The It is a dream of many people, whether they are entrepreneurs or not. And in an economy as unpredictable as today’s, knowing how to manage the money we have on hand here and now is of the utmost importance.
Although we already know that it is not easy at all to plan expenses and save enough to build an estate, especially for those who want to start a .
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In this post, we will share simple tips on how to manage money, dedicated to those who want to have a healthier financial life, even without having a very high budget.
If you adopt at least one of the habits that follow, you will see that, over time, your money will go further.
But, anticipating some information, we will tell you that from now on spreadsheets and calculators will be your best friends.
So, let’s see these some tips on how to manage money:
1. Write down your fixed expenses
Fixed expenses are those that we pay every month, such as rent, water, electricity, telephone, Internet, etc. It is important to note that you must include taxes in the list…. that you will not forget!
Having a record of fixed expenses is important to know how much of the family income is left over every month to invest, save or even allocate to rest and leisure.
Also, if you are a you must also have control of the fixed expenses of your business, such as rent and production costs.
There are several ways to perform this control, but to begin with, we recommend that you keep a spreadsheet in or in Excel, which will allow you to organize, update and save your data very easily, in addition to automating calculations thanks to its formula systems.
If you are a digital entrepreneur, take the opportunity to download our free preconfigured to calculate the main metrics of your digital business:
2. Set aside at least 10% of your income
Before paying fixed expenses, try to reserve at least 10% of your income to invest it. This will be a great way to simply understand how to manage money, in case you don’t have much time to do some calculations.
If you earn a fixed monthly salary, this means that you must separate it from it. If you work as a freelancer, that percentage is separated from all your earnings for the month.
The goal here is not just to save money over a period of time until you can spend it on something superfluous, but to apply that value so that it can earn interest and become a significant asset in the future.
At first it can be difficult to “give up” that 10%, but if you focus on the long-term result and manage to adapt your lifestyle without making big sacrifices, in less than a year you will start to see the first results.
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3. Keep your expenses separate
This suggestion is valid for those who already have a business or intend to start one. Many small and medium-sized entrepreneurs still have difficulty separating personal expenses from business expenses, which can lead you not only to accumulate losses, but even to bankruptcy.
This practice is bad because you cannot know if your business is producing simply because you will always be taking money out of the box for private purposes.
The lack of capital will also prevent you from investing in improving processes and disclosure, which will only put a glass ceiling on the growth of your business.
And lastly, mixing personal accounts with business accounts can give a false impression of “wealth” and motivate you to spend more than you really can at the moment.
So, we will recommend you to have two separate accounts if you are an entrepreneur. The good news is that you can use the legal entity account to contract corporate plans for your company, such as medical insurance, food cards, etc., which will also help you contain expenses.
4. Try not to ask for financing
Financing is a danger for small and medium businesses, since it represents a long-term commitment and usually charges high interest.
We know that it is not always possible to avoid them, since they are useful to attract resources in the initial phase of the enterprise. But whenever you need to request financing, try to reduce the number of terms as much as possible, in addition to making a comparative study of the conditions stipulated by various financial institutions, in order to choose the lowest interest rate.
Remember that financing must also be included in your fixed expenses sheet during the entire term of your contract.
5. Pay off your debts as soon as possible
If you have already obtained a loan in your name, think about paying more installments simultaneously to reduce the duration of the contract and, of course, interest.
But beware, we are not saying that you should strangle yourself financially to pay off debts faster. Ideally, you know how to manage your money strategically in such a way that the money that is “left over” can be used to advance installments. In other words, nothing to touch the fixed expenses or the cash flow of your business.
For example, you can reserve for this the money received for a specific job that you have done.
6. Learn to invest
it is a way of making sure that you will not spend your money on something superfluous. But when we use the word “investment”, it can seem that we are talking about something that requires a lot of prior knowledge.
Do you think so too? Well, it’s exactly the opposite!
Anyone can invest, from people with a more conservative profile to those with a more daring one.
For this reason, we recommend that you study the different types of investment available in your country. Only then can you choose the one that best suits your profile. Also, you can talk to people who know about investments before making your decision.
Some types of investment are:
6.1 Savings accounts
Savings accounts are successful everywhere because they are easy to open and very secure. Savings, in most countries, have the lowest risk of any other type of investment, but they also have the lowest return potential.
That is why it is recommended to make cash deposits in a savings account to conservative investors, with a lower tolerance for risk.
6.2 Investment funds
Investment funds or mutual funds pool money from different investors and then invest it in a variety of investments, such as stocks, bonds, etc.
This type of investment is suitable for those people who can afford to invest thinking in the long term.
6.3 Actions
Unlike the previous options, the stock market is recommended for those investors with a more daring profile.
The value of shares can fluctuate wildly during the period when the market is open, so it is a risky model.
Stock management requires a deeper understanding of how companies are performing, and ongoing monitoring of the stock market is also crucial.
This way of how to manage money is quite interesting, but also risky, so before you invest, you should learn a lot about the stock market.
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7. Set financial goals
Before moving forward it is important to know the difference between goals and objectives. Although we are used to using these two words interchangeably, they can have certain differences in meaning:
Objectives represent what we want to achieve in the long term, while goals, on the other hand, represent concrete, measurable, time-bound actions.
For example, if your goal is to increase the sales revenue of your business, your goals, in turn, may be to double the number of transactions in the next six months, increase the average ticket of your customers by 50%, etc.
Take this opportunity to read our post about
8. Pay in cash whenever you can
This may sound cliché, but any finance specialist will tell you that one of the most effective ways to manage money is to only buy something when you have the money to do so.
This is why paying in one payment (or using a debit card, of course) is an excellent strategy to save money, since you avoid spending money that you don’t really have.
Many stores around the world offer special offers and discounts for cash payments. This means that you can save money and pay less for a product or service.
9. Avoid using your credit card
Another important tip for how to manage money is closely related to the previous point.
Does that mean you should never use your credit card? Of course not! Credit cards represent a great convenience for the consumer, in addition to being the payment method most common online.
Although our advice is that you try to avoid using it when you have cash to pay for something. In many parts of the world, when you make payments on credit (or in installments), you end up paying interest, thus spending more than you would if you made it in cash.
10. Set limits on variable spending
Managing money is closely related to limits on spending.
Anything that is not a fixed expense is a variable expense. In other words, a type of expense that, in principle, can be left for later. But we know that, in practice, people do not want to stop depriving themselves of small pleasures, such as going out with friends, taking a trip or buying something that is not essential.
For these cases we recommend you set a limit for them. Reserve a small amount of money for your leisure activities.
We know your goal is to save money, but if you end up sacrificing too harshly, you may as well end up forgoing saving altogether.
For example, to manage variable expenses in a balanced way, it can help you to establish small rewards for when you achieve a goal, or to make a list of five elements that you consider superfluous, trying to include at least one of them in your monthly budget.
11. Use financial management tools
If you are not used to working with spreadsheets and need simpler methods to control your expenses, there is a whole variety of programs and applications financial management to help you.
Some of them offer the option of uploading receipts for payments made by card, tracking bank transactions and even inserting reminders for bill payments. Thus, you have control of everything that enters and leaves your account. For example, interest paid for late payments will no longer surprise you.
One of them is , a service oriented and designed for those who do not have financial knowledge. It is about introducing the…
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