4 tips that will help you better organize your finances in this new year
December 11, 2015
The arrival of 2016 is a new opportunity to start from scratch and keep an organized control of our monthly income. In addition, it allows us to set the objective of allocating part of this income to a savings fund, which we can make use of in case of unforeseen events of any kind, without getting into debt.
Therefore, Anthony Sierra, CEO of BMI Companies, a leading international insurance company in Latin America, offers some advice to achieve this goal:
- Allocate an appropriate amount for the emergency fund
It is advisable to set aside the 10% from monthly income or a reasonable amount of money and put it into the savings fund. To reach this goal, every time we generate savings (an offer at the supermarket, a discount on some registration, etc.) we must save that money and not assign it to buy something else. Continue contributing to this fund, until you manage to have saved an approximate of 3 months of your salary / income or an amount that covers between 3 and 6 months of monthly projected expenses
- Set a specific amount as a goal
Identify the order of importance of each of these expenses and establish priorities. One way not to spend beyond our goal is to put the money from each expense in an envelope each month. As you see how the envelope runs out of money, it means that you no longer have a budget for that expense. Many times the use of debit or credit cards does not allow us to accurately calculate how much we are spending and on what.
- Take into account accessibility and security
It is vitally important to put your money in relatively stable accounts that you can easily access without taxes or penalties. In the case of allocating this money to a bank or insurance entity, it is advisable to take into account that their products guarantee their preservation. For example: the problem with placing mutual funds, stocks or other assets is that they can lose value, which would no longer be the initial value if you needed to withdraw the funds quickly.
- Consider different options
Having a traditional savings account is a good option. However, it is important to consider other financial tools with multiple options, such as life insurance.
"In the case of BMI, we have two life insurance options: Universal Life Insurance and Indexed Life Insurance," says Anthony Sierra. "Savings and protection are the two factors offered by both insurance, which allows the insured to accumulate money and request loans or partial withdrawals in the event of unexpected expenses," he adds.
Sierra affirms that among the advantages of having this type of life insurance, the following stand out:
- They offer flexible premiums and a guaranteed minimum interest rate.
- They allow you to select the modality and frequency of premium payments.
- They provide liquidity by allowing loans and partial withdrawals on cash value.
- They allow you to increase, decrease or suspend the payment of premiums, in case there are sufficient reserves to cover the monthly charges and the cost of the insurance.
- They provide unlimited tax free money accumulation / growth.
- The accumulation of money is subject to an interest rate higher than the average bank rates.