Saturday May 6, 2023 | 11:30 a.m.
In general, when analyzing the behavior of people regarding the management of their money and their personal finances, basically three situations arise that serve to somehow classify three scenarios:
monthly loss: when income is less than expenses;
Income = Expenses: when there is no loss, but there is no money left over; and
monthly profit: when income is greater than expenses and money is left over to save, accumulate reserves and invest.
In principle, if you are in a moment of loss, the first thing is to see if it is just a situation, critical or extreme, which may be partially or indirectly affected by the difficult general economic moment, but from which you hope to emerge and improve. In these cases, it would be prudent and necessary to spend time every week building and controlling a budget, following the numbers as closely and in detail as possible, and being creative to generate extra income, even for a period of time. Also ideally, propose a scenario of extreme temporary situation of reducing expenses to the maximum, with a focus on canceling debts, requesting help and assistance and tending to the strict search for order, planning and meticulous recording of income, debts and expenses.
If the situation is intermediate, that is to say that you are not at a loss, but you do not have a surplus of monthly money, surely you want to be better off and have some extra monthly amount to save. For this, it is necessary to dedicate time, even once a month, to control expenses, since, currently, consumption is what most affects the possibility of projecting a healthy and growing economy, mainly because of high monthly and annual inflation.
This is planning and projecting a budget each time the month begins, and controlling it on the 15th of the month and again at the end, to analyze deviations, variations; and separate which are really necessary and essential, from those specifically unnecessary and avoidable.
Focusing on the third situation raised (that is, that there is some money left over), the ideal is to protect savings against inflation and boost them in the long term.
For this, in relation to the control of expenses, a good exercise is to annualize each item of what is spent and calculate how much that money would be at the end of the year, if instead of consuming it, it is invested every month at a rate average interest. It will be necessary to establish an ordered monthly budget, so that everything that is left over has already been assigned a specific destination, either to be reserved for emergencies or unforeseen events (in this case, this money can be invested in MEP Dollars or in common investment funds of high liquidity and low risk that at least seek to protect the pesos from inflation) or for long-term investments.
You can think of diversifying the investment portfolio in variable income instruments, such as Cedear and Argentine shares (pesos), or fixed income such as provincial bonds (of good credit quality), negotiable obligations that pay interest in dollars, among other assets
What improvements can be made in the budget
Rent: review the contracts well by a specialist before signing, pay attention to commissions and expenses, negotiate the initial price and an indexation or annual increase or what corresponds by law.
Expenses: make sure that they are established by law accordingly (ordinary and extraordinary depending on each case) and by contract.
Services: request electricity subsidies and check consumption habits (care and maintenance).
Cable services and online platforms: decide what we consume from cable television, telephone and streaming platforms. Perhaps it is not necessary to contract all these services but to limit ourselves to one or two and with that reduce a high monthly fixed expense.
Purchases: this is one of the items in which the greatest deviations can be generated. If it is the supermarket, always look for offers, promotions and discounts. Ask for benefit cards and consider special days to buy with discounts. Check if there are promotions for online purchases. Tie yourself only to a list of what is consumed and try to standardize or always repeat the same purchase. Do it by quantity and the more you can stock or save. Meanwhile, it is ideal to avoid daily purchases without planning and in small nearby supermarkets.
Cell phone: ask for promotions with long-term benefits, discounts and bonuses. View plans from other companies and request price improvements.
Club or gym fees: a good alternative is to freeze the price, paying six or twelve months together in fixed installments without interest.
Clothing and clothing: it is one of the items that increased its prices the most in the last year. At this point, it is worth asking yourself how much you need to consume and think carefully before making the purchase. Try not to generate many fees or with several credit cards.
Fuel: see promotions with bank cards and apps.
Insurance: consult different brokers to improve policy quotes and prices.
Maintenance: look for prices, go reserving month by month an item to save in reserves for this point. Keep the money that we are separating in dollars or some investment instrument, liquid and that is updated by inflation.
In conclusion, apart from these three situations mentioned today, the more time is dedicated to the analysis of the personal situation of each one and the more tools are applied, the better results will be obtained to offset the negative effects of inflation, control expenses, generate savings and be able to invest.
