MEXICO — Almost everyone has experienced a similar situation. The end of the month is here, you’re on a tight budget, and after paying your utilities, rent, and treating yourself, you’re left with very little money. How can we improve this situation to one where the economy is safe? The answer lies in financial education.
“Financial education is the process of learning how to optimize your money by acquiring the skills to manage your resources, obligations and personal assets wisely at each stage of life,” said CETYS University, Faculty of Business and Management, Executive Degree Coordinator, Mexicali Campus Leticia Torres Arteaga said:
Financial education includes not only proper management of money, but also debt management and being aware of the assets and all the resources that are actually yours. “For example, I own a house, and I can say that this is an asset to me. But I owe it to the bank, so it doesn’t belong to me, and it doesn’t belong to me until I pay it off.” “We cannot think that it is,” Torres said. Arteaga said.
Creating a personal and family budget is important to achieve proper financial management and reduce the risk of debt. This ranges from the most basic, such as recording the inflow and outflow of resources, to applications and electronic formats. This budget takes into account the contributions of all those contributing to the family’s income, as well as regular, temporary and All temporary needs must be considered.
As a result, you will be able to recognize whether you need to look for ways to increase your income, reduce your expenses, or a combination of both. Visualizing whether your budget is positive (if you have a surplus in savings and investments) or negative (if you have a deficit) can help you make better decisions when borrowing money, and can help you prioritize when making purchases. It also helps to establish.
Another suggestion is to set aside at least 10% of your income as a “mini nest egg,” or set aside for unexpected events, or invest some of it and keep the rest as a backup. The idea is to put it aside as savings until you have enough money. Even if there is some problem. You should also be careful when using your credit card, as you should avoid purchasing more than you can afford. “Avoid making just the minimum payment on a credit card. Doing so won’t reduce your debt significantly. In most cases, you’ll be covering the interest, which will add more debt over time. “It’s possible,” the expert added. .
Another thing to consider is avoiding impulse purchases. Torres Arteaga advises asking the following questions before purchasing non-essential items or products:
Is it really justified?
Will it help?
Can it be avoided or replaced?
Is it really necessary?
Are there alternatives?
Best price?
It is important to distinguish between needs and wants. If you can’t pay something in cash, try to choose a short term, as interest will be charged over the period you pay the debt. The longer the repayment period, the higher the total interest you will end up paying.
If you share your finances with someone else, such as a partner or family member, it’s important to create a joint budget to optimize your resources. That’s why you need to analyze your priorities and establish the important order in which you should spend your money. On the other hand, you need to consider income, expenses, seasonal expenses, or expenses that occur at certain times of the year, such as Christmas, back-to-school, graduation, vacations, and birthdays, to name a few.
Knowledge about personal finance not only allows you to achieve the quality of life you desire, but also allows you to live with less worry and prepare for the unexpected.
