6 quick tips for you to organize your finances

Although a large number of fellow citizens understand the importance of controlling and planning personal finances, few do. If you belong to this group, then you should read this article, where I present 6 quick tips for you to organize your finances. 

Quick tips for you to organize your finances.

Here are a total of six tips that will help you organize your personal finances.

1. Establish a single account for your daily transactions

1. Establish a single account for your daily transactions

This principle consists in dedicating a single instrument to centralize the handling of the cancellation of ordinary expenses. The most suitable instrument for this purpose is a checking account associated with a debit card, and with which you can make payments online.

Remember that it is possible to direct some of the recurring payments to this account, such as those related to utility bills. If you do this, keep in mind that you must keep enough money in the account to be able to make these payments.

2. Establish a single account for your savings

Any set of tips in finance that is appreciated, includes establishing a monthly savings that allows you to face emergencies, as well as ensuring your future. The instrument you select must be exclusive for this purpose, and from it you should not make any type of payment.

The instruments that are best suited to savings are savings accounts and time deposits. Although the latter offer better interest rates, they have the disadvantage that they do not offer the liquidity you may need when an emergency arises.

3. Save for the short and medium term

3. Save for the short and medium term

Establish as a strategy two types of savings, which you must manage separately: one in the short term (less than 5 years) and the other in the medium term (from 5 to 15 years). The short-term savings is the one you will use for emergencies, so you should have it with as much liquidity as possible. Instead, long-term savings can be placed in instruments with less liquidity but higher returns.

The use that you should give to short-term savings is to attend to emergencies and unforeseen that may arise, and it is recommended that this be equal to 6 times your monthly income. On the other hand, you should dedicate the medium-term savings to other purposes, such as raising the initial installment of a mortgage loan, or financing your children’s studies.

4. Invest and save for retirement

Never neglect the capital that will allow you to cope with your golden years, which will elapse after your retirement occurs. Whether or not you become a family burden then, or whether you should continue working, depends on a lot on what you do now.

In particular, I recommend that you do not request advances on your retirement, unless you are going to use this money in a very low risk investment. For example, you can use up to 25% of your AFP to buy your first property, using a mortgage loan.

5. Diversify your investments

2. Establish a single account for your savings

Don’t put all your eggs in one basket, diversify your investment in different financial instruments, real estate and the stock market. Having various types of investment is an excellent way to diversify your portfolio, and to reduce the risk of losing it.

6. Regulate your superfluous expenses.

It is important that you can reward yourself, but you should only do so when your main financial goals are met. Be careful not to use your credit card irresponsibly to finance these types of expenses, since then in the end you will have to pay off a larger debt.