The ability to manage money competently is especially valuable quality in the conditions of financial crisis, when the purchasing power of the population is shrinking, inflation is rising, and exchange courses are completely unpredictable. Below are the common errors in money matters and financial planning advice, how to manage your own finances properly.
The budget is generally the most basic thing in financial planning. It is therefore especially important to be careful when it is compiling. To start you have to draw up your own budget for the next month, and after a while to make year budget.
As the basis take your monthly income, subtract from it such regular expenses as the cost of housing, transportation, and then select 20-30% on savings or mortgage loan payment. The rest can be spent on life: hiking to the restaurant, entertainment, etc. If you are afraid that you may spend too much, limit yourself in weekly charges by a certain amount in cash.
"When people borrow, they think that they should return it as soon as possible," said Sofia Bera, a certified financial planner and founder of Gen Y Planning company. And at its repayment spend all that earn. But it's not quite rationally ".
If you don't have money on a rainy day, in case of an emergency (e.g. emergency of car repairs) you have to pay by credit card or get into new debts.After each paycheck delay $50-100. Keep on account of at least $1000 in case of unexpected expenses. And gradually increase the "airbag" to an amount equal to your income for three-six months.
"Usually when people plan to invest, they only think about profit and not think that loss's possible, says Harold Èvenski, President of the financial management company Evensky & Katz. He said that sometimes people do not do basic mathematical calculations.
For example, forgetting that if in one year they lost 50%, and the following year received 50% of the profits, they did not return to the starting point, and lost 25% savings. Therefore, think about the consequences. Get ready to any options. And of course, it would be wiser to invest in several different investment objects.