Every month can be an opportunity to improve our personal finances and adopt a plan to avoid the over-indebtedness that overwhelms us.

César Coronel, General Manager of Defense Debtors Ecuador, reaffirms four essential points to improve the management of the family economy.

1. Prepare a monthly budget

It is necessary for each person or family group to make a budget in which they will record all their income and fixed expenses in order to have control over the resources they will have. By having clear numbers, you could, for example, predict the percentage of indebtedness you might have during the year.

2. Moderate ‘ant costs’

Daily expenses for snacks, coffee, among others, are enemies of the pocket, since these are expenses that we are not aware of because we often have them outside the budget. It is advisable to establish clear boundaries of the tastes we can give ourselves in order to focus our expenses. Proper distribution of money can also help you here, such as envelope strategy. So your ‘ant cost’ could be included in your entertainment money.

3. Avoid borrowing

It is always better to prefer cash payment, but if there is no other option than borrowing, you have to be careful. “You must not get carried away with discounts because there is always a risk of ending up with a debt that is difficult to pay due to the interest that can be accrued. If you are going to use a credit card, try to make the purchase in as few installments as possible and without interest, so that it will not be a burden in the future,” says the adviser.

4. Always save

The pandemic has taught us that there are situations that we cannot predict and that can often cause serious financial problems. Therefore, it is advisable to set aside a percentage of income for savings in order to create a fund that allows us to be prepared for all possible situations. There are several strategies for saving, Either you allocate a monthly amount and have to save it rigorously, or you can increase the amount of money to save monthly.

With discipline, planning and commitment, financial health can be improved and therefore the start of each month becomes a challenge.