - is organized.  This includes the participation and commitment of each family member, considering the different financial behavior profiles of its members. Financial control is nothing more than having all household expenses recorded. A great tool to do this is the BUDGET.

The family budget is a tool that allows you to control and track expenses, manage your family's income and help with saving and investing. This involves a very practical exercise which is to calculate how much money comes in and how much money comes out at the end of each month, to ensure that the sum of the family's income is greater than the sum of the expenses. To stay within budget limits, it is important to keep track of income and expenses, as well as calculate how much you earn per month and how much you spend.

It is common to separate essential expenses (those that cannot be cut) from superfluous ones (that can be eliminated or reduced relatively easily). To save money within the monthly target it is essential to cut unnecessary expenses, that is, those that are not of paramount importance for day-to-day life. 

On the other hand, there are many expenditures considered essential, but which in fact can also be the target of expenditure restraint.
Basic rules for the preparation of the family budget
A rule of thumb for spending effectively is to have a surplus budget as the main objective and thus keep expenses always lower than income. In short, spend less than you earn.

Once you manage to get a surplus budget, that is, spend less than you earn, make it a habit to make savings, both to make dreams come true and to be safe in unforeseen or emergency situations. That is, you must create an emergency fund.

The emergency fund is an amount that should be reserved for eventualities and unforeseen circumstances, understood as the amount needed to help overcome a difficult or unforeseen period.

It is always better to be prepared for the unexpected, than to be caught off guard.
Tips
One of the biggest challenges after having prepared the family budget is to stay within budget limits. We know that it is not easy to resist shopping desires throughout the month, but believe me, it is possible.

To help you resist the temptations of good financial management, here are some tips:
 
  • Remember frequently how much you have planned to spend;
  • Make a budget forecast for unforeseen expenses;
  • Keep savings out of reach so you don't spend them;
  • Keep track of what is being spent. Make sure you’re not spending more than the budgeted;
    If you spend more on one thing, you should spend less on another;
    Make a list of how to reduce expenses;
  • Involve the family in preparing the budget;
  • Not      despise you      spending         in         small    values. Lots of times,  they    are       the responsible for uncontrolling personal finances precisely because they are insignificant and no one gives them the importance they deserve.  The problem is that as they are not controlled and, as a rule, they are recurrent, they end up gaining a considerable proportion, causing a break in the final budget of the month;
  • Faced with a desire to buy, ask yourself: "Do I really need what I intend to buy?"

In each chapter we are together building more organized and healthy financial lives and taking important steps towards the realization of dreams.
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