9 steps to make a budget that is effective

Making Count helps to take control of your personal finances, so this time we want to give you some tips to make them work for you.

How often do you balance your personal finances? We begin with this question because we know that many people do not do the judicious task of finding out at least every year, what they have, what they owe, what they need and what they have achieved. And it is not that they do not want to do it, rather it is that they have never had the habit or rather they usually believe that if they do they become squared with money and with it even stingy.

However, this is nothing more than a myth, because if you are organized and plan in a concrete way the management of your finances will not achieve more than good results, for example, to fulfill your objectives, save a good amount of money a year or Invest in something that generates good returns.

Moreover, if you are clear with money, you will never be over in debt, with losses of wealth or in need of silver, on the contrary, you will get your wealth to take a giant step and be successful.

At first, it can be difficult, but if you have discipline you will achieve it. The budget is nothing more than a way to classify your money in income and expenses and then make decisions about the administration of that money, what can be done, what you should stop doing and what is best for you.

1. Make the decision: Just like a person who wants to start exercising or lose weight, he must also have the will to make a monthly record of what we are going to mention. Anyway, we start by congratulating you, because if you are reading this article, it is because you are sure or at least want to start with a budget that fits your financial life.

2. Know how much you have: make a careful list of all your financial products, then write down how much money you manage in each account and how much income you receive month by month, also take into account the interest rates charged for example by credit cards and finally write down what are the expenses of each product and of course those of the month that may move them in cash.

3. Knowing how much money you are making: if you only receive your monthly salary it will be very easy, but if you are independent or earn for hours the thing changes, because you do not always receive the same money. If this is your case, we recommend that you average the recurring income of the last six or twelve months and if you want to be more conservative, choose the lowest amount, this will allow you to give yourself “drawer” in case of an emergency or an expense additional.

4. Know what you should: Do you always have to borrow or ‘scratch’ the card at the end of the month because the money is not enough? Then write in name order who your lenders are and of course how much you owe them. Now, if you are paying any credit, include it and if you are late, this will also help you know in total how much you should later make a plan that allows you to dissolve all debts.

5. Know where and where your income goes: you already know how much you owe, now you have to calculate from your income how much is the amount you are spending month by month, that is, the expenses you often have. For this you can save all your invoices and then develop some categories according to the type of expenditure, these can be very general or very specific, choose the one that suits you best. The categories could be: food, leasing, public services, daily expenses, vehicles, children, among others.

6.  Determine its net worth: it is very simple. It is about taking up the previous steps and doing an operation: subtract. Yes, determine your net worth by taking your total income and subtracting it by total expenses. The result can be encouraging or pessimistic if it is the first, it can take the result and convert it into permanent savings or divide it into two, one part for entertainment and the other to save, it all depends on the amount, but if the situation is the second case, cheer up! You must come up with a strategy to get out of debt.

7. Know where your money is not going: now that you know how much your net worth equals and your result was positive, we recommend that you make a list of possibilities where you could leave or save your money in the short or long term, it can be To an investment fund, to a savings account, to open a CDT, to have a business, to buy a house or to study a career, it all depends on your desires.

8. Follow-up and monitoring: the results will only be seen in the long term if you are disciplined, since keeping track of and recording your finances does not take more than a couple of hours or minutes. Get to work, this task should be done month by month, remember that it is not just about targeting your expenses and income, but rather about making wise decisions that will lead you to an effective money management.

9. Have financial peace of mind: living without stress is priceless, enough with the stress that some personal conflicts and daily work can cause to have stress for financial reasons. Having a budget frees you from a cause of additional stress.

Conclusion:  The most important thing is to know perfectly how much our family income is and how much is the total expenses and thus know the remaining money. We must avoid making an uncontrolled use of credit cards, but in the case of using them we must be very attentive to the interest generated, since we will have to add them to our expenses in the following months .

How to manage settlement and severance pay?

Perhaps one of the most complex moments that a person can face throughout their working life is to be unemployed, the uncertainty of not having a fixed income can cause moments of stress and tension. Find out what you should and should not do with your settlement money and severance payments.

Generally when an employment contract ends (depending on the contracting modality) people have the right to liquidation and to claim their severance. These economic considerations basically become a lifesaver to face the time in which they will be unemployed, so it is important to know how to manage these resources.

It is first important to make a budget with these resources for a period of 6 months, since this is the average time it takes for a person to get back to work. He also recommended not withdrawing all the resources of the financial institutions, since “normally this becomes pocket money and there is a great temptation to spend the money.

In the case of settlements and severance payments over $ 10 million, it is important that people do not let themselves be dazzled by businesses that promise very high returns in a short time, as these generally do not work out very well. It is essential not to invest in an impulsive business since in order to think of a venture it is necessary to have a long-term plan and knowledge of the type of business.

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In case you decide to invest, that it is ideal to do so in productive assets, that is, in investments that generate some level of income such as a taxi or work tools that allow independence. Acquiring a business such as a cafeteria or a store can also work, as long as the person has the experience and knowledge.

Financial expert believes that real estate is not a good option in these cases, since considering that money is not much; it would only reach for a property of less than $ 50 million that would leave a return of less than 0.5% of its value, a volume of relatively low income for such level of investment.

Finally, the two experts agreed that having a settlement does not mean having money available. You should make rational use of these resources to extend them as much time as possible.

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On the other hand, in the vast majority of cases, liquidations do not represent large volumes of money, it is essential to reduce expenses to the maximum, leisure and shopping expenses should be restricted, to give priority to the payment of fixed household expenses such as mortgage loans, leasing, food, health, and education. Both experts assured that, as far as possible, it is essential to continue being punctual with the payment of debts since default interests can affect the financial situation even more, and they recommend not paying debts in advance because the payment only reduces the time and not the volume of fees.

The financial plan that every entrepreneur should handle

Control of your finances is important for your future and that of your venture, so we tell you how to manage it and what you should keep in mind to manage your money successfully. Could it be that the vast majority of millionaires are interested in being entrepreneurs to manage their time and be their own boss? The answer for sure we don’t have, however, is the perspective that many people have today about young people. And not just as an example of entrepreneurship and independence, but rather as a figure of rebellion, of laziness, who like easy things, who do not care about their future, much less the administration of their finances.

Anyway, there are many points of view and great debate, the truth is that they are the main public of world trade, some studies as Sage, a business management software company, and estimate that in 2020 they will be 50% of the workers of the world.

Young people have a different expectation and that is perhaps what drives them to act many times taken in the face of the possibilities that are presented to them and with the decisions they make. It’s okay to be risky but it’s also good to be organized and strategically raise what you want to do and where you want to go. Because when we go out on an uncertain road without knowing anything, we can crash.

Now, to make an effective financial plan and that is consistent with your business idea you must take into account the basic concepts that we will present below presented by allfinancedirectory.com:

1. Determine the viability of your company: here you have to take account; basically it is to make an economic analysis with calculations that allow you to measure the profitability of your business. To do this you must consider three things:

The necessary funds are the contributions that are in the capital, then you must take into account, if the contributions are own or from third parties and how much is.

  • Calculate the expected benefits: that is, determine what the results would be in terms of profit.
  • Learn how the company is: here you must take stock, look at the financial statement.

After this, identify if your project is viable as follows:

  • The investment budget (the resources to start up a company) must be covered by the financial budget (the economic funds that finance these investments).
  • The sufficient benefits are obtained, after the exercise Income – Expenses
  • Liquidity, that your business or small business has the capacity to meet your immediate payment commitments. To determine this you must do the following operation: opening balance + collections – payments = final balance

2.  Necessary financing: you have to determine how much money you need for the activities you have in mind to develop. Make the list and then determine how you can cover this need for resources if you require loans or investment from any third party.

3. Collections: are the entries that occur in the treasury of the company, that is, income from customers or suppliers.

4. Payments: are the outflows of money, that is, the resources used by the company or the employer to cancel purchases, suppliers, expenses and credit cancellations.

5. Expenses: refers to the acquisition of goods and services for production, that is, the purchase of machinery, raw materials, technology, energy, etc.

6. Revenue: results from the sale of products or provision of services.

7. Establish the costs of what you sell: it is important that you know three concepts: variable costs, fixed costs, and break-even point. It is assumed that at this moment you already know what you want to sell and you also have an idea of ​​the price you want to put, then, knowing your costs and the price, you could know how many units of your product or service you have to sell to not lose money and start To receive profits.

  • The variable costs:   these are those directly associated with sales and the elements that are incorporated into the production process.
  • The fixed costs: they are the ones that you already know that you have to pay at certain times, for example, rent or salaries.
  • The equilibrium point: it is the intermediate one, as its name indicates is the point at which neither profits are obtained nor losses are generated. The point is when total revenues and total costs (variable costs and fixed costs) are equalized.

8. Initial investment plan: these are expenses that are not consumed in a single production process but over time. For example, machinery, industrial equipment, facilities among others.

9. Cash flow: this is the ability of the company or business to generate funds in a given period. Said cash flow comes out of the difference between income and expenses.

10. Investment recovery period: make counting; here it is about discovering how long you will recover the investment you made at the beginning of the business. Remember that time depends on the sum of the cash flows that have been generated over time. It is important to keep in mind that the shorter the time, the greater the liquidity of the project or business.

11. Economic profitability: this is the benefit, that is, the results (profits and earnings) before taxes and total assets. Follow these because these concepts will help you to have effective, complete and organized accounting and finance for the good results in the growth of your projects or businesses.