How not to spend more than you earn?

Have you ever found yourself at the end of the month not understanding where your salary has gone? It seems like the money has evaporated and the bills keep piling up. Yes, this is a very common situation, but the good news is that there is a solution.

It's not a big deal. Controlling your spending and ensuring that you live within your means is possible. Today, we're going to talk about how not to spend more than you earn. Shall we go together?

Understand your spending: Do you know where your money goes?

The first question I ask is: do you know exactly how much you spend in a month? It seems like a simple question, but most people don't have a precise answer. Don't worry, if you don't know either, this is more common than you might think. The point is that without clarity about your spending, how can you control your finances?

So before you do anything else, start by writing down all your expenses. It could be in a notebook, a spreadsheet or even an app. Write everything down. The coffee, the streaming subscription, the birthday present for a friend. All these little things add up, and that's often where your money slips away without you realizing it.

Prioritize What's Important: Do you know how to differentiate between the essential and the superfluous?

Once you understand where your money is going, it's time to reflect on your priorities. What is really essential to you? Some things are non-negotiable, such as rent, utility bills and food. But what about those expenses that are considered superfluous? Subscriptions to services you don't use, that trip to the cafeteria every week or the impulse purchase of clothes that will be forgotten in your closet?

How about stopping and thinking: do I really need this? This kind of questioning can be a powerful way of changing your relationship with consumption. After all, it's not about living with limitations, it's about learning to say "no" to what doesn't add real value to your life. What do you think you can cut back on to improve your finances?

Have a plan: What do you want to achieve?

Another important step is planning. Now that you have an overview of your spending and know how to differentiate between the essential and the superfluous, it's time to set goals. What is your goal? It could be to get out of debt, save money for a trip or buy something important. With a goal in mind, it's much easier to avoid impulse purchases and focus on saving money.

Set up a monthly budget. Define how much you want and can spend in each category. Set aside a portion of your salary for emergencies and another for your long-term goals. This will help you to have a clear control of your limits. And remember: it's not about depriving yourself of everything, it's about having a plan and respecting the limits you've set. How do you think you'd feel if you managed to achieve that goal you've always wanted?

Tackling Debt: What's your plan for getting out of debt?

Debt is a major villain when it comes to spending more than we earn. Often, debt starts small and, without realizing it, you end up in a snowball of interest. If you have debts, it's important to tackle them head on.

List all your debts, their amounts and interest. Prioritize paying off those with the highest interest rates or with conditions that could deteriorate quickly. Negotiate when possible. Many companies are open to renegotiation and can facilitate payment. And remember: the important thing is to take the first step. Even if it's a small amount, it's a start. How would you feel about taking the first step towards paying off a nagging debt?

Use your Credit Card with Conscience: Friend or Foe?

Credit cards can be both an ally and a villain. It makes our lives easier, but it can also be the reason for debt. So, how do you use your card? If the answer is "I use it for everything", you might want to think again.

Only use your card for planned expenses. Make sure you have enough money to pay the bill in full when it arrives. And never, ever pay only the minimum amount of the bill. Credit card interest rates are extremely high, and that's how debts get out of control.

Why not try paying more with debit or cash? That way, you feel the impact of the expense immediately and it's easier to control. Have you tried this method?

Create the Habit of Saving: What can you do for your future?

It's not just about cutting costs, but also about learning to save. Even if it's a small amount, getting into the habit of saving a little every month is essential. This guarantees a reserve for emergencies and helps make dreams come true.

Don't wait until you have money left over to save. If you put it off until the end of the month, it's unlikely to be there. How about reversing the logic and saving an amount as soon as your salary hits your account? It could be 5%, 10% or any amount that suits your reality. The important thing is to make it a habit. And remember: saving is about the future you want to build for yourself.

How do you deal with the unexpected? Are you prepared?

Life is full of surprises, not always good ones, is it? Unforeseen events happen, and they have the potential to destabilize your finances. That's why having an emergency reserve is essential. This fund is precisely for those situations that weren't planned for: a health problem, an unexpected car repair or any other urgent expense.

If you don't already have an emergency reserve, start slowly. Set a target amount, something that gives you and your family security. After all, sleeping soundly knowing you're prepared for the unexpected is priceless, don't you think?

See also: Nubank announces new function to increase credit limit

December 7th, 2024