Keeping household expenses at bay serves a dual purpose. First get to the end of the month. Then, to be able to save something in case an unforeseen event arises. From the breakdown of the car to an emergency work at home, having a mattress prevents having to go into debt, continue to the limit and also with a credit to pay.
The first step to order finances and save is to be clear about how much money we enter and where it goes. "The important thing is to identify how much we spend, see what percentage of our income it represents and see what expenses are expendable and likely to be reduced," explains Manuel Morales, global head of digital products at BBVA. To know what to cut, it's time to prioritize. "The first thing we have to do is face vital expenses: housing, food, education, transportation... Only when we have covered this can we allocate a budget for other types of expenses that provide us with quality of life and enjoyment, since Otherwise, we can find ourselves upset if we have to assume an unforeseen expense and we don't have the money to cover it," he says.
Thinking about the latter, how much do you have to have saved? The advice is "to have a cushion that allows us to face the expenses of the next months, ideally six, in case we are given an unforeseen situation." That is, half a year of the expenses that are made recurringly.
To meet that savings there are guidelines such as the 50/30/20 rule. With this scheme, 50% of income goes to fixed expenses that cannot be waived -housing, food-, 30% to dispensable expenses, such as leisure, and 20% to savings. "This 20% will vary according to income and situation, but the important thing is to know that if we want to save, we will have to identify and reduce some item that is not essential."
There are several ways to achieve this. One is a budget, the main one. Setting what the money goes to monthly or annually helps to know how expenses are divided between essential and dispensable. Good planning is also worthwhile, creating savings goals, categorizing expenses to know what is being spent more on... The idea is to create a routine, like the gym or a diet. With stability, "little by little we are going to improve our financial health," says Morales.
To achieve that routine you will have to go down to detail. In recent months, with the push of inflation, calls have resurfaced to control ant expenses -daily, which seem little but in the end they mean a good bite, like coffee every morning-, vampires -fixed supplies that are too high due to leaks or problems in the facilities that make you spend more- or ghosts -the subscription to the gym that you do not go to or a platform that is not used-. In bank apps you can check the categorization of expenses to define whether they are expendable or not. One to keep an eye on is supplies and subscriptions, where you can see recurring expenses such as electricity and telephone, and other less necessary ones such as video and music platforms. With that, more awareness is gained "and you can try to control or reduce it."
All this does not imply that one can indulge or relax spending a bit in specific cases. "As long as our capacity allows us, there is no problem," they maintain at BBVA. Same with credit. "It's not bad or good, it just has to be assumable and sustainable." That is, flee from over-indebtedness.
