The Financial Well-being Ladder is a tool with several tips to get rid of misconceptions about saving, control debts and learn to invest. Find out here how it can help you in your plans and how to use it for your benefit.
The idea, according to the experts, is to recognize which of the steps it is on and How are you going to achieve your goals?
Remember that saving is key, but so is controlling debt. You don’t need a lot of money to start
1. Have an emergency fund
Create a contingency fund that covers at least one month of household expenses. You can choose how much to allocate and assign a percentage savings before you start spending, according to Bancolombia, the company that designed the tool.
Once that saving is automated, you can forget about doing it manually and make excuses.
The fund can be used for commitments and obligations that are to occur. For example, you can save a percentage to pay your children’s income tax or tuition.
To have better control, you can use the pockets of your savings account, make a budget, to know what you are spending on and with the Budgets option of your bank’s application you can plan your monthly savings.
2. Pay off high-interest debt first
Before choosing to pay a debt, prioritize those with high interest, because they cost a lot of money and, in general, take up a significant portion of your monthly money.
To make it faster, you can use the “snowball” method.:
– Make a list of your debts, with interest and order from the smallest to the largest monthly installment. To find out the interest, review the statements and be sure to choose those higher interest debts for the snowball method. For example, credit cards, free investment credits and commitments with other people.
Make the minimum payment on all but the smallest installment debt. In that, is where to make additional payments to pay it ahead of time.
– Then move on to the next smaller monthly payment debt and use the money you missed on the first debt for additional payments on the second, and so on.
Debts with high interest could generate greater damage in the long term. Don’t let them accumulate. If necessary, refinance them or look for alternatives paid
The General Pension System in Colombia has two bodies: the Average Premium (Colpensiones) and the Individual Savings (private funds).
3. Think about your retirement
The idea is that you invest at least 10 percent of your salary for your retirement. If you can’t do it with all that, start somewhere and work your way up until you do.
Look for investments that generate income and that they grow in the long term for when you want to stop working. But, be careful, for them to grow it is necessary to reinvest the income from those investments to generate even more money, and thus continue to grow for many years.
A good technique is to invest when you have extra income or excess liquidity such as bonuses or salary increases.
4. Investment
Regardless of how small your savings start, keep in mind that ideally, in addition to having the resources in the emergency fund to cover between 3 and 6 months of expenses.
You can define goals and develop action plans to achieve them. for example: buying a house, going to university or taking trips. For this you can look for alternatives that allow you to advance: discounts or subsidies.
The virtual investment can be the ideal to have the money separated and organized. Just as it is, the use of digital pockets so as not to have the resources available to spend.
5. Look for growth
The investment alternatives you seek must generate income in the future, be it a second home for investment or business.
Once your retirement investment percentage increases, your investments should ideally be capable of generating 20 percent of your monthly income.In addition, there you can also be creative and diversify your portfolio, have digital investments, homes for recreational use or for short-term rental.
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