Among the purposes, to improve the relationship with my finances

At the beginning of each year, new goals are proposed to be achieved, including financial ones, but also, in some cases, it represents a great challenge for the family economy after the expenses that were most likely incurred during the month of December.

Even so, this is the time to put everything in order and start planning what this 2023 will be regarding personal finances. For this, it is important to make a list of economic priorities for the whole year, avoid as far as possible those impulsive expenses (“offers” or the months without interest on items whose useful life is not more than one year), analyze strategic purchases to be made in the event of any remodeling, maintenance or updating home appliances.

What can be done to be able to start the year against the slope of January? Normally, the month of January is complicated because if you have not made a budget, you may make financial “errors” due to the number of events and meetings attended, not having established a limit amount for Christmas gifts or for the excitement of the time. To start the year in good shape, it is vital to identify the active debts that were contracted, such as the payment of the next credit card cutoff, the payments of promotions to months without interest and the promotions to be paid in future months, this will help to have a better notion of the total amount that is outstanding.

If you have a mental or unwritten budget, you may believe that the beginning of the year is a restart of financial commitments, which will make it difficult to have a correct planning. Therefore, the second point will be to write down all income and expenses, both fixed and variable that each person can identify when preparing their notes. It is important to consider as many elements as possible because sometimes it may be thought that minor expenses such as buying a coffee or a daily snack (45 pesos) do not have an impact on finances, but when it is analyzed that this consumption per week represents an expense of 225 pesos, which is 900 pesos a month and 10,800 pesos a year, surely that money could have been used for other activities or priorities.

Identifying non-vital activities or expenses will help a lot to prioritize when looking for how to “cut” outflows of money from the budget and to be able to have greater freedom to allocate it to savings and investment concepts, which, by the way, it is recommended that they also be considered as fixed and non-modifiable amounts in order to reach future or longer-term objectives.

The following options can also be considered to have a better relationship with the planning that will be carried out:

In case of identifying that the situation of pending payments or debts is greater than what was estimated to be the appropriate percentage, the best and according to the possibilities that are available, will be to make larger payments to the most expensive credits to reduce the capital or amount on which interest is accruing.

Use the credit card as a support that acts in favor. Many times credit cards offer an alternative to not exceed the ability to pay. For this reason, it is important to choose credit cards with costs that are affordable to each person’s budget and choose cards that have benefits that can help in daily activities, such as reward programs, discount benefits in establishments, or if you travel continuously, that offer coverage to the destinations that are attended.

Now, all that remains is to implement this purpose, have a lot of discipline in this process and continually review the notes to remember how much is the percentage or amount that was allocated at the beginning of the year. Finally, do not forget that it is important to enter all the data on the expenses that are made as the months progress, because with this, you have the opportunity to analyze whether the plan needs to be corrected or to verify that it is actually being carried out as proposed. at the beginning of this 2023.

*The author is Associate Client Servicing of BBVA Asset Management

miguelangel.paez@bbva.com