The ability to manage money competently is especially valuable quality in the conditions of financial crisis, when the purchasing power of the population is shrinking, inflation is rising, and currency exchange rates are completely unpredictable. Below are the common mistakes related to money affairs along with financial planning advice to help manage your own finances properly.
The budget is the most basic thing in financial planning. It is therefore especially important to be careful when compiling the budget. To start you have to draw up your own budget for the next month and only after it you may make a yearly budget.
As the basis takes your monthly income, subtract from it such regular expenses as the cost of housing, transportation, and then select 20-30% on savings or mortgage loan payment.
The rest can be spent on living: restaurants, entertainment, etc. If you are afraid of spending too much, limit yourself in weekly expenses by having a certain amount of ready cash.
“When people borrow, they think that they should return it as soon as possible,” said Sherrie, a certified financial planner and co- founder of Savvy King Consulting. And at its repayment spend all that earn. But it’s not quite rationally “.
“Usually when people plan to invest, they only think about profit and they don’t think that loss’s possible”, Sometimes people do not do basic mathematical calculations.
For example, forgetting that if in one year they lost 50%, and the following year they received 50% of the profits, they did not return to the starting point, and lost 25% savings. Therefore, think about the consequences. Get ready to any options. And of course, it would be wiser to invest in several different investment objects.