Financial stability is a dream for many entrepreneurs and even joint employees. But with such an unpredictable economy, it is always more difficult to plan your expenses and save enough to build wealth, especially for those who want to start a business from scratch.
In this article, we will share 21 simple tips for those who wish to have a healthier financial life, even without a very high income.
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If you adopt at least one of the following habits, you will see that over time your money will multiply more and you will be able to invest in the activities you love the most.
The first thing: from now on, tables and calculators will be your best friends.
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1. Record your fixed expenses
Fixed expenses are those that we pay every month, such as rent, electricity, internet, etc. We emphasize that you should also include in this list the taxes you pay throughout the year.
Having a record of fixed expenses is important to know how much family income you will have at the end of the month to invest, save, or even spend on leisure activities. If you are an entrepreneur, you should also monitor your business’s fixed expenses, such as rent and production costs.
There are several ways to perform this check, but we recommend maintaining a spreadsheet on Google Drive or Excel, as in addition to having these documents saved and not risking losing them, the tool even performs calculations of expenses and deducts from your salary/income.
2. Set aside at least 10% of your income each month
Before paying fixed expenses, try to set aside at least 10% of your income for investment. If you are an employee, this means you need to withdraw this amount from your salary, and if you work independently, this percentage applies to all your earnings each month.
The goal is not just to save for a period of time until you can spend it on something frivolous, but to apply this amount so that it can earn interest and multiply, becoming wealth in the future.
At first, it may be difficult to “give up” those 10%, but if you focus on the long-term result and adapt your lifestyle without making major sacrifices, in less than a year, you will already start to see results.
3. Keep your personal expenses separate from your business expenses
This advice is valid for those who already have a business or for those who wish to create one. Many average entrepreneurs and micro-entrepreneurs still struggle to separate personal expenses from business expenses. This can lead to losses and even bankruptcies.
This practice is harmful because you are not able to know if your business is generating income, as you are always deducting from the final amount. The lack of capital also prevents you from promoting improvements in your processes and enhancing your promotion, thus limiting the reach of your brand.
And finally, mixing personal accounts with business accounts can give a false impression of “wealth” and motivate you to spend more than you currently have.
We therefore recommend having two separate accounts if you want to be an entrepreneur. The good news is that you can use the legal entity associated with the account to engage in business plans for your company, such as health, food, etc., which also help you when saving.
4. Avoid loans
This type of financial movement is dangerous for small and medium-sized enterprises, as it represents a long-term commitment and high interest rates.
We know that it is not always possible to avoid them, as they are useful for capturing resources in the initial phase of your business. But whenever you need a loan, choose shorter terms and look for conditions in financial institutions, opting for the option with the lowest interest rate.
Keep in mind that financing should also be included in your fixed expenses spreadsheet for the entire duration of the contract.
5. Pay your debts as much as possible
If you already have a loan or financing in your name, consider paying more installments simultaneously, in order to reduce the contract time and, of course, the interest.
But be careful, we are not saying that you should put yourself in a sensitive financial situation just to pay your debts faster. Ideally, use extra money to advance the “maturity,” so do not shift fixed expenses or cash flow from your business.
An example of money that can be reserved to pay off debts is a payment received from freelance work you have done.
6. Research investment options
Investing is a way to ensure that you do not spend money on unnecessary items. But when we use the word investment, we assume that it requires prior knowledge.
Do you think so too? It’s exactly the opposite!
Anyone can invest! For this, we recommend studying the types of investments to choose the one that best suits your profile and talking to people who are knowledgeable about the subject.
Savings account
The savings account is quite well-known, as it is a very simple format. You can deposit your money every month.
This type of investment is suitable for people with a conservative profile because the income is certain every month.
Remember that the amount obtained from savings also depends on the amount applied and the time the money is invested.
Other options
Banks have many options for investing your money, and there are even other options like the stock market. You can learn more here.
7. Set financial goals
First of all, you need to establish the difference between goals and objectives. A goal is what you need to achieve, while objectives are the definition of the goal in quantitative terms and with a specified timeframe.
For example: your goal is to increase your business’s revenue. Your objectives could be to double the number of transactions in the coming months, increase the average ticket of your customers by 50%, etc.
Take the opportunity to read our post on how to clarify your business objectives.
8. Always pay in cash
This may sound cliché, but any finance specialist would say that we should only buy something when we have the money for it.
Therefore, making cash purchases is a very good strategy to save money, as it prevents you from spending what you do not have.
Many establishments offer discounts for cash purchases. This means that you avoid spending money and still have the chance to pay less for a product.
9. Avoid using credit cards
This suggestion is closely related to the previous point, as it serves as an incentive for cash purchases.
Does this mean you should never use a credit card? Of course not!
The credit card is a great convenience for the consumer, in addition to being the most commonly used payment method for online purchases. Our advice is to avoid using it when you have cash to pay, as the shared amount may incur interest and, if you add other expenses, you will only see the problem in a few months.
10. Set limits for variable expenses
Anything that is not a fixed expense can be considered a variable expense, meaning they can be postponed for another time.
But we know that, in practice, it doesn’t work that way. Sometimes we want to pay for small pleasures, like going out with friends, traveling, or buying a product that is not a very necessary item.
In these cases, we suggest setting a limit for variable expenses. Reserve a small amount for your leisure activities.
We know your goal is to save money, but if you are forced to make too many sacrifices, you may give up on the challenge. Establishing small rewards for when you reach your goals can be a motivation to continue.
Choose five items you consider superfluous and try to include at least one in your monthly budget.
11. Use financial management tools
If you are not familiar with spreadsheets and want to have less work controlling your expenses, know that there are software and financial management applications that can be useful for this task, such as Bill Remember.
Some offer the ability to download bank card statements, track your bank movements, and even insert reminders for bill payments. This way, you have control over everything that comes in and out of your account, without surprises.
12. Look for other sources of income
Currently, there are many activities you can do from home and earn money. Like affiliate marketing, which is the business model where you promote third-party products in exchange for commissions through sales made.
If you are creative and enjoy producing content, you can create a blog and write about a topic you love and find easy to teach. Along the same lines of content production, you can become a Digital Producer and create an online course to share your knowledge with others.
Anyone with a YouTube channel or a profile with many followers on Instagram can become a digital influencer and earn money through partnerships with brands, selling products, and publishing ads through Google AdSense.
Of all the examples above, you just need a computer with internet access. But if you do not like any profession we suggest, you can learn about other ways to increase your income from home.
13. Have an average budget
Freelancers have more difficulty planning their budget because they do not have a fixed income or profits from workers.
The advice to avoid being caught off guard is to average your business income over the past few months and identify the periods when you bill more/less, as well as the effects of the season (such as holidays and events) on your sales.
Ideally, your minimum income should be enough to cover fixed expenses. During months when you earn more than average, apply the difference in your preferred investment modality or save for unforeseen circumstances.
14. Use the internet to research prices
If you do a quick search on the internet, you will see that the same product can be sold on different websites at different prices.
Therefore, whenever you make a purchase, search online to find the most appropriate alternatives for your budget, because the mission is to save, so every penny counts.
There are tools that search for and buy deals, and that sort prices from lowest to highest. Another solution is to use market and e-commerce filters to find the cheapest products. These two examples serve the market for physical products.
If you are looking for a digital product, such as online courses and e-books, search for Facebook groups or sign up for producers’ lists to follow offers and compare prices.
Remember that, in the case of digital products, price is not the only factor that should influence the purchase. It is important to consider how much value the product produces, what problems it will help solve, and, if possible, find a high-value product at a price you can afford.
15. Participate in points programs
Points programs are perfect for those who want to save on purchases. In this model, you are rewarded for every purchase you make. You earn points and they can be exchanged for products and services, such as airline tickets, for example.
Most credit cards offer free points programs and you are automatically rewarded for every purchase you make.
16. Consider subscription packages
Do you have a product that is superfluous but you consume frequently?
Consider subscribing to a plan. You save more than buying items separately, in addition to the obvious advantage of receiving your purchase at home.
Wines, coffees, beers, and beauty products are examples of products marketed by subscription clubs.
In the case of digital products, monthly subscription programs are equivalent to membership spaces, which are simply virtual learning environments where students can consume material made available by the seller.
17. Buy second-hand items
With the evolution of themes such as minimalism and conscious consumption, buying second-hand items is a way to contribute to the environment and save money.
There are thrift stores and shops, and even flea markets, that sell second-hand furniture and appliances.
On the internet, eBay is a good example, even though it sometimes sells new products.
You can also join groups on Facebook and trade products and services with others.
Consuming second-hand products is a cultural shift, after all, we sometimes want to pay for a damaged or old item, but if you are interested in learning more about this market, start buying products from people you trust.
18. Do not ignore small expenses
Services that charge directly from the credit card, like Uber, Spotify, etc., can be traps for those who want to save money. Because you depend on money without realizing it, and when your statement arrives, you have several withdrawals.
Therefore, our advice is to not ignore small expenses. And even though you make purchases in small amounts like Uber, for example, this value accumulates throughout the month and can become a problem.
Prefer to walk and during the day use public transport, as depending on the distance, it can be your cheaper alternative.
Of course, you should not give up transport or music apps. But be careful not to use these services all the time and without a real need.
19. Avoid eating out
Eating outside the home is an expensive habit depending on the area you work in. For this reason, we suggest looking for cheaper options and even bringing your food from home if your workplace has a microwave.
As with the previous point, we are not saying that you should stop eating at a restaurant when you want or need to, but you can reduce those outings in order to save money.
If you work from home, it will be even easier to adapt to the new dietary routine. This change can also be good for your health, as you will have more control over the type of diet you consume and how you prepare it.
20. Save your extra money
Our last tip is a bit obvious, but it makes all the difference for those who want to manage their money and multiply it. It’s simple: do not spend your extra money.
Do you know about the payment that was not planned in your earnings? Such as a bonus on income, freelance work, or, in the case of the entrepreneur, a product launch with a better performance than expected.
Keep that money to apply it with the 10% we already directed at the beginning. Since this is money that was not included in your budget, you will not miss it when paying your bills.
Remember that the more you invest money, the higher the income, and consequently, the more money you will have to acquire a sustainable property or improve your business.
Do you have any financial planning questions you would like to share with us? Get to work!