Being able to maintain financial balance both personal or professional is essential to be able to keep your business going. Learn to manage your activity in this field is crucial, because who do not know personally is very unlikely to succeed professionally. Not only is being able to maintain your financial stability, but also how to manage, identify and solve your problems.
Why do you think that many people earning a reasonable income accumulate endless bills and debts? Not to win badly, but why not make a sound financial management.
The same may be happening with your business as a freelancer. Not having a good personal finance, you will never have enough money so you can improve your situation with debt. The worst is when you start mixing business accounts with personal accounts. This is another major errors. But do not worry, like today’s article will identify all the errors and find a solution for them.
How to improve your personal finances
1. Save a portion of what you earn in a month (10%)
It is important to keep some capital to prevent if there is any serious problem having to borrow. Some people get into debt because they have a little money aside. But why is this measure important? Imagine you unfortunately have a very serious accident with your car. This arrangement runs out and you’re forced to buy a new one. You have a serious problem. Now you have two options: Buy one or a good car running out of time.
Suppose that you saved anything, so it has no choice but to pay the car several times. To maintain the same standard of living, the reader decides to buy a car worth 30,000 dollars. If you pay on several occasions, with the interest will be very able to pay an additional $ 10,000 the value of the car. End result? The car will cost 25% more than it would normally. If you had a savings account that will not have happened.
Such problems can happen to anyone including you too. The easier it is to open a savings account and tell your bank every month to withdraw 10% of their salary. So do not be tempted to spend all the money and calling it “just this once”, not get it out of your full salary until the end. This money can only be adjusted in cases of life and death: car accident, operation or job loss.
2. The household expenses (30%)
This is the value that outweighs your personal budget. But I warn you one thing: should not exceed 30% of what you receive per month. The reasons for this are several, such as the fact that you can stay out of work, the provision of the bank or to a mishap. Many people reach the 50% threshold. I think this is a risk, especially if you have a loan from your bank. Moreover, this very significant value bet neglects other issues such as investment or personal savings. It is an option that is not worth taking minimal risk.
Pay attention to one thing: your growth in material goods should be equivalent to what you get per month. Especially when working independently can serve as a motivation, which led him to produce more gain to achieve better things. Do not try to live a life that you can not simply because they want more comfort. Do not think only in the short term, but rather make a long-term analysis and objective. Maybe once in your life you bet on the future, not your convenience.
3. Retirement (5%)
While working as a freelancer you have a deduction for each month that you work for your retirement, so you have to estarla doing on your own. Despite not knowing the reality in this area in Latin America and Spain are no plans for retirement savings that can help. Just give the order to your bank for a value that discounts a month (usually the minimum is 25 euros per month) for this task’re insured. I know it may be tempting to use the money we have now, but the truth is that long-term thinking is a good strategy. Prevention is our best friend sometimes.
4. Invest (5%)
This may be the value to be used for other business investment in the long term. In addition to saving, it is important to keep thinking about your future in terms of investment, so that you can earn an average of time. Whether to invest in Forex or in other activities, be able to think in determining your future in order to generate profits. In this field, you have two options: invest in something that will give you interest rates (the example of the Currency) or save to invest in another project. The likely choice is yours. I personally opt for the second option, but only because I know also another market to be able to trust your investment. However, long term do.
5. Car maintenance (20%)
Along with the layout of the house, the amount paid for the car sucks much of our income. It is normal and is an essential commodity with which we can not live every day. If you buy a good car that is economical because then avoid unnecessary interest. If you want a luxury car, opt for higher payments. So get to pay less and get lower interest rates. But remember this rule: not to exceed 20%. Be true to your budget and do not fall into temptations instantly.
6. Personal expenses (15%)
This part should be about what you buy in the grocery stores, a lot of payments by phone or Internet. This base can be expanded a bit, especially if you have a home with the kids and your wife. Each case is 15% and fit most cases, not all. It should not be a hobby buy things that are not necessary to buy in the supermarket. I will explain this in a more simplified.
The big shopping techniques used to force the customer to buy things that are not essential as chocolates, cookies and drinks. How? Keep in mind when you go to the supermarket. What are the products that are to the right of the entrance? Certainly not essential, as well as bread, meat or fish. Yes, these are impulse buys. They are presented to the customer is forced to see them before moving on to what is really essential, ultimately, you have no need to even buy them. Do not condemn the supermarkets for it. His techniques are, as you should have for your business.
There extravagances to do certainly. I do not run to the rule. I just want to help you find the answer to the fact that your personal costs could be higher than 10% I said. Use of the Pareto law on your next shopping list and buy only 20% of the products they provide 80% of your food.
7. Setbacks (10%)
Many people say they can never fulfill the percentage of its budget to the letter. Unfortunately I have to agree with that designation. Each month that goes something will escape the correct measurements. Is something not worth fighting, and it will happen. So I created this new segment. Each month a discount of 10% of that profit to cover some surprises that may occur. You see that little is left at the end of this segment. However, the outstanding achievement of a month without having to use it, be sure to treat yourself and buy something that makes you happier.
8. Invest in yourself (5%)
Life is not all work, far from it. So each month saves a portion of your salary as a freelancer to indulge yourself. Go to the gym, buy new clothes or going out to dinner twice. Get something for your work is motivating and helps you appreciate what you have done. Do not be like those people who think only of saving and making money. Not worth working so hard to not enjoy anything after that.
9. He rigorous
Advance planning performs well when properly structured, if in the end did not meet the goals it has set, try to be strict with the financial goals that you approach. It is normal for a few months can not meet targets. It’s perfectly normal. Being persistent is a very positive feature.
10. Do it every month
Little use to think about it in these percentages only a month or two and then leave. As your business works, it requires an organized and financially practical.
11. Credit Cards
When I advise you not to use your credit card does not mean you can not have one and use it. I work with mine every month. But I worry about two things. The first is that the value will be deducted from my account balance in the following month (avoiding interest) and the second I use it in an emergency. My only motivation for using refers to premiums and discounts given to me, nothing more.
One tip to avoid the use of the card is not take it with you all the time, leave it at home and carry it in your wallet only when you know you’ll need it, so you will not fall into temptation easily use.
12. Write your goals
Doing these accounts implies share somewhere. For this, I created an Excel file in which I aim all my expenses, which facilitates the calculation of percentages. It’s a fairly simple, but do not go against my goal, which is to prevent not know what the bills. And sometimes the beginning is even more complicated. That’s your incentive. Do your calculations and creating the.
How have you organized your personal finances?
Organization is key to your success. And this field also enters your personal finances. I hope the article has given you a basis of how to proceed. I’m not saying that these percentages should be exactly. As I said, everyone is different and you have to adapt to their reality. However, if you want to escape those values, it is because something is wrong.