How to manage your money | Highlighted

MEXICALI – Most people have experienced a similar situation: the end of the month is approaching, with a tight budget in which there is barely enough money after paying utilities, rent and taking care of yourself. How can we improve this situation so that the economy is no longer a problem? The answer lies in financial education.

“Financial literacy is the process through which we learn to optimize money and acquire skills to intelligently manage resources, obligations and personal assets at every stage of our lives,” Coordinator of Executive Degrees at the School of Administration and Business at CETYS University, said Leticia Torres Arteaga at the Mexicali campus.

Financial literacy includes not only the proper management of money but also the control of debts as well as awareness of assets or any resources that we have that are truly ours. “For example, I can say that I have a house that is an asset to me, but I owe it to the bank, so it doesn’t belong to me and I can’t consider it my property until I pay for it,” says Torres told Arteaga.

To achieve proper financial management and reduce the risk of indebtedness, it is important to create a personal and family budget, which can range from the most basic means, such as recording the inflows and outflows of resources, to the use of an application electronic Format. This budget must take into account the contributions of all people who contribute to the family income, as well as all regular, temporary and exceptional needs that must be met to ensure an adequate quality of life and the satisfaction of the basic needs of the members.

This will help you determine whether it is necessary to look for ways to increase revenue, reduce expenses, or a combination of both. Visualizing whether your budget is positive (when you have a surplus to save or invest) or negative (when you need to cover a deficit) is helpful for making better decisions when taking on debt and prioritizing purchases.

Another suggestion is to set aside at least 10% of your income as a “small emergency fund,” or set aside for unforeseen events or as savings until you have enough to invest some of it and keep the rest as a reserve just in case any problem. In addition, it is important to avoid purchasing more than you can pay for, so you should be careful with your credit card. “Avoid paying only the minimum amount on your credit card as you will not see a significant reduction in your debt as most of the time you will cover the interest and the debt may even increase over time,” the expert added.

Another point to consider is avoiding impulse purchases. Torres Arteaga recommends asking the following questions before purchasing non-essential items or goods:

Is it really justified?

Will it be useful?

Can it be avoided or replaced?

Do I really need it?

Is there an alternative?

Is it the best price?

It is important to distinguish between a need and a want. If you are unable to pay something in cash, choose a short-term payment term, as the debt payment term carries interest. The longer the term, the higher the total amount of interest you will have to pay at the end of the debt.

If you share your finances with someone else, be it your partner or another family member, it is important to create a shared budget to optimize resources. Therefore, you should analyze priorities and determine an order in which the money should be used. On the other hand, you should consider income, costs and seasonal expenses or those that occur at certain times of the year such as Christmas, back to school, graduations, vacations or birthdays, to name a few.

Knowledge of personal finance will help you live with fewer worries, be prepared for unforeseen events, and achieve the quality of life you desire.