Personal finance is all related to the money you need to maintain your lifestyle, your house, your family… Depending on how you structure all these blocks in your life, they can be more expensive to maintain or less… a clear example on how to rise your personal finance expenditure is by having more babies in the family. Small things like having a closed budget safes money. To have a plan basically.
There are many studies about personal finance. It is important to know that we are all under a lot of pressure to consume unneeded stuff. So we keep buying little and stupid things we don’t need. If we could save on those things at the end of our lives we would have a decent retirement.
I read once a guy’s blog talking about the idea of saving 1,6€ a day. His idea was to create a fund where everyone who wanted could put that 1.6€ every day for the rest of their lives. So the calculation was around the million euros after 25 years using that financial product. He was referring to the concept “one coffee a day”, and makes sense. We can all manage our personal finances to save 1,6€ a day (48.6€ a month). If you can get a fixed percentage a year investing every day, the profits are exponential… reinvesting the profits.
The exercise to organize your personal finance is quite easy. You need to know an approximation of your future income. Then identify all your fixed costs as rent, bills, etc. The tricky part comes with the variable costs such as cothing, restaurants bills, etc. So, by knowing the amount of money left at the end of the month you can know the amount you spend on variable things. Excel is a good tool to write down all the concepts in one column with their correspondent cost in the next column.
Our goal here is to have control on our financial situation and avoid uncomfortable surprises.