Importance of saving

- Investment: Living without worrying about debts or the money needed to make ends meet is synonymous with peace of mind.

- Satisfaction of needs: Having a reserve of money, serves to solve real needs that can arise at different times of daily life.

Ways to save

It is important first to distinguish what our basic needs are, this will allow us to structure a savings plan avoiding unnecessary expenses.

It consists of keeping a sum of money at home. There are also other forms of savings such as: the purchase of goods such as jewelry or long-life consumer items.

Disadvantages

1. By having the money "on hand", you can be tempted to spend it.

2. Money at home does not generate returns.

3. Increased possibility of loss or theft.

Formal savings

It consists of having your savings in a formal entity such as: banks, finance companies, cooperatives, mutuals, public financial institutions, among other entities.

1. It is safe and allows the money to earn interest.

2. There are different products that fit your needs and allow you to withdraw money whenever you want.

Savings plan

Establish priorities and set specific and achievable goals in a given period of time.

Learn to live with what you have.

1. How much does it cost to meet each goal?

2. How much money do you have available right now?

3. How much do you have to save?

4. How long do you plan to meet that goal?

5. How often will you save?

6. How much do you have to save periodically?

7. What strategy will you use to save?

8. Keep track of your savings.

Consumption errors

Impulse purchases.

Always use credit cards.

Borrow above your maximum level of indebtedness.

Expenses greater than income.

Budget

The budget is nothing more than the analysis of expenses and income in a given period.

Income

Amount of money received by a company, person or family nucleus on a regular and/or sporadic basis.

Spending

Disbursement of a sum of money that can be in cash or other means of payment.

Cost

It is associated with producing a good or service, such as raw material, supplies and labor.

Difference Between Expense and Cost

The cost has to do with the assets, while the expense is related to the payments that are made in exchange for services.

Physical or material objects have a cost, while services represent expenses.

Expenses are not expected to generate income, but the cost of a product is.

Investment

Purchase of an asset with the intention that it will provide us with some benefit in the future.

Budget Advantages

Reduce the risk of defaulting on financial obligations, allowing priorities to be identified.

Design savings plans to achieve specific goals such as: the down payment on a home or a car.

See the reality of the financial situation and make adjustments when necessary, before making mistakes.

Maximum level of indebtedness

It is the limit that an individual has to borrow according to their ability to pay.

It is a percentage of the net monthly income, which is calculated by the difference between the monthly income and fixed expenses, and it is advisable not to go into debt with a monthly installment greater than 40% of the net monthly income.