Finances may be limiting or provide additional opportunities. This is also one of the reasons why so many people want to improve their financial situation as quickly or efficiently as possible. In addition, the most current loan comparison is one of the options for everyone to find finance when they need it on the best possible terms. However, there are other ways that you can do at your own time and with greater influence on your own. Everyone also wants to reward themselves with something special for a job well done.
Here are a couple of ways that can allow you to afford different things more successfully.
- Evaluate your monthly taxes. In all likelihood, they will be about 20% of your income. Write down this number.
- Find out your fixed costs: How much do you pay for your rent each month? Do you also pay for health insurance? Medicines? Telephone Bills? List all the expenses you know you will have every month, add up and write them down.
- Open at least two different accounts. More accounts may seem like many, but each has a different and important function. A more traditional way would be to use envelopes to place finances or information on the various aspects that may affect them, as well as invoices.
Tax account (20% of total revenue)
In this case, you pay the monthly estimated taxes. This is also the account you will use to pay your taxes at the end of the year.
Account for living
This is the account you use for 99% of your daily needs (your fixed expenses plus everything else): food, shelter, toothpaste, wine, batteries, gifts for friends and family, recipes, entertainment, etc.
That is, when you are in an accident, your water heater breaks down, your car needs repair, and so on. in life situations. Then you need to use this account. Deposits can vary in size depending on where you live, the specifics of your workplace, whether you have a car, health insurance, etc. Good health insurance is one way to cover virtually any major expense. Ideally, your health insurance will be reimbursed by your employer. The self-employed, etc., cannot be relied upon and are therefore an additional expense, as health insurance is compulsory in most countries. In Latvia, too, such a law was enacted a year ago, which will allow the reimbursement of emergency health expenses.
If you are only 20, that does not seem to matter, but if you are 70, you are most likely to condemn yourself for not having started any of these before. It could be a savings account or just a special envelope that you keep in a safe place. Of course, an interest-bearing account will be in your favor, but in any case, nothing is better than nothing for retirement. If you have a stable employer, you can make sure that part of your salary is also paid into your retirement account. This is usually the case regardless of the employee’s wishes. This is not to say that it is not useful, but it is also necessary to evaluate the real amount of finance that can be accessed when needed
Savings / Spending Account
This account is where you save on a big item or something you have watched, such as a car deposit, a tropical vacation, a new camera, a computer, VIP seats, or shopping to grow your business. Deposits in this account are highly dependent on availability. If it is clear that the amount invested is very small, there is a need to increase finances or improve their management. Loaning is another alternative to getting what your heart desires faster, but that’s another story.
Create a budget based on your average monthly income, your expenses, and your savings goals. Use the following example based on Laura’s income. After Laura makes monthly deposits in a tax, emergency, retirement, and savings / spending account, she deposits the remainder in her living expenses account. She then spends only $ 353 of that money on something not yet budgeted (food, wine, movies, concerts, etc.). She does not touch any other account until a specific need arises. If Laura was in debt, she would simply add another debt account and adjust her priorities so she could invest in this fund. Another important factor is her average salary of 1941 dollars. Of this amount she pays 20% for taxes, 950 dollars for living expenses (she pays 700 dollars for rent, 50 dollars for phone, 200 dollars for insurance). Her goal is to save $ 50 each month in emergency expenses, $ 100 in retirement and $ 100 in savings / spending account. With the remaining $ 353 she can do whatever she wants. Of course, this amount of salary seems too optimistic to many, but it is a reality in countries like America, Germany, England, etc. In Norway, such an average profit figure would be nothing special, but accordingly, the profit opportunities need to make the right financial shift. It is clear that many may have to significantly reduce their spending on food and entertainment, but that does not mean that your life will lose motivation or joy.
Knowledge is power, and assuming that financial control is one of the most powerful things anyone can do, surely it shouldn’t be a big challenge to occasionally afford something more exclusive or find something that is not at all affordable. All you have to do now is evaluate whether you really need it, otherwise all your savings and financial management will not be used for the best purpose. If you want to save on a new car, you need to consider what you want and take into account that after a few years, a brand new car will lose much of its value. This means that when you want to buy a new car and sell the old one, you may be at a huge loss. Buying a relatively older car, on the other hand, is also risky in the sense that you may have to forgo financing for repairs and other types of maintenance. This is just an example of buying a car. The same may be true of an apartment, but if the desire is to sell it, the situation will be better in the sense that property prices continue to rise. However, if the apartment becomes too small after a while and you still like it, you may have to move. This situation can arise if you are thinking of starting a family. It is also a good tactic not to be afraid to take risks, because otherwise it is impossible to develop or learn from mistakes. This is very important especially from a financial point of view. In this way, it is also possible to discover new things or learn something new in the field that may be useful or at least interesting.