Like any other decision, a bad financial decision it can also trigger a set of unwanted events. So, we must be careful and think carefully before making any decision. Concerning financial issuesthe logic is exactly the same: before taking any step, you must carefully weigh the pros and cons. Questions like, is it really necessary, or isn’t there a better option, are some of the ones that can arise. Thus, in this article, we address six decisionit’s relevant financial issues that you will hardly regret.
Have cash aside for an emergency
This should be one of the first decisions you make once you win your first salary. The creation of an emergency fund is undoubtedly relevant to respond to unforeseen circumstances. Even though the tendency is, especially when we are young, not to give so much importance to these issues, have you ever thought about what you would do if you had an expensive medical situation? Or an extended stay? Or even a sudden unemployment situation? How would you cope with your monthly expenses if you don’t have money on your side? An emergency fund, as its name implies, is a monetary amount that is set aside for emergencies. This value must be sufficient to ensure, at least, three months of expenses. However, it is currently recommended that six months of expensesand if possible a little moreRead further: Saving for retirement: Why you should do it and how to achieve this goal
Guide your finances through budgets
Another important decision involves make budgets. Budgets are the “best friends” of personal finance and, above all, savings. A budget includes a maximum value that you assign to each category of expenses you have. For example, if you spend around €200 a month on food, this is your budget for that expense. What you should try every month is to stay within that budget, if possible reduce it. THE The same strategy should be applied toFor all other expenses, from house bills, car expenses, vacations, among many others. This is not a punitive method, meaning nothing happens to you if you don’t stick to a budget. This method is based on self-control and willingness to save as much as possible. So, you should make a commitment to yourself and, if you don’t meet a budget one month, do your best to make it up the next month. Also read: Do you have credit card debt? 7 tips to regain stability
Contribute to your reform
This is one of those decisions that we often only remember late. When we are young, retirement seems far away, however, as the years go by, we realize that the amount to which we will be entitled may be insufficient. Therefore, to prevent this situation, start preparing for your retirement as soon as you start working.There are several ways to put money aside for your retirement. Among the most common is the PPR – Retirement Savings Plan. As far as PPR is concerned, there are a few types. You can have one where a certain amount of your current account is deposited monthly, that is, it works in a very similar way to a direct debit on your current account, however the amount reverts to your retirement savings. On the other hand, there is the format of making deposits to your liking. Remember that, in addition to putting money aside for your retirement, you also get tax benefits by subscribing to a PPR. Another way to save for your retirement is to invest. In this case, you must first define your investor profile (more or less conservative or more or less dependent on the speed of results) and then keep in mind that it depends on market volatilities, that is, your money can yield more or less depending on whether the market is growing or falling. Although more risky than a PPR, the Investment returns can be much higher in the long run, however, they are never guaranteed.Also read: 8 warning signs: It’s time to increase your emergency fund
In addition to decisions that you are unlikely to regret, we are now talking about investments. This type of investment requires a lot of research before acting. In other words, you must first invest in your financial literacy and ensure that you are aware of all aspects of financial investments, including risks. Investing your money can result in big gains in the future, especially in the long run. However, you must ensure that any money you are investing is not needed, at least in the near future. One of the main mistakes associated with financial investments is making them before you are prepared, that is, investing before you have the money to do so. Investments are good and can be profitable, however, it is not the starting point. Before investing you must gain “financial muscle”, that is, work so that your finances are stable and your priorities clear. Read also: Renegotiate housing credit: 5 situations in which you should do it
try to save more
Saving should be the foundation of your entire financial strategy. Regardless of why you do it or for what purpose, always having money available and minimizing your expenses are key rules a good financial situation. Saving means spending as little as possible in any situation. For example, if for 1kg of apples you can pay €1.10 in a certain supermarket, why would you spend €2 in another? The same applies to all your expenses. If, for example, you can save on a television service on a certain operator, you should change if yours is more expensive. Every month, after receiving your salary, you must ensure that you have money left over to set aside. You can save for a specific purpose, for example, for a vacation, or save for the future, without having any defined objective. Also read: Money doesn’t seem to stretch? What to do to make it to the end of the month
Don’t rush important decisions
Last, and not least, never rush making important financial decisions. Before making decisions, inform yourself, research, be informed, take your time and don’t let external stress influence your decisions. Informed choices lead to greater success than hurried choices. Also read: How to budget for a family when income is uneven?