If you are someone who is having a hard time setting and sticking to a monthly financial budget, or who are not saving any amount of their monthly income, then you need to program yourself financially! You may now ask: How to do this? What is financial programming in the first place? Well, we will try to answer all your questions promptly, through this brief article.
First, let’s define what is meant by financial programming. It can be said that financial programming means – quite simply – rearranging your financial position in terms of spending and saving. In other words, you should not spend all the money you get (the salary) in a random way. Rather, it is necessary to organize spending, and try to deduct part of your salary for the purposes of saving. A question may occur to your mind: Is there a scientific way to do this? The answer is certainly yes, and we will reveal its secrets and details to you below.
Economists and finance experts say that your monthly income should be divided into two parts: The first is the part devoted to spending, which should not exceed 88% of total income. The second is the portion devoted to saving, which should not be less than 12% of income. Incidentally, these ratios are global, and are unanimously agreed upon by economists and finance experts around the world, and they can be verified.
It is necessary to know that if the percentage of your salary that you spend exceeds 88%, the financial risk resulting from the inability to meet obligations and emergency situations will increase, while it will decrease if the percentage of the section devoted to savings exceeds 12%.
It should be noted that the proportion allocated to spending must cover all expenses and expenses; Including loans, school fees, water, electricity and others. In other words, the expenses should not be covered from funds saved in earlier periods.
Someone might say: I can’t save no matter how hard I try; What I get from the money goes all. If you are one of those, we will help you to create an easy plan through which you will be able to gradually save part of your monthly salary, and reach your goal little by little, just be patient and go with us.
Do not try to cut all of your salary (12%) all at once and suddenly, because this will cause you to be financially stifled. Start with a rise in the savings ladder, with a grade, deduct 1% in the first month, then 2% in the second month, then 3% in the third month … and so on until at the end of the year you reach the minimum target. In this way, you have programmed yourself financially, gradually and not feel upset or upset. But if you manage to exceed this percentage later, you will do yourself a favor.
Here, a question may arise: If I can reach the minimum savings and think about getting a loan, how should I plan to pay it off? First, those who are considering borrowing must bear in mind not to involve themselves in a loan that they cannot pay when due. It should also be borne in mind that the value of the installment is part of the section devoted to spending; In other words, whoever plans to borrow should not rely on his savings to pay off installments, rather the installment must be part of the expenses.
Some borrowers do not have financial capacity; Meaning that they do not have the ability to pay their obligations to the lender, so they resort in this case to their savings. It goes without saying that this is a mistake that must be avoided; It negatively affects saving and creates many problems.
But if you have the ability to save more than 12% of your monthly salary, and you want to borrow, then economists and finance experts advise you not to increase the loan and reduce the period of repayment, to avoid the increase in interest.
Do not be subject to the temptations offered by banks and other lending institutions to induce you to increase the value of the loan, for example if you need $ 10,000 to start a project or buy a property, the bank may try to tempt you to borrow a larger amount, in order to achieve additional profits. We advise you not to take more than your need, because that will exhaust you financially, and you may have to sacrifice your savings to pay off the loan, along with its interest and expenses, so be wise.
If you follow these tips, you will have found the golden key to savings, which you have always searched for in order to open the door that leads you to financial stability, and then you may think of investing your savings for a better life for you and your dependents.
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