5 steps to organize your personal finances

There are steps to organize your personal finances which are fundamental to avoiding complications. The process for keeping your financial life healthy is simple: spend less than you earn. However, this is one of the biggest problems, as people don't put this formula into practice on a daily basis.

5 steps to organize your personal finances

In principle, taking care of personal finances is essential in everyone's life. However, the process of getting organized financially is something that raises questions, such as the formula for having a healthy financial life. 

There are 5 steps to organize your personal financesThese include maintaining a balance between the amount you receive and the amount you spend each month. With these strategies in hand, you can make strategic decisions about your own money. 

This procedure is essential to avoid problems related to disorganization. In short, if you want to optimize your financial life, the first step is to know these simple but practical steps. Check them out below:

1. understand your financial reality

 First of all, it is essential that people understand their financial reality. This is a more manual procedure than others, as it involves writing down the main information about your money. 

In this sense, write down all your monthly income and expenditure. This data is important for taking the next steps and getting organized financially. Although it's a manual step, it's essential. 

By completing this stage, it is possible to discover their financial reality. In this way, consumers can identify the main points of concern in their account and find the best solutions to resolve them. 

Another important tip is to write down all your expenses. There's no point in having a high-paying job if your standard of living compromises your finances. Create spreadsheets, notebooks or use financial control apps. 

2. Create savings goals

People can't just create economic goals with the money left over at the end of the month. It needs to function as an objective. In this way, you can have greater control over your expenses and create a financial projection. 

To create realistic goals, consumers need to have created a spreadsheet with all their financial information. With this information in hand, it is possible to determine a monthly amount to create their reserves. 

When you receive your salary, immediately set aside the amount you have set aside to build up your savings reserves. To avoid spending the money you have saved, put it in another available account. 

3. Avoid unnecessary expenses

It's common for people to spend unnecessarily. In this sense, it is important for people to restrict their daily spending, especially if it is superfluous. As with the previous tip, it's worth setting a savings target. 

With the target set, consumers follow a monthly consumption limit and cannot spend more than it. To create a spreadsheet with these expenses, remember to separate them into categories of purchases. See below: 

• 15% of the value for supermarkets;
• 10% of leisure value;
• 5% of the value for clothing and other accessories. 

It's important to note that consumers don't have to spend this amount every month, but there is a limit set for investing in each type of account. This is one of the most important advances for those who want to organize their financial lives. 

If you have any unforeseen circumstances or priorities during the month, give preference to what is essential. At times, it's essential to weigh things up. This simple habit not only controls consumer spending, but also significantly improves your financial life. 

4. Stay away from new debts

If you don't have any debts, you're already on the right track, especially when it comes to maintaining good financial health. On the other hand, if you do have some, think about how to get rid of it and don't take on any new debts until you do. 

When bills are overdue, they lead to other costs, as fees and interest are added to the final amount. This is one of the biggest problems in Brazilians' financial lives. In this sense, whatever money comes into your account, use it to pay the bills. 

Remember: your main objective is to get out of debt, before investing or thinking about new business. To solve this problem, you can enter into an agreement with the institution, negotiating or paying off the debts in installments. 

This is a fundamental procedure for people who want to lead a good financial life. When they get rid of these debts, consumers get rid of a huge stumbling block on the road to financial organization. 

5. Create a reserve for emergencies 

When consumers establish a financial plan and control their spending, there comes an extremely important moment: creating a reserve for emergencies. This is the amount responsible for providing peace of mind, especially in crisis situations or those that go beyond initial planning. 

Experts recommend creating an emergency reserve that corresponds to six months' monthly earnings. However, this money should not be left idle in your current account, as you would be losing purchasing power due to inflation. 

In this sense, it is important to allocate the money in a safe and highly liquid investment, such as fixed income. By following this procedure, in addition to being able to redeem the money quickly, it also offers consumers good returns. 

By setting up an emergency reserve, people can stay organized with more peace of mind, especially in difficult situations. That way, their financial planning will be steady and smooth. 

When is the best time to start financial planning?

Now that you know the importance of organizing personal finances, it's important to plan and invest in good business. What many people have doubts about is when is the best time to start financial planning?

The answer is personal, i.e. it's up to the individual to decide whether they want to keep their finances balanced or not. By maintaining the habit of financial health, consumers are able to map out plans for the short, medium or long term. 

By creating a good financial plan, people can make their dreams come true more easily. What's more, they avoid falling into problems related to expenses or bills that snowball.