Many people do not really know what personal finance stands for. If we talk about private finances, it is the personal finances that apply. That is, your income and expenses.
Many people don’t really know where their money is going. Thankfully, it’s easy to gain control and control your personal finances. All that is needed is a little structure and Sweden can help you with that.
Personal Finance – What Does Personal Finance Mean?
The private economy consists mainly of two parts – What comes in and what goes out. Therefore, we need to start by clarifying these two concepts.
- Salaries from, for example, work
- Income from, for example, pensions or contributions
- Passive income from investments or other assets
- Fixed costs such as housing costs or mortgages.
- Necessary variable expenses such as electricity, insurance, food, gasoline etc.
- Leisure and entertainment such as clothing, restaurant visits, hobby activities.
In order to keep track of your finances, you have to start by figuring out what you have for income and expenses at the moment. Only then can you start working to reduce your expenses and increase your income.
Control it before it becomes too big a problem
If you have started to have problems with your private finances, it is important to control it before it becomes overpowered, so that you do not unnecessarily incur debts or consume your buffer savings. A really badly managed private economy can end up with Kronofogden, which can cause difficulties for you if you need to take out a loan or get a rental contract.
To avoid getting into that seat, it really is important to be aware of the finances you have and start from it when you spend money and trade. Do you have control over your own money, you also know what you can afford or not. This will make you feel so much better and not have to worry about not having enough money.
Get up to date with a budget
There are many personal finance tips and good advice on how to make your own finances better. Some of the things you can do are:
- Make a personal finance calculation in Excel where you figure out what you have for income and expenses. If you do not have Excel, you can use eg. Google Sheets that are free. It works fine but plain paper, pen and a calculator as well.
- Make a personal finance budget based on your calculation. Then you can clearly see what expenses and income you have each month. Don’t forget to include expenses that are quarterly or yearly, such as insurance, car taxes or virus protection for your computer.
- Set clear goals on how you want your finances to look in a couple of weeks / months / years. This will make it easier for you to keep control of your money and thus better manage your money.
How do I improve my personal finances?
To improve your finances, you need to get more money relative to the money you spend. You can do this both by increasing your income but also by reducing your expenses.
Tips on how to increase your income
- Get an extra job
By starting to work extra you can earn an extra income. You can do this by working an extra few hours at your current workplace or at another workplace, selling crafts or services in areas you are good at.
- Negotiate higher salaries
Another way to increase their income is to negotiate wages. Many people are bad at this or let the union negotiate. But you can profit from negotiating yourself. Before entering into a salary negotiation, it is good to prepare and find out what opportunities there are for higher pay in money or in benefits if higher pay is not possible.
- Change service or workplace
One last way you can increase your income is by switching jobs. You can do this by getting a new service within the same workplace. Maybe you can apply for a managerial position or as a group leader? Other alternatives are to change jobs to another company and to negotiate higher salaries already during employment.
Tips on how to reduce your spending
- Review your fixed costs
They over if you can reduce your fixed costs. Negotiate your loans so you get better terms, change housing for a cheaper if possible and review your contracts on electricity and insurance.
- Review variable costs
Maybe you can pull down on car driving during the warmer parts of the year? It is also good to look at subscriptions such as mobile, TV or music streaming services and food costs to see if you can save anywhere.
- Get tips on saving others
There are several ways you can cut your spending and save money. Second-hand shopping, choosing cheaper brands and availing discounts are common things you can do. You can share your best tips with others and thus get tips from others on what you can do to save more. Maybe you get a tip on something you haven’t thought about.
The goal of personal finance is to find the balance
When talking about personal finance, it often sounds like the goal is for everyone to save as much as possible and live a life completely without luxury and gold. That is not the case. The goal of a good personal finance is to find a balance in your finances. Your income and expenses must go hand in hand with room for sudden expenses like a broken car, but that doesn’t mean you have to live on crispbread and tap water all your life.
In the beginning, you may have to resort to hobby activities or excess luxury to stabilize your finances. But when you have control of your finances and your budget gives room for a gold edge in everyday life then you have reached the goal. Then you can set new goals. For example, to save for a larger purchase or to receive a higher pension.
Why do you need to learn about personal finance?
If you learn what your finances look like, you will get a clear picture of your personal finances. This will make it easier for you to know what you can afford to buy or not. It also allows you to set more long-term goals like saving for a cash deposit for a home or for your pension.
For long-term savings, it is often a good idea to choose a high-interest savings account if you are going to spend the money within a few years. Should you save for 10 years or with, it may be a better option to save in mutual funds or to buy shares online.
Sure, it can feel tempting to sometimes buy things when you see something nice online or in the store, but if you can’t afford it, it’s best not to. Because even if that new sweater or shoes are nice, it’s probably not worth putting into debt by shopping on installment or with the credit card.
But if you, however, have full control of your money and know that you can afford to buy, you can buy whatever you want without stress. For that very reason, you need to learn about personal finance and how to make a household budget, it gives you full control!