There are many bank customers who choose to leave a considerable portion of the money available that they have every month on the current account. Many justify this option with the need to meet current and extraordinary expenses, others simply believe that the money to order is easier to move faster to get up.
The latter are extremely conservative clients who want to have maximum liquidity in their money. Let’s focus our attention on customers who have money in their checking account to meet current expenses ..
If You Want To Make Money You Must Heed The Details
In general, I can say that these clients do not have the correct management of their Personal Finance, since they do not focus their attention on the optimization and monetization of all the available money that they have. Likewise, they are not aware of the importance of a paid and liquid Emergency Fund to cope with unexpected life events.
Correctly managing Personal Finance eliminates any surplus of cash and simply monetizes or decreases the risk of losing money by owning the stopped money in a current account.
But How Can I Lose Money If Not Invested?
In fact there is an enemy of money that, even with economic and financial stability and we all feel confident with the financial system, it continues to take value for money. This enemy is the inflation that is news in the main channels and one of the main concerns of the European Central Bank in conducting the monetary policy of the Euro Zone.
In fact, with every passing day, we lose more or less money, because inflation takes away the purchasing power that this money has.
A small example is to consider that over the years has an average balance in your account in the order of 1,000 euros, if you consider that last year’s inflation rate has been set at 3% then know that at the end of the year those 1,000 euros only can buy 970 euros, or in other words, will need 1,030 euros to buy at the end of the year the same as it would buy with 1,000 euros at the beginning of the same year.
How Can I Counteract the Effect of Inflation and Make Money?
It is not easy to counteract the effect of inflation on our money, because it requires a lot of discipline and financial control. In general, there are simple tips that can be useful and effective that, when associated with discipline and budgetary control, work in particular:
- Look for savings with a net interest rate above the expected inflation rate
I think this procedure is the most difficult to achieve mainly for conservative people, that is, they value the capital and guaranteed interest. Unfortunately, the fall in market interest rates made the conservative products uninteresting, with interest rates below 1%. So, to have a higher return on inflation, you have to take risks …
- Advocate for an efficient monthly budget
Definitely the best way is to know exactly what fixed and variable expenses exist or may occur over the course of a month. Know exactly is to know the amount and the day of the month in which they occur, for example, water bill assumes regular value over the months, light bill can be fixed throughout the year, communication expenses may have monthly limits, housing or consumption benefits when indexed have regularity according to the revision of the index, food can be budgeted and diversified, among others.
Variable expenses can be programmed and, when not expected, can be settled using the emergency fund set up for this purpose.
- Try the manual expenses payment
I am defending of the expenses registered in the checking account so that no forgettings occur, however, I accept the amount of payment of expenses as soon as they are due, that is as soon as the invoice arrives home. Not only will you be able to confirm the amounts as you can perform the necessary procedures to pay off such an invoice. This tip is too tiring and I believe it will not have great advantage if not applied with maximum discipline.
- Control the Costs of Your Housing
Housing expenses are the heaviest expenses in the family budget. In this sense, it is never too much to reinforce the importance of having a permanent posture of cutting costs. In fact, we suggest that you start by performing if you are paying the correct amount in your banking performance (for this we suggest using the Gilgamesh housing credit simulator).
Regardless of the strategy you use it is important that you keep in mind that you will have to live with inflation. Reducing the effect of this on your money is in your hand, provided you are aware of the risks of making any decision. Whether it is by investing in risky products but with potential for higher profitability, whether through the use of credit cards or simply by controlling your Personal Finance (now why not see 3 tips to save money?).