Management of personal finances

April 18, 2019

2 min read

The management of personal finances increasingly assumes a role of extreme importance in personal and family balance. Nowadays, we live surrounded by stimulus to consumerism, whether through traditional means of communication, social networks or fashions created by society. To cope with all this consumerism, families must create mechanisms of self-protection, in order, to maintain a financial equilibrium. The future is uncertain, so we need to be prepared for it and for the heights of crisis that may arise. For this, the creation of savings takes on a central role, to deal with some unforeseen circumstances and to go through them more calmly.

To help manage personal finances, such as happens in companies, families should prepare a budget as much as realistic as possible, including fixed expenses such as rent, electricity, water, gas, insurance, among others, and variable expenses such as clothing, vacations, among others. On the other hand, families should also be considering an amount for savings. If families can save more than the expectation it will be better, but a minimum amount for savings should be defined and families should make that effort monthly. After the budget is implemented, it is important to families to keep it in mind, to comply with it and to not create many exceptions throughout the year. The budget is a tool to help families to not spend more than they are able to.

When we speak of personal finance management, it does not co-exist with impulsivity. Financial decisions should be rational and free of momentum. Nowadays, in families with children, it is important to give them this example. It is easier to have a financial education from the beginning than to change mentalities years later, so financial education should also be part of our children's education, and it is important for them to realize that their financial future will depend on their choices and decisions. For their part, parents should be careful not to give in to the temptation to compensate for affections or the time that they do not spend with children with material goods and financial expenses.

At the end of the day, it is important that all financial decisions are weighted rationally, Choices should be done rather than spending on everything and family budgeting should be respected and monitored to maintain a healthy financial balance. Above all, it is important to realize available income for the family and how much they can spend per month and so avoid excessive debt.

Ana Alves

Strategic Planning and Controlling Assistant