By Fillipe Gomes – Swood Convida
Those who have already started the phase of life where time is exchanged for money, that is, the time when one always works, have already heard that every month it is important to save some money. And at the beginning of every month you have that question: “I wonder how much will be left over to save? Creating a savings account requires accumulating money over a period of time, and for this to happen you need to have money left over at the end of the month. But is it still possible to save some money after paying expenses?
Let’s start with a very simple tip, map your expenses, that is, try to put together a spreadsheet where you can see what you spend. Separate the expenses by category, such as household expenses, leisure, transportation and see how much it represents of your monthly budget. The intention is to visualize how much these categories impact on the budget.
After checking how much is spent in each category, it is time to ask yourself, are all these expenses necessary? Is it not possible to cut some of them, or perhaps reduce them? Of course, some of these expenses are basic and it will not be possible to change much, but others will. These “extras” should be questioned, such as spending on credit cards, overdrafts, transportation and food apps. You see, it is much easier to order food by app than having to prepare your own food and it is much more comfortable to get around with an app car, but it costs much more.
Thinking about the first two expenses, a reflection is needed: why is credit card spending high? Why is it necessary to use the bank’s overdraft facility? Of course, unforeseen things happen and sometimes we need to use them, but this has to be occasional. If you need to use any of these resources constantly to close the month, it means that you are living a life with a standard above what you can afford and it’s time to take a step back.
Now that a sweep of expenses and an alignment of the standard of living has been made, we will establish how much we will save per month, this can be done with a fixed amount or with a range of your budget. Once established, you already know how much you can spend during the month. Try not to treat your savings as if it were the leftovers of the month, prioritize it.
Remember, saving is a habit and requires patience to achieve long-term goals and it is always good to mix this with short-term goals. For example, I want to save for my retirement (long-term goal), but next year I plan to travel on holiday (short-term goal).
Well, after starting to have some money left over during the month, it’s time to take another step. This money cannot stay still under the mattress, it is necessary to invest and this investment has to be in accordance with your objectives. For that, look for a specialized institution with people who are able to help and advise you. There is no miracle investment that will give you high returns, there are investments that are in accordance with your goals or not.
I hope that I have helped you to get a “start” as a saver and that you manage to get financially organised so that you can achieve your goals.
Fillipe Gomes is graduated in business administration from the Pontifical Catholic University of Rio de Janeiro (PUC-Rio) and has almost 10 years of experience in the financial market. He has worked for large companies such as XP Investimentos, BNY Mellon and MAG Group.