Tips to improve personal finances and avoid debt

The best management of our personal finances or those of our business is usually among the goals that we set at the beginning of the year, so we make a monthly budget to continue and achieve other dreams such as a vacation trip, buying a car, apartment or paying for our children’s education.

“A budget is a tool that allows us to better plan our expenses, because it allows us to identify our income, prioritize our expenses and allocate a part to savings”, explains Mavilo Calero, division manager of the Marketing network of Financiera Confianza.

However, we soon catch up with holiday spending sprees or unexpected circumstances and we fail to stay on track. For this reason, Calero gives you five key questions that you should ask yourself to check why your monthly budget is failing.

1. Do you use a physical or digital tool?

“Many people make the mistake of making a monthly budget, mentally. The mind is fragile and, furthermore, it needs to see things to have them clearer. If you did not make your budget in writing, you may have overlooked some important expenses, “explains the expert.

Therefore, it is better to use a notebook, a cell phone application or a computer program to make your budget and be able to keep an adequate control of your expenses month by month.

2. Is your budget realistic?

“If you are having many unexpected expenses or more than planned, the information with which you made your initial budget may not be the most faithful to reality. Check it again and do not put more or less than what you earn or spend, “advises Calero.

3. Are you keeping track of your expenses?

It is not enough to make the budget at the beginning of the month. You must be disciplined, write down the expenses you are making. This will allow you to compare them with your budget and know how well it is working or not. It is a mistake to wait until the end of the month to do this exercise, because you will not see in time if you should correct your behavior.

4. Do you pay your debts on time?

Electricity, school fees, loan payments, credit card payments, all are debts that you must pay on time. It is important that you have an alarm and pay your debts on time to avoid paying additional fees that are not within your budget.

5. Do you have ant expenses?

Ant expenses are small expenses that are not really necessary, but that satisfy small “tastes”. Because it is a low amount, we believe that it does not affect our budget, but if we do the exercise of adding them up at the end of the month, we will see that it is a large amount. Therefore, you have to be careful. Identifying them early will allow you to make adjustments and save money sooner.

Finally, the expert recalls that one way to manage expenses well is also to generate more income. “In a context such as the economic impact of the COVID-19 pandemic, starting a business that we can run alongside our current work, with knowledge and tools that we already have available, can be a good alternative to face scenarios of rising prices of products or stagnation of wages”, says Calero.