Financial education continues to be a pending subject for many Spaniards. “The lack of knowledge in economic matters prevents us from making good decisions and does not help us make ends meet or save,” explain the experts at the financial products comparator HelpMyCash.com. However, having a sufficient base to be able to manage our money correctly is simpler than it seems.
This October 5th marks Financial Education Day, a day that remembers the importance of learning to manage our money.
A habit as simple as opening an application on your mobile phone and writing down all our expenses will help us control how much money we spend each month and what we use it for. Thus, it will be possible to assess whether, for example, one pays too much for electricity or whether leisure consumes too much of one's income. Once our expenses have been analyzed, a monthly budget can be prepared to help save.
Credit cards and personal loans can get you out of more than one trouble, but resorting to them regularly can end up putting a strain on your pocketbook. You have to go into debt with caution and resort to credit punctually, never to cover day-to-day expenses.
Most experts recommend not allocating more than 35% or 40% of your income to paying off your debts as a whole, including your mortgage. Logically, this barrier is not immovable and depends on salary, family responsibilities... In any case, it is an objective that must be tried to achieve so as not to put finances at risk. If instead of a mortgage, you pay rent, the percentage should be reduced to 15% if you are over 55 years old or to 20% if you are younger, according to the Bank of Spain and the CNMV.
Saving, no matter how little, is one of the basic principles for having a healthy domestic economy and being able to overcome unforeseen future events. Set specific savings goals that encourage you to save some of the money, such as buying a car. Some entities allow you to create subspaces in your accounts, also called piggy banks or goals, to save for specific objectives.
But how much should you save each month? According to the 50/20/30 rule, the payroll should be distributed as follows: half for essential expenses, 30% for expendable expenses and 20% for savings. That money can be made profitable with one of the best savings accounts on the market, which will allow you to earn up to 5% TIN.
Savings must be prioritized and made into a habit. Saving at the beginning of the month instead of at the end will allow you to be consistent and meet your goals. To achieve this, you can schedule an automatic transfer during the first days of each month from your checking account to a savings account, so you don't even have to worry about doing it manually. In addition, “this way you can separate savings from everyday money and avoid spending it,” added sources from HelpMyCash.
Buying an apartment, a car, saving for retirement... The sooner you start, the easier it will be to achieve your goal, especially if you take advantage of the advantages of compound interest. “The sooner you start saving, the less effort you will have to dedicate to achieving the same final balance, since thanks to compound interest, not only the money will be profitable, but also the interest earned,” they explain from HelpMyCash.
Financial education is not only based on saving, but also on correctly managing the budget to make ends meet. And one way to achieve this is to be intelligent consumers, capable of making the right decisions to manage money.
Before consuming, you have to compare to find the product with the best quality-price ratio. Comparing will help you save, for example, on electricity or gas rates or stop paying bank fees. Nor should you contract any product that is not understood, this way you will avoid taking unnecessary risks and accepting abusive clauses.
Concepts such as TIN, APR, commissions or Euribor will help to better understand how banking products work and, above all, to understand the fine print of the services. It is easier than it seems to be. You can resort to the multiple sources on the internet such as the Bank of Spain's Banking Customer Portal or comparators such as HelpMyCash.com, which dedicate a large part of their space to resolving any doubts that consumers may have.
Not all products hide the same risks. While accounts and deposits are liquid products, with some exceptions, and safe, which have the protection of the Deposit Guarantee Fund, others can register negative returns and cause you to lose money. Financing products are not free from danger either: some, such as credit cards, are complex and expensive and others may hide abusive clauses. It is important to understand the products that are contracted and know the risks they entail.
Regularly reviewing the account and card statements will not only help us know the balance, but will also allow us to react quickly if we are a victim of fraud. If any suspicious movement or an unrecognized charge is detected, you must notify the bank as soon as possible and cancel the affected card.
