Basic tips for your finances
Published 07/17/2022
Finance is a crucial management area for all people and businesses, especially for companies seeking to expand and improve their positioning.
However, although business people and entrepreneurs are usually aware of their importance, they often fail to control them effectively.
If this is your case, relax! In this article, we will prepare you to avoid making mistakes in personal and corporate finances that could jeopardize the future of your financial stability or that of your business.
We will then give you some valuable tips to optimize your organization's financial management or your personal finances.
Basic tips for your finances
-
Educate yourself
Take the time to read about personal finance. Schedule "money" appointments with yourself each week and spend a few hours managing your finances and reading financial books, magazines, sites, or blogs. The more you know about your finances, the more confidence you will have in managing your money in the long run.
-
Check your credit regularly
Your credit report shows the history of your financial movements. It tells lenders how risky you are and whether or not they should lend you money. When buying a car or a house, you want your credit report to be in excellent shape so you can qualify for reasonable rates.
Make a habit of checking your credit history at least once a year to confirm that everything is in order. Do it on a particular date (like your birthday) to make it easy to remember and keep track.
-
Make a budget
Although this sounds very basic, many entrepreneurs do not have a budget to monitor their monthly income and expenses. You can use digital tools like apps to monitor your finances or an Excel document. It is vital that the option you choose better fits to your lifestyle
If you want to get your finances in order and stay ahead, you should allocate time and energy to updating your budget weekly. This will help ensure that you don't spend more than you earn and can save for your financial goals.
-
Manage your debts well
Debts can improve your quality of life or sink your economy. Therefore, good debt management is vital to heal your finances and meet your goals without frustration. Before accepting or applying for new debt, make sure that your debt capacity allows you to do so, choose a payment method to get out of other previous outstanding accounts, and make sure that the amortization table adapts to the reality of your finances.
In addition to reaping the benefits of healthy debt, your credit history will grow with a good rating.
-
Spend wisely
We understand that spending on what you like can result in a feeling of guilt or that you may sometimes go overboard without even realizing it. For your peace of mind, we're going to change that right now with a conscious spending technique. To do this, you must categorize your expenses, automate your payments, set aside a percentage of your income for those personal treats, and finally, track your cash inflow and outflow every so often.
This method will make you feel more satisfied with your money and manage your purchases much better, without going overboard but without depriving yourself of anything.
-
Anticipate the unexpected
"Better safe than sorry" is one of the many lessons you learn early in life. And yes! An essential personal finance tip is to anticipate unforeseen events because they are the ones that, in just a few days, can dampen your economy.
To do this, it is advisable to gradually build an emergency fund that allows you to cope with an illness or sudden job loss. Thanks to this fund, you shield your finances without the risk of getting absurdly indebted or losing your assets to pay off those debts.
-
Make good use of your credit cards
Credit cards are a significant financial resource if you take advantage of them and use them well. Take advantage of your credit cards for those purchases with a medium or long-term debt, for example, when buying home furnishings. Pay attention to the number of deferred installments and the corresponding value, and make sure that your finances allow you to assume that debt every month.
On the other hand, we also advise you to learn how to read the account statement to understand each of the concepts detailed therein.
-
Calculate your debt capacity
Contrary to what most people think, getting into debt is not bad; however, you should do it with prior planning. Therefore, you must calculate your debt capacity, for which several formulas and indicators exist.
One of the traditional ways of doing this is to subtract the monthly fixed expenses from the total monthly income and multiply the result by 35%.
The amount of this operation is the maximum debt capacity of a company or individual.
This parameter is a simple reference, so you should evaluate other factors before requesting financing.
For example, your company's equity, i.e., the sum of the value of your brand and different assets.
Another golden rule is not to access higher than your total equity credits.
Although these tips are valuable, the ideal is that you manage your financing requests with experts in the field.
Remember that a loan can significantly boost the growth of your business, but exceeding your debt capacity generates major financial and operational problems.
-
Automate your finances
Technology makes it much easier to manage your finances every day. Make most of the process automatic. You can make transfers in an automated way monthly. This process will help you avoid stressing about paying your bills on time and incurring interest or extra fees.
If you are concerned about automating the payment of your bills, you can set alarms on your calendar (on your computer or smartphone) that remind you of costs. The more you can automate your finances, the less worry you'll have daily.
At El Paisa Multiservices we want to help you with your finances in Hartford, CT. You can contact us if you have questions about our services.
By Ingenuity & Solutions
