A new year is also the ideal time to improve salary management

Every new year, before establishing the financial goals for the following 12 months, it is advisable to carry out a financial evaluation of the year that ended. There are several basic questions that need to be asked: how did I spend the money received, how much was I able to save, how much did I borrow?

Elizabeth Arellano, executive of Produbanco’s Financial Education Program, explains the main steps to manage salary efficiently. “The efficient administration of the salary is essential to maintain a healthy financial situation, have permanent liquidity, save and face unforeseen events without affecting the pocket; To achieve this, it is important to follow several steps, which are easy to apply and only need organization and good habits that are easy to learn”.

Clearly identify income. It is very important to know exactly what the personal and family net income is, that is, how much the household enters each month. Put together a format where you can see your income and expenses. The expenses must be classified into categories to identify which of these are necessary expenses and which can be classified as unnecessary, or even luxury. This exercise will make it possible to make cuts in certain items to make a change and avoid that expense.

Create the annual budget. Once last year’s expenses have been identified, it is time to create a budget based on more real information. In this way, it is possible to make adjustments, establish a savings and spending plan to achieve goals more easily.

Identify financial deadlines. An effective way to organize debt and meet fixed expenses is to create a deadline calendar with major financial expenses. Alerts can be configured on a cell phone to have reminders on specific dates a day or week before.

First pay off the most expensive debt. Financial advisers always advise it as one of the most important aspects of the list of solutions to start paying off debts and improving the financial picture. Of the total that must be paid, priority must be given to the one with the highest interest rate, while continuing to pay the minimum for the other debts. The goal is to pay off the biggest financial burden faster to save money.

Know the monthly expenses. Fixed and variable expenses for each month must be identified. To know exactly how much liquidity will be required, it is best to keep a record of expenses divided between fixed and variable. The first ones are more difficult to adjust, while the variables are those that we can eliminate or cut.

Fixed costs: food, education, housing, basic services, mobilization, debt installments, among others.

Variable expends: they generally have to do with lifestyle expenses such as gym, entertainment, restaurant meals, among others.

Avoid unnecessary expenses. An alternative is to challenge a revenue freeze in the first quarter of the year to reset the budget. This involves abstaining from all unnecessary purchases for a week, a month, or whatever length of time is appropriate. The only expenses allowed each month are the payment of the house and food.

Cancel a recurring monthly expense that is not necessary. It is perhaps one of the biggest challenges, but it helps financial stability. It can be a plan for paid movies, a subscription to a service that is not used frequently, the gym, etc. It is best to eliminate them gradually. There are always alternatives like watching movies online or training with family members without having to go to the gym.

Learn to save and do it every month. Although it appears at the bottom of the list, saving should be considered a priority “expense” each month. It is best to allocate at least 10% of your monthly income to savings for various purposes. It can be creating an emergency fund, reaching short, medium and long-term financial goals such as purchases of household appliances or trips.

Remember that if your budget exceeds more than 40% of the income for the month, it is a sign of over-indebtedness. (F)