- Limit (and even eliminate) the use of deferred debit cards
Deferred debit cards are a real brake on you to manage your finances.
They are neither more nor less than a debt towards your bank, which distorts the vision of your expenses during the month.
Depending on the banks and the bank statements they generate, it isn’t easy to read your bank balance before you get your paycheck.
If you want to use them, you have to reserve them for business expenses that you may incur and reimburse to you by your employer.
- Know your fixed charges
Whether you are self-employed or employed, it is always essential to have an excellent knowledge of your monthly fixed charges.
A priori, we often tend to minimize them, and when we start to sum them up, we can reach fixed charge ratios greater than 70% of total charges. At this stage, it is then customary to feel “suffocated” by the weight of these loads.
To correct the situation, you sometimes have to question a lifestyle that is not suited to your income.
- Monthly all expenses (as much as possible)
Your salary is monthly, and your costs must also be. Monthly as much as possible: Taxes (on income, housing tax, property tax), insurance premiums, condominium fees … whose deadlines are not always monthly.
We are sometimes tempted to postpone specific deadlines to face one-off financial difficulties or on the pretext of not wanting to “advance” money to the state or certain suppliers.
If you properly provision these charges on bank booklets, this is already a good thing, but it requires excellent rigor. On the one hand, you need to make sure that you regularly fund to cover the charges you anticipate, but on the other hand, you need to resist the temptation not to use this money for other purposes!
Monthly payment of ALL its fixed costs seems to us to be the optimal solution. It saves you an unnecessary mental load and puts you in front of your financial reality as soon as possible (and not in December, when it’s time to fund the holiday season).
- Make your banker an ally
We recommend that you maintain a healthy and regular relationship with your banker. You might think that hitting the right bank advisor is more of a fluke than a management choice, but we disagree.
You should see your banker as a service provider (financial in this case), a right partner with whom you can maintain frank and useful communication, in the service of your financial situation.
Your banker will thus be more inclined to offer you financing solutions adapted to more strained financial situations.
If you do not manage to have this kind of relationship with your banker, perhaps you should consider changing or compensating for these shortcomings by using a coach specializing in personal finance?
- Don’t give in to promotions at the expense of your cash flow
Promise, if you decide to keep your clothes dirty, we won’t allow ourselves to be judged, especially since our coaching services take place remotely.
More seriously, this question is an opportunity to oppose two principles that should allow you to make the right trade-offs for your budget: savings and cash.
When faced with a volume purchase like this detergent, it is difficult to resist the temptation to buy in large quantities for a more attractive unit price. However, by too often making a purely “economic” choice, you risk exceeding your budget and entering a bank overdraft.
In many cases, when your budget is tight, it is better to smooth the expense over time, even if it is more expensive. It is more realistic to consume strictly what you need for the current month, and not for the next three months.
- Manage your finances with a real provisional budget
As you can imagine, we recommend the construction of a monthly budget and regular monitoring of actual expenses against the estimated budget (once a week is sufficient). It is an indispensable tool to reconcile your bank account and your life. And that’s of course what we train our clients to do.
The expression “to follow your accounts” translates the fact of “undergoing” the situation. If you look at what you spent at the end of the month without setting a goal beforehand, it is too late: you risk being in a budget deficit, i.e., having consumed more than your income allows you.
And the more you accumulate budget deficits, the more difficult it is to compensate for them after that, it is a vicious circle towards a first debt, then the interest which accumulates until forming an excessive deficit.
The forecasting work not only allows you to aim for a balance between your expenses and your income, but it is also an opportunity to set yourself realistic savings goals that will enable you to gain peace of mind and freedom in your life.
- Set aside at least 10% of your income each month.
As we said earlier, savings are an essential buffer to your financial stability.
It is essential to understand that the savings rate matters more than the amount you save, and therefore does not depend on your income.
If you save € 70 on an income of € 1000 per month, that represents a savings rate of 7%.
It’s much more virtuous, and it will have a lot more impact in the long term for you than for someone who has an income of 5,000 € and manages to save only 150 € (i.e., a savings rate of 3%).
Even so, if you have a high income and can’t save money, you aren’t to blame. We often find that our lifestyle quickly adapts to our income. But the ability to save money is working!
It requires some effort to “break” the routine consumption in which you have been able to settle to regain a savings capacity that will allow you to carry out your spending or investment projects.
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