We embrace the new year with enthusiasm, but with the feeling of continuing under the same economic 'influence': inflation, and a war in Ukraine with no sign of being resolved but which is triggering the cost of gas and other materials. All this responsible for tightening our pocket in recent months. Regardless, there are ways to safeguard our finances and achieve some financial stability if, and only if, we commit to the long term.
There is only one rule that is fulfilled and that refers us to the aviator and writer Antoine de Saint-Exupéry: a goal without a plan is just a wish. The same thing happens with finances. The desire to save is common, but establishing a plan to achieve it is not so common. If we want to keep our financial health proof against macroeconomic and political setbacks, we must literally act smart. That is, under the model called SMART (for its acronym in English).
When we talk about SMART objectives, what we mean is that the objectives or small goals that we want to achieve must be Specific, Measurable, Achievable, Realistic and scheduled in Time. Saving is not an objective, it is rather a consequence of a plan made according to the starting point, the available resources and the eventualities that may arise. Yes, it is, for example, saving 7,200 euros (specific and measurable) in three years (agentable) for the down payment of a car (attainable and realistic).
Before starting "the plan" we must take into account that, although January is the first month of the year and seems the most appropriate to establish a new relationship with our finances and be faithful to our initial purpose -to save-, there are "traps" that they can blow up everything: sales. What we call behavioral economics comes into play. That is, the one that starts from the fact that any decision we make arises from emotions.
If we understand our impulses, we will be able to identify and neutralize them. “In general, people think that we are very rational when evaluating prices, which is the variable that comes into play in sales, but this is not the case. We are guided by perceptions and emotions more than by knowledge and deliberate thought”, they affirm from BBVA. That they make a considerable discount, that there are few units left, are some of the biases that encourage us to buy.
The key is to evaluate if that purchase is really necessary and if the offer that precedes it is attractive and advantageous for our pocket. Which leads us to introduce the key instrument that will reveal this information to us: the budget. It is, as indicated by BBVA, the best tool to control expenses and income. If we prepare a budget when we go on a trip with the aim of not 'getting out' of it and not compromising our economy, why not do it during the year?
"Take care of the small expenses, a small hole, sink a ship," said Benjamin Franklin, one of the founding fathers of the United States. And he was right. To find out what the state of our economy is and to detect possible 'leaks', the ideal is to make a budget. That is, a calculation, planning and advance formulation of income and expenses during a period of activity. The budget helps us make better decisions and make sure that we are able to meet the obligations that we have contracted.
A figure from the INE helps us to understand its suitability. At the national level, according to the 2021 Living Conditions Survey, 14.4% of the population has ever suffered late payments (supply bills, installment purchases). To make a budget, first of all, we must identify the inputs (income) and outputs (expenses) of money, as well as their periodicity, predictability and level of need (always differentiating the fixed ones from those that may be expendable or not urgent).
Secondly, we must bear in mind that the budget is a living tool that we can adjust based on three scenarios: a balanced situation, in which there is no lag, but there are no savings either. An unbalanced situation (with income below expenses) that will require increasing income or cutting expenses. Or a situation in which the inputs are greater than the outputs, which generates a remainder that we can allocate to savings in the short, medium or long term.
According to INE data, our ability to save has decreased. On average, Spaniards saved 11.4% of their disposable income in 2021, which represented a decrease of four points compared to 2020 (the year in which the pandemic restricted many spending opportunities by default). To reverse it, nothing like preparing a simple and updated budget of the domestic economy to project realistic savings scenarios and adjust our rhythm of life when there is an imbalance.
The budget serves us precisely to guarantee that all fixed expenses are covered. Among them, supplies. Electricity, heating and water are the Holy Trinity of domestic spending, but they can also be savings. How? Applying common sense: checking consumption and comparing the contracted rate based on it, avoiding heat losses (checking door and window seals), and adjusting the thermostat (three degrees represent up to 20% of the bill), are some measures .
Money management is one of the main sources of worry and stress throughout the world, which is why it is not uncommon for year after year to find saving among the most coveted New Year's resolutions. Getting it or not depends (just like going to the gym or learning English) more than ever on ourselves and the plan we have drawn up to fulfill it.
