RCS – Business Default

“Money is the ruler of the world,” is a saying that we all know very well. But who is the ruler of money? We. Everyone is the ruler of their own money and decides how to spend it or invested. Unfortunately, we could not and will not be able to learn how to handle money (financial literacy) at school, so the aforementioned knowledge must be acquired on one’s own initiative.

Are you financially literate enough?

Financial literacy is a phrase that many are afraid of. they avoid, because under it they imagine a series of complicated or even manipulative advice. But it is necessary to realize that for several years we have been living in the age of capitalism, where not only basic knowledge of handling money is needed, but also financial literacy, which also helps us in decisions about investing it. In addition, we have developed into a consumer society that accumulates a variety of things (products and services) with which we more or less try to make our lives easier. Day after day we are tested on how we will spend or invested their money.

Financial literacy covers a very broad content of skills and knowledge about handling money, but fundamentally it starts with ourselves, our way of thinking, level of responsibility and awareness and education about finances. If you want to start with the first (basic) steps on the way to responsible management of your own money, follow the following basic steps or advice.

How do you feel about your money?

Consider what money means to you. What kind of attitude do you have towards it and what beliefs related to money do you have in your mind. Namely, it is impossible to embark on the path of financial literacy assuming that money is something bad for you, and that you equate the desire for money with greed, gluttony or selfishness. Money in itself is not evil, as many like to point out, only people can be evil if they have it. So money (and how we handle it) says a lot about ourselves. Namely, the reasons behind the desire to have more money can be completely genuine and honest, such as a better quality of life, care for health and family, helping children to become independent, a good life in retirement, a charitable note, etc.

After you have cleared your attitude and feelings towards money, start observing yourself and your finances in the coming month. Track how and on what things you spend money. This is not about starting to limit your spending, just observe and record at this point. Write down all the expenses you have each month (fixed and variable). E.g.: living expenses, household expenses, fuel, telephone, insurance, credit, etc. Watch how you think when you spend money. Are you often tempted by sales, promotions and discounts? What is your mood when you spend money? Just watch yourself.

Do an expense analysis

After the end of the month of observing the handling of money, make an analysis of how you spent your money and how much (if any) you had left at the end of the month. At this point, it is very important that you know how to manage your monthly income (salary) economically. What does that mean? Many people enthusiastically start spending when they receive their salary, while there is nothing left for investments at the end of the month. The formula for economic behavior goes like this:

When you receive your monthly income, you first deduct all monthly fixed costs (insurance, credit, living expenses, household…), after that you deduct the monthly amount that you allocate to saving or investing, and what remains can be spent on i. impulsive purchases.

With the help of this formula, you will suddenly realize that you want to know more about financial literacy, because it can lead you to more efficient and economical handling of money.

In the third step, it is important to think about your short-term, medium-term and long-term desired financial investments. Write them down for a period of one year, 5 years and 10 years. Namely: when we have a clear picture of our future (new apartment, house, own business, education…), it is easier to maintain daily, monthly and yearly discipline in managing money economically. We must know our t. i. “why”.

After that, prepare a monthly plan on how you will realize the mentioned investments. Be honest with yourself and don’t leave your financial future to fate. Do not avoid responsibility by saying that you are not into finance or that you have no knowledge about it. Set clear goals and be disciplined. Learn about financial literacy. Read books and articles about money, attend some seminars, start to understand the “money game”. Above all, know yourself, what type of investor you are.

Where do you spend the most money?

You too have probably shook your head thoughtfully at the end of the month and wondered where all the money went this month. You won’t believe it, but many studies have shown that the most money is spent on small things. A euro here, a euro there, and all of a sudden we are at the end of our monthly salary. How to avoid this? With discipline.

Instead of paying for a bag at every store (even if it’s only 20 cents), get into the habit of carrying one with you. If you only visit 10 stores a month, that’s 2 euros per bag per month, 24 euros per year and 240 euros over 10 years. When you calculate it like this, it’s not a little. Better invest 240 euros today and carry your bag with you for the next 10 years.

Instead of visiting stores impulsively, check when certain stores have discounts or your products discounted. Plan your visits to the shops economically. You go to the store with a shopping list and focus only on what you came to the store for.

If you are shopping with children, do not let them blackmail you with things they want to buy. Instead of a new toy that your child will play with for an hour a day for a few days, arrange an afternoon game with the ball he already has at home. Hanging out with you and having a fun ball game will definitely be a cheaper and much better choice for him and you. Let this advice resonate in your mind, especially during the coming holiday month.

The little things listed above and many more lead to big results and it’s no different when dealing with money.

How to create savings?

Hard, you will say. But with a little self-initiative, discipline and clear goals, even the impossible becomes possible. It is important that we clearly define our priorities. What means the most to us in life and what we will pay the most attention to, and consequently money. Once you have clear goals for what you want to save for, start planning where you can save money. Many people forget that they can spend their time instead of money. They just have to take it. Let’s look at examples where you can save money by investing time.

Saving for retirement and life insurance. The sooner you think about it (at the age of 25, for example) and take action, the less money will have to be invested for this purpose. Take advantage of the time.

Food. We all know that healthy (bio, eco…) food is more expensive than industrially produced food. Instead of wondering why healthy food is so expensive, ask yourself why industrial food is so cheap. If you have a little talent for growing food at home, plant your own garden with lettuce, tomatoes, peppers and carrots and proudly grow your own bio/eco food. Why not? Parsley, basil and pepperoni on the balcony or windowsill of your apartment can also be a start.

Clothing and footwear. Instead of buying cheap clothes for one season, make a conscious purchase of quality clothes for several seasons. “I’m not rich enough to buy cheap,” is a saying that still rings true today. Why would you buy a new jacket every year for 40 euros, which adds up to 400 euros in 10 years, when a very high-quality down jacket that you can have for 10 years or more costs only about 200 euros. The same goes for footwear. Renting clothes can also be a way to save a lot of money.

Admission. Why should you go on vacation in the high season, when the prices for some destinations are sky high. Plan a vacation in the off-season and save up to half of the amount intended for vacation.

Transportation. If your work does not require field work or a dynamic work schedule, use group transportation as often as possible or, in the warmer months, cheaper forms such as bicycles, rollerblades, skis… Not only will you save money, it can also be much more fun.

My own master. This form of savings is the rarest nowadays. Since today we buy increasingly perishable products, it is rare for anyone to decide to repair an existing product (machine, appliance, furniture, etc.), since it is within reach to buy a new one. But with just a little self-initiative, we can still repair the damaged product ourselves, if possible, and thus, at least for a while, until the product is completely destroyed, save for the purchase of a new one.

You could write a whole book on money-saving tips, but from the aforementioned title, only one universal tip is worth mentioning: “If you keep buying things you don’t need, you’ll soon have to sell the things you do need.”

And finally. Investing in financial literacy and effective money management will pay off handsomely. Don’t underestimate the value of money, question your spending habits, and if possible, never depend on just one source of income. Invest in order to gain new sources of income and thus turn the “money game” in your favor. Instead of you working for money, let money work for you.