Inflation reached 9.1% in July, the highest value since November 1992. According to INE data, despite the fact that the gross salary of the Portuguese increased in the second half of this year, the increase in prices reduced the purchasing power. In practice, due to the impact of inflation, wages fell by 4.6% in net terms. Perhaps for this reason, savings also fell from 10.7% to 8.3% of disposable income in the first quarter of this year.
According to the latest surveys, two thirds of the Portuguese have already had to change their habits: they began to use the car less, due to the cost of fuel, and reduced visits to the supermarket. As such, the post-holiday and back-to-school phase can be challenging, especially financially. The saying goes that prevention is the best medicine. So if you’re worried about a possible crisis and considering whether to start saving (more) for an emergency fund, take note of these tips. The time has come to start preparing for the new exercise.
1) Make a budget
Make a monthly budget and write it all down on paper. Write down your income and expenses. If you have more than one job (for example, a steady job and other one-time jobs), make a note of all cash receipts and the due date. Regarding expenses, it is even more important to point out everything: the fixed ones -such as, for example, the rent of the house, your children’s school, water, electricity, telecommunications- and the variable ones -such as fuel, the supermarket, the clothes. … also extra expenses: meals away from home, going to the cinema or any other type of leisure, among others. If you don’t know all of your expenses by heart, one way to get organized is to keep all of your receipts. Do not forget to request invoices with a taxpayer number to be able to make deductions in the IRS.
2) Save first
A common mistake when organizing finances is to leave savings for last. Many people think: “If I have money left over at the end of the month, I save.” And this attitude almost always leads to zero savings. So pretend that saving is an expense, set a monthly amount and, as soon as you receive your salary, transfer that amount to a savings account or put it in a piggy bank.
3) Renegotiate contracts
Many contracts for the services we hire are automatically renewed and we don’t even worry about it. The truth is that we may be spending money unnecessarily. Before it’s time to renew your auto insurance, for example, do your research and compare existing policies on the market. The same can be true for health insurance. Also check your telecommunications contracts: do you need so many channels? Are you using all the subscriptions you signed up for? They may seem like mere euros per month, but at the end of the year you can achieve significant savings.
4) Reduce consumption
It may seem like basic advice, but it is always good to remember it: make a shopping list before going to the supermarket and avoid going hungry (so as not to be tempted). Before making the list, check everything you have in your house, from the freezer to the pantry. Get in the habit of using leftovers to make new dishes: Are there steaks left over from dinner? Make a cake for the next day. When organizing the fridge, put the boxes with leftovers and products with expiration dates ahead. If they are kept at the bottom of the shelf, there is a risk of forgetting them and they will end up spoiling. Before you buy clothes or shoes, make sure you really need them. Take advantage of sales and promotions, but before making a decision, compare prices so that you are not fooled. If you have space, make a garden at home, even on the balcony or in pots by the window.
5) Beware of “plastic” money
When we have money in hand, as a general rule, we are more aware of what we are spending. If you are not in the habit of controlling the movements of your account, the use of the card, whether debit or credit, can make you spend more than you intended. Therefore, avoid, as far as possible, taking out loans or paying in installments, if you do not have the purchasing power to do so. However, if you need to make a personal loan for your children’s studies or for an unexpected expense, make sure you do it with a credible entity, pay attention to your effort rate and compare the conditions proposed by several different institutions.
Source: Observadora
