Financial Freedom For Beginners
Financial education is a very broad subject, from which we can learn a lot, because everything we find in it can help us on a daily basis. It is important to know the basics of this world, as it allows us to develop personally and economically. We can say that with the 10 basic notions of financial education, you will make a qualitative leap in the management of your assets.
If you can understand each of them, you can better understand how to be efficient and how money works.
1.- Know what you enter
The first point from which we must start is the sources of income we have, such as the total income we receive. That done, we can improve our investments, like being more efficient with our expenses. If we are aware of what comes in, we are more aware of what we spend.
From here, we must control our expenses
Managing the tickets, we have to go to the expenses that we have to prepare our first budget. Budgets are made based on the income and expenses we have; therefore, we also need to know what we spend. The more accurate the information, the better, so we advise you to divide expenses in this way:
- Fixed: fixed expenses are those that are immovable and that we will pay YES or YES to. They are represented by rent, mortgage, electricity, water, etc. They are called fixed because we will always have them and they will never fail (unfortunately).
- Variables: expenses that vary due to many factors, time, personal circumstances, leisure, etc. It can be high or low, the fact is that they vary every month and are never the same.
3.- Set a goal
We all have a long-term or short-term goal, whether it be buying a house, a car, getting promoted in our workplace, starting a family, etc. We must work our finances around these goals, because money is power and will open doors that we never imagined could be opened.
If we want to invest in a business or directly set it up, we will have to plan the objective well, as we will have to save a lot.
Very important: the goals must be achieved, nothing to give up or create alternative goals.
It is VERY important that you know how the taxes in your respective countries of residence work. Taxes are usually periodic and have payment deadlines, so it is CRUCIAL to pay over time to avoid surcharges that make them more expensive.
Normally, there is an income tax (Personal Income Tax, in Portugal), another property tax (IBI in Portugal) and also, the taxes we pay for our products, such as circulation tax, of economic activities , corporate tax (if you have a business), etc.
5.- Bonuses and help
In the case of meeting certain requirements, we may ask for some bonus or help that allows us to save money and spend less. There are certain housing aids, help with entrepreneurship etc., which give us an important impetus to face our day-to-day activities, such as rental assistance, etc.
Obviously, if we are very solvent and have a high annual salary, these grants will not be granted. On the other hand, support for entrepreneurship exists in many countries, regardless of the income you have.
If you are young, you can seek help to be a university student or young (-25 years old), obtaining interesting discounts.
6.- Expand your financial lexicon
You need to know what a lease is, what a deposit is, what a checking account is, what a clearance is, etc. In summary, you must acquire the basics of financial education:
Leasing: is a lease for a movable or immovable property. There are two parts: lessor and lessee; the lessor leases the property (but maintains the property) for the lessee to use and enjoy. They generally have a limited duration, although they can be indefinite.
Leasing: is a lease with option to purchase. It works like the basic lease, but has some characteristic obligations, both for the lessor and for the lessee. It has a limited duration and, after the conclusion of the contract, we have the option to buy or give up the good.
Current account: is a contract that we sign with a credit institution (bank or savings bank) for which we open an account in which we will direct our payments, receive revenue and be able to take advantage of the bank's services (transfers, checks, accounting etc.) .
7.- Beware of investments
Investing the money earned from the sweat on your face is a very important decision that involves risks. We can do well or we can make mistakes, everything depends on the luck and the vision that we have in the business. We could say that investing is a risky operation in which we can obtain benefits or incur losses. Take a look at these business ideas for investing.
We will obtain benefits when we recover the investments added with more money; We will incur losses when we do not recover the investment or recover less than what was invested.
8.- Evaluate before buying
There are certain goods or services that we hire or buy and that require certain maintenance, such as machines, houses, cars, motorcycles; vehicles and real estate in general. To find out if we can afford to acquire such goods, we must think about what it will cost us to maintain them, not what it will cost us to acquire them.
9.- Optimize expenses
We will always have expenses, variable or fixed, but it is in our hands to optimize them. Why pay more when we can pay less? To do this, carefully study all the expenses you have and see where you can cut. A house recommendation is that you classify them as:
Priority expenses: fixed expenses and expenses that, for us, are a priority.
Non-priority expenses: variable expenses that can be reduced because they are not an absolute priority. Here came insurance, streaming services, subscriptions, etc.
Never give up on a good lifestyle, just adapt.
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