Between fixed charges, unforeseen events and purchases "to have fun" or "to please", it is not always easy to manage your finances well. Whatever amount you receive monthly, know that it is essential to learn how to manage your money better. With these few tips, you can be sure to regain long-term financial independence.
Why is it essential to learn to manage your finances well?
Contrary to popular belief, it is not just the “rich” who need to learn to manage their finances. Regardless of the total amount in your bank account, it's the way you manage your money that will keep you from life's hardships. So, even if you collect little money, but you have total control over your spending, you will live easily, you will have the right skills to achieve your goals and you will not encounter any financial difficulties. On the contrary, even if you earn a lot of money, but don't have full control over your spending and cash inflows, you will quickly be in the red. Everything is in the management and not in the sum.
The keys to managing your finances well
It's time to regain full control over your finances! Here are some tips that will help you better manage your money and optimize your spending more efficiently:
Money inflows> Money outflows
This is one of the golden rules that will allow you to better manage your finances: always make sure that your money inflows are greater than your money outflows. Only in this way can you avoid turning your bank account red. It is with this in mind that you must learn to differentiate between “assets” and “liabilities”. An asset is an expense that grows in value over time and can generate income. Whereas a liability is an expense whose value decreases over time. You will have understood it: maximize the purchases of assets and minimize, as much as possible, the purchases of liabilities.
Clearly identify fixed charges
Whether your salary is fixed monthly or not, it is important to have a clear idea of your monthly fixed costs. This is, in most cases, the main mistake made by employees and the self-employed. Indeed, you cannot just make an “estimate” by eye. You really need to do the count and clearly identify the fixed amount you have to pay each month. If the fixed charges are more than 70 % of your total charges, you need to make some changes to get back to a good balance. Ask yourself this question: is this lifestyle really suited to my income? If not, quickly correct this situation before it cripples you in the long run. Here are the steps you need to go through to make an accurate budget estimate:
- Take 1 paper and 1 pen
- List in one part all the money entries
- List in another part all the expenses
- Differentiate well between fixed and variable charges
- Tax an amount to be saved every month
- Eliminate all unnecessary expenses
- Subtract between cash inflows and outflows
Be careful, you must always keep your feet on the ground. The budget must not only be as precise as possible, but also as realistic as possible.
Monthly your expenses
Do you receive a monthly salary? So why not install your expenses monthly as much as possible? It is sometimes tempting to push back deadlines to better cope with occasional financial difficulties. And yet, this is precisely how you will lose an eye on your spending. Monthly payment of all fixed charges will allow you to keep precise control over your expenses and will even allow you to better achieve your goals. It also saves you the stress once the deadlines are fast approaching. If you can, discharge all expenses at the start or end of the month.
What is a savings? This is an amount stored in secure savings accounts. We do not always pay attention to it and yet, savings are the fundamental tool (if not the most important) for better financial management. What will this part of the money be used for that will not be immediately consumed? There are different types of savings:
- Precautionary savings: which will allow you to face the vagaries of life
- Constrained provision savings: for non-monthly expenses
- Project savings: the amount that will allow you to fund your projects
- Reserves: a sum to be touched only if it is really necessary
The amount to save depends entirely on each case. On the other hand, it is recommended to save between 10 and 15 % of your income. If you can, you can even do more.
Use budget management tools
Keeping a constant eye on your budget is therefore essential. Unfortunately, you don't always have time to devote to tracking your budget. The good news is that you'll find tools that will do it all for you. You can, in fact, use specialized tools and applications. Thanks to these budget management tools, you can: categorize your expenses, receive an alert on each entry and exit of money, calculate your expenses more efficiently, follow budget developments via a graphic, have a real-time overview of the money you have left, more clearly identify your fixed and variable expenses, etc.
The FastBudget application
Since you can install the apps on your smartphone, you can be sure to always have an eye on your budget. Wherever you are and at any time, you can mark your cash outflows there. A very effective way to better manage your finances. At Lica we find that the application FastBudget is ideal for easily managing your budget!
In conclusion, manage your finances well ...
Before doing your credit with Lica, ask our operators for advice in order to ensure a solid budget. At Lica we advocate responsible credit while providing you with a non-binding offer at very advantageous conditions. In addition, you can receive a cashback of up to CHF 5'000.- with your financing. As a result, you get the guarantee of neutral advice and the best conditions in Switzerland. Apply discreetly for new financing or to buy back existing financing. So you will save money and benefit from great conditions!