# 7 tips to keep your finances on track in 2020

The high school math teachers taught many things. Sure enough, you’ve seen all about square root and learned how to make super elaborate equations. But do you remember how to use it and what it is for? Would you be able to find out the value of “X” today? Most likely, if these techniques are part of your daily life, you will know how to use each of them. But not all professions and daily routines depend on these calculations. A super important and active subject in everyone’s life, however, was not taught in school: Financial Education. How many times have you found yourself almost falling into overdraft or even sinking into it? And your credit card, do you know the best time to pay for a purchase?

To help those who are starting to organize their finances, Otávio Machado, a specialist in financial education at Credits, the main online platform for guaranteed credit in Brazil, has separated seven valuable tips. Do you know the first math you learned how to do in school (add, subtract, divide and multiply)? These will be essential to proceed with the planning. Check out:

1. Know how much your work is worth

Nothing better to control expenses than knowing how much your work is worth. Do this exercise: Divide your take-home pay by the number of working days in the month. Then divide the result by 8 (if you work more hours per day, this number can be changed). This value is how much you earn per hour worked.

Always use this value as a unit of measure for your expenses: how many hours will you have to work to pay for the expense you want to take on? Is he more important to you?

1. Understand when it is better to pay in cash or installments

There is no single answer to this question. It all depends on the payment terms. Will you get any discount by paying all at once? How much? If it is higher than the investment yield rates, the cash payment is, yes, the most suitable. “The risk-free rate (SELIC) is at 4.5% per year today, it can serve as a comparison for 12 installments, for example. If the cash discount is greater than 4.5%, it is better to pay in cash than in 12 installments”, explains Otávio.

If there is no discount or if it is less than your money would have been invested, it is better to split it, as long as the installment is without interest. Also, consider the effect of inflation: when you pay interest-free installments, the amount paid in the last installments is worth less than in the beginning. That is, you are saving.

Lastly, also consider the psychological effect of the installment plan for you. It makes a lot of sense to split a product or service by the time you use it. But if it’s something punctual and you know that seeing those installments there always, for a long period, will bother you, pay in cash.

1. Invert the way you organize your expenses: saving and investing must come before bureaucratic expenses

When the salary comes in every month, the most common thing for many people is to pay first all fixed or routine expenses, such as housing and consumption bills, which are also called bureaucratic expenses. Then we go for flexible or quality of life expenses, that is, the costs of everything you buy but don’t necessarily need, like that trip to the movies or a restaurant you like. And, finally, investments in the future are last: that money you set aside to have a good standard of living in the future or carry out an important project or objective.

However, the idea is to reverse this logic and put your dreams and retirement first. Then the quality of life. And lastly, bureaucratic expenses. Thus, you have more flexibility to make a change in your life, until you find a place or work that you identify with and grow, according to your goals.

In addition, it manages to achieve financial independence more easily, also establishing a sustainable lifestyle, which may even be simple, but with more quality.

1. The 50-30-20 rule is a good idea to organize yourself financially

Did you like the previous tip, but still don’t know where to start reorganizing your expenses? One method you can follow to take care of your budget is the 50-30-20 rule. With it, you establish a monthly proportion for each of the types of expenses we’ve already talked about:

• 50% for bureaucratic or fixed expenses;
• 30% for flexible spending or quality of life;
• 20% for future investments or financial priorities.

Calculate how much these percentages represent within your monthly budget and keep their values ​​in mind. This makes it easier to prioritize how to spend or, better, invest your money.

1. The first step to start investing is to save

When you’re thinking about starting to invest, the first thing to do is save early. The more you get, the better. It is very important to be aware that it is important to save to invest and not spend.

Many people already want to think about high rates of return and study a thousand types of investments, when, in fact, they would have more money if they saved more in the beginning. That way, you’ll build a reserve for your first investments — the moment when you’ll be learning to invest and what makes sense and what doesn’t suit your profile.

1. Search for information sources to start learning about investments

To get started and learn to invest, there is no other way: you need to look for a variety of information sources. Search a lot! It is worth making an account with several brokers, exploring investment simulators and fund comparators, subscribing to newsletters and reports.

When you start investing, it’s also a good idea to put some of your money into each type of stock or investment that interests you, to understand how it works and what the return on each one is. The best way to learn is to practice.

1. To save money, invest and not get into debt, it is important to change habits and behaviors

A healthy financial life is much more related to our habits than simply the amount of money we have on hand. That’s why changing behaviors and mindsets about finance is what makes the most difference for anyone who wants or needs to organize themselves financially — especially if you’ve never done any kind of financial planning, explains Danielle.

Keep your investment and savings goals in mind at all times, and consider them before making any expenditures that may not be as necessary and could disrupt your planning.