The financial reserve, also known as the emergency reserve, is an amount saved exclusively to be used in unforeseeable emergency situations, such as Taxes for small business. This amount should be calculated based on your monthly expenses. Thus, a good financial reserve must contain enough to cover 6 to 12 months of all your expenses in normal situations. The size of the savings of your company will depend on your spending and the financial risk of your profession or occupation.
Be cautious, yes
The consumerist appeal means that we are influenced, all the time, to buy items that are completely superfluous and of little durability. Supermarkets, stores and shopping malls are structured so that consumers buy thoughtlessly. In order not to fall into this trap, never buy without thinking hard. Check and ask yourself –
- Do I really need this?
- Will I get into new debt when I buy this product?
- Is the cost-benefit of the brand worth it? Are there other cheaper options?
- Can I refuse any object I already have to achieve the same results?
If you come to the conclusion that actually purchasing the product or contracting the service is necessary, be sure to research prices and, if possible, ask for discounts and opt for cash payment. Spend less than your company profit. So, before investing your resources in the purchase of a luxury car or an apartment on the beach, see if spending on these items will not disproportionately harm your budget for the month. Remember that your salary must account for numerous expenses, and these luxuries are completely expendable.
Set financial goals and objectives
Managing your money efficiently can be an extremely painful task if you are not motivated to do so. After all, we are encouraged to live only in the present, buying and consuming objects that allow us momentary pleasures. However, to achieve bigger dreams and enjoy a certain financial tranquility, it is necessary to give up some futility and focus on the purposes of the future. Only with well-defined objectives and goals will it be possible to save money and reap its rewards. By doing this exercise, it will be easier to establish effective financial planning and avoid consumer temptations.
Record all your expenses
Have you ever had the feeling that you spent all your money and didn’t know where it went? This impression of money not having paid is very common and happens to practically everyone. Thus, to resolve the lack of control over your income, it is necessary, first of all, to record all your expenses, however small they are. Make it a habit to record all your expenses in real time. Did you like our content? So don’t waste time and get expert’s help.