Managing our personal finances well or badly can mean the difference for tens of thousands of Spanish households between reaching the end of the month comfortably or, on the contrary, entering a dynamic of debt and economic problems.
This Sunday, October 31, World Savings Day is celebrated . Different experts and financial companies ( Ibercaja , BBVA , Rastreator, Bankinter, iAhorro, Fintonic, Micappital …) offer their recommendations to be able to save and invest better, and cite errors that we must avoid.
From Micappital , a financial advisory fintech, they explain that “saving is the end towards which many are headed, but not all of them achieve, sometimes due to insufficient income and others due to poor planning, overconfidence or lack of foresight to long term”. For this reason, they consider that “adopting saving habits is highly recommended to be able to face crises and unforeseen events and better prepare our future”. In this regard, they point out that the ideal would be to reserve for this purpose between 10% and 20% of our monthly income.
Adopting saving habits is highly recommended to be able to face crises and unforeseen events and better prepare our future
Antonio Gallardo, financial expert at iAhorro, explains 20 minutes later that “we are in a difficult time for saving, since with negative interest rates on some products such as public debt and others of 0%, he continues to focus on classic products, such as deposits. and especially sight accounts “. “If we add to this the moment of economic uncertainty, which makes us more fearful of investing in risk products, there is a kind of ‘perfect storm’,” he stresses.
In this regard, according to Gallardo, the saver may find that the savings are very far from inflation (5.5% year-on-year currently).
Ten mistakes in saving and investing
1) Live from day to day without saving … or worse, spending more than what is entered . “Although it is always said that life is short, you have to know how to prepare for the future”, advise from Bankinter. For this reason, “it is important that you have savings to face possible unforeseen events and have a calm future,” they emphasize.
Obviously, if a family has monthly expenses greater than its income, it will need to borrow constantly, so it will enter a vicious circle that it will be difficult to reverse and will have more and more debt.
Álvaro Bas, Rastreator’s Director of Business Development, recommends that readers of this newspaper apply “the famous 50/30/20 rule”. “To avoid surprises, it is best to take into account what your income and expenses are and try not to go outside the established budget. It would be advisable to allocate 50% of your monthly income to your basic expenses, 30% to your personal expenses and whims and 20% to savings, “he explains.
It would be advisable to allocate 50% of your monthly income to your basic expenses, 30% to your personal expenses and whims and 20% to savings
One of the most common deceptions is that in an establishment they do not show you the menu at any time. Before ordering any dish, make sure how much it is worth and thus avoid unpleasant surprises when the bill arrives.Dinner in a restaurant.Pixabay / Free-Photos
From Ibercaja they consider basic “knowing how much and what you spend on.” “Before doing anything, the first thing is to be aware of your financial situation. Review all your accounts and write down all your fixed expenses: rent, electricity, water, car bill, telephone bill … etc.
To make sure you write down Everything, we recommend that you use your bank’s app and view the receipts, so you will not miss anything. Next, it is time to review the variable expenses, that is, those that are not so fixed but that, on some occasion, you allocate part of your budget: dinners or lunches out, going to the movies, whims you indulge in from time to time … etc “.
Check all your accounts and write down all your fixed expenses: rent, electricity, water, car bill, phone bill …
2) Being too conservative. “This is the main mistake made by savers, being too conservative and not distinguishing between short, medium and long-term goals,” according to Antonio Gallardo (iAhorro) . Thus, as he emphasizes, although in the short term we have to keep money in accounts, available for unforeseen events, for the medium term (savings for a purpose such as a trip or a house entry) we can already opt for products that are not so liquid (such as savings plans) to achieve greater profitability. And in the long term (for retirement, for example) it is money that we do not need to withdraw and we can opt for higher risk products.
3) Borrowing a lot: The use of credit and debit cards, or payments with the mobile phone, are an advantage for consumers both because of the convenience of not having to carry money with them and because it is one of the best ways to control and manage your expenses by being reflected in the bank account. “However, many of these expenses are linked to outstanding debts, so it is necessary to keep track of those expenses and not allocate more money than is earned,” they emphasize from Fintonic.
4) Not having an inexpensive mattress . Having savings that allow you to face unexpected expenses is a guarantee of good financial health. “The middle class does not usually have a good habit of saving, and that means that they do not have that money that may be needed at certain times and would avoid many troubles,” they indicate from Fintonic. On the contrary, if you save little by little each month, you will be able to pay expenses that you did not have and, even, allow yourself a whim from time to time.
Two women have a coffee this Monday, March 8, 2021, in a bar in Barcelona’s Plaza Rovira.Two women have a coffee in a bar in Barcelona’s Plaza Rovira.ACN
5) Do not count ant expenses : Ant expenses are small and routine disbursements that we make almost without realizing it but that at the end of the month make a dent in the pocket. Drinks in cafeterias, use of the taxi, tobacco, sweets, beauty treatments, commissions when withdrawing money in a bank that is not yours … At the end of the month they represent a percentage of spending of our income that is not usually taken into account but it is mining.
6) Investing in the Stock Market without knowing and letting yourself be carried away by euphoria and fear. From Ibercaja they advise first knowing how the Stock Market works before launching to invest. In this regard, you must learn how the stock market works, what are stocks, intermediaries and concepts such as dividends, profitability, risk.
On the other hand, for investors who already know how the Stock Market works, from Micappital they give some recommendations. Euphoria and fear are very frequent emotions that condition behaviors. ” When the stock market rises strongly, the most common mistake of the bad investor is to get carried away by excess optimism and to invest in an extraordinary way when the market prices are already much higher, paying more for those products.”
At the same time, when there are strong declines – which is the ideal time to make those extraordinary investments because you can access interesting products for much lower prices – you panic to lose what you already have invested and begin to get rid of your portfolio, selling cheaper even than what you bought and eliminating any chance of recovery in the bud.
7) Don’t think about retirement . Due to the continuous reforms that take place in the system and the economic situation, it is necessary that you think about your future retirement. Therefore, it is important that you have a pension savings plan in mind, Bankinter advises.
8) Do not diversify: Spanish savers tend to invest in what they know because it makes them feel more secure. The average saver invests 74% in Spanish assets. The main advantage of diversification is that it allows you to reduce investment risk. “For this you have to use different classes of securities, different categories of assets, sectors, geographical areas and investment styles,” they recommend from BBVA.
9) Abusing installment payments. In the short term, delaying expenses and resorting to mortgages or loans may seem comfortable and successful, but in the end you will be paying much more money when you add the interest. For this reason, as far as possible – and as long as there is money saved – it is convenient to settle expenses. A larger outlay in the short term will allow you to live more comfortably the rest of the time.
10) Do not compare or see the options that best suit our needs. ”Before hiring a product or a service, it is essential to compare. At a time when the number of options on the market is increasingly high, spending a few minutes on this can help your pocket to hire the one that best suits your needs ”, says Álvaro Bas (Rastreator).