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Money under control: how to count and spend, so not to go negative

What you need to know to multiply the family wealth
Money under control: how to count and spend, so not to go negative

Many of us have a huge gap in knowledge, which neither school nor university can fill; that is financial literacy. That is why we often hear phrases as “I did not buy anything substantial in the store, and the money is gone" or “It was a payday yesterday. And though it is not the minimal salary in the country, but it has already gone”, etc. Besides, few of us know how to save up for a rainy day (according to the  personal finance experts, there should be a "safety airbag", so it is possible to stay afloat for 6-10 months of involuntary unemployment or other force majeure), be aware of financial instruments and use them effectively.

"Today" has learned from the personal finance experts how to improve financial literacy and learn how to determine the difference between income and expenditure, invest money, how to become a wealthy person and where this knowledge can be obtained without spending too much. Here are some tips: calculate monthly family expenses, read and talk a lot about money, especially with children, find a business that will help in case you are unemployed, and do not ignore financial instruments.

Count your costs so you can earn

Some people find the question: how much money a person needs for life a month, rather difficult. They start to calculate the total family income and say that sum is not enough, and add some amount, which, according to estimates, should be enough. This, according to experts, is wrong: every financially literate person should know his amount "to a penny".

"For a person who does not realize how much he needs for life, a million dollars a month will not be enough", says Andrey Kotiv, a personal financial consultant at the Kiev Development Center. "And this amount consists of such constant expenses as utilities, rent, if a family is renting a place, cell phone expenses, medical expenditures, child’s hobby or sport classes, his tutor, etc., everything that makes the usual family routine not to collapse. Knowing this amount, you can understand how much you are lacking, or how much money is wasted, if the household welfare is not growing".

The food expenses are more complicated: no family would be able to specify how much meat, or cereal in kilos they consume. However, you need to know that if you want to move towards financial literacy. You can easily calculate the amount spent for food by writing down all the expenses in a notebook or by attaching checks from the stores and forming a table of these expenses in Excel. You can also use the "home banking" program on the Internet or a smartphone application. All the methods have proved to be good: it is a matter of individual convenience of use and a personal discipline.

Look for Investment Sources

Having a "section" on your family, you can move on by making sure that the vital amount is always available and could shrink gradually, so the wealth can grow. It is impossible to do without passive income, ways of earning diversification or investments. However, many people block this idea in the harshest possible way; saying that there is not enough money to risk it, and so on. This is keeping a family on the same social scale, and it is not protected in case of force majeure, such as a serious illness of one of the family members or a sudden loss of work.

"It is necessary to think where, how, and how much money can be saved for a rainy day without putting many efforts, at least open a deposit with attractive interest rate", explains Igor Kholmogorov, a financial analyst.

It would be practical to consider as many options as possible: ask friends or even strangers in social networks.

"It is reasonable to consider life insurance or endowment insurance, operations on the stock exchange: buy something cheaper, then sell it more expensive, deposits in gold and constant monitoring of the investment market", explains Valery Stavniychuk, a specialist in financial planning. "Anything that would save your money and provide growth of your saved amount, but, whatever financial tool you choose, it should not be just the only one source. And you must study all its details. So, if you have bought some shares and expect them to grow in value, you should keep an eye on the events, and do not look at the situation on the stock exchange once in a hundred years. Otherwise you will find yourself complaining that another idea has been a failure, and the money wasted. Though the latter situation should not be excluded either".

Universal life insurance is a product that allows you to simultaneously provide yourself or your relatives with insurance coverage and create a capital for a certain event or date. Unlike most other investment tools, this is a mechanism for the equal accumulation of funds. In Western Europe, the United States and Japan, this type of insurance is the most common. Its share is 60-70% of the total market volume, and about 90% of the population have universal life insurance policies. Having chosen the universal life insurance program the beneficiary is confident that he will be receiving money on his account even in the event of financial situation worsening caused by disability, as under the contract, in such a case the insurance company will pay fees for the client.

The scheme by which the endowment insurance is working is as follows: having concluded a contract with an insurance organization, a person transfers a fixed amount for a certain period of time, and the insurer makes investments in various financial instruments. At the end of the agreed period, the insurance company undertakes to pay the customer not only the amount accumulated during this time, but also additional investment income. Its guaranteed rate is stipulated in the contract and usually ranges from 3 to 5% per annum. However, if the company manages to ensure a greater return on investment, then the client's income also increases. Therefore, the amount of real savings may be higher than the one that is provided in the policy. In any case, it should not be lower than stipulated in the contract. Once a year (or once a quarter), the insurance company sends to its customers a notification on the level of return on investments over the past period. The amount of savings largely depends on the terms of the contract. Any organization that deals with long-term life insurance is ready to offer several types of programs to choose from.

Do not stop to learn and do not be afraid to take risks

An important detail in financial literacy is the ability to maneuver in money matters. Resistance to any change that should be made at a certain moment can cause foregone profits.

"An example of monetary conservatism is the conscious reluctance of some Ukrainians to exchange hryvnia for dollars at a favorable rate; there were no problems with that so far. Their resistance and the share of conviction that the interest on deposits in hryvnias was high and could overlap inflation, led to the total depletion, compared with those who quickly orientated themselves. Same story with choice of various new financial instruments versus old ones; I am not saying that you should immediately invest in everything and risk everything. But you have to carefully consider every opportunity that occurs", says Ilya Vasilenko, an expert in personal finance, a specialist on stock markets.

A financially literate person knows: it is very important to engage in self-development, both, financial issues (learn about any particular instruments’ effectiveness), and other areas as well. You can do it yourself by reading books and discussing them with friends, on the Internet - by reading the materials, watching videos and video lessons on YouTube channels - and also by constant monitoring and attending webinars, seminars and trainings, online courses, etc. They are often free, but it is reasonable to set a separate column in the costs for self-development:

Such studies can cost as much as 200 UAH, and 2 thousand UAH. The latter is already a serious blow to the budget, which you have so diligently formed", says Ilya Vasilenko.

You can get the knowledge on financial literacy free on some websites specializing in this subject. They are as follows:,,,,,,,,,,, fincult .info, etc. You can find advice on how to allocate your personal budget, where to invest, what you should fear, information about consumer protection, personal experience of those who have already tried different financial products, and much more on these sites. Introductory articles about the structure of the economy, finance, etc., have been prepared for children and youth.

Those who like to watch or listen, financial experts advise to refer to such YouTube channels as "Financial genius", "Personal adviser", etc. You can also read books "Children and money" (R. Potemkin and E. Kazakevich), "Financial Knowledge” (A. Goriaev, V. Chumachenko) - on financial planning, banking and investment products, etc.

Acquire additional sources of income

Many consider work to be the only way to supplement a personal or family budget. But, according to experts, you must always have an additional real source of income in reserve. It must be kept in mind in case of unforeseen circumstances. It can be renting out a room in the apartment, the apartment or dacha, providing some kind of services for money (manicure, hairdressing services, etc.), a freelance work, performing any tasks, etc.

"I worked in a travel agency. There were many staff reductions in the heat of the crisis, so was I. The last payments were spent quickly. I had to think where to get the money without borrowing and consumer crediting as it was unclear when the next pay-day would be. I placed ads on sites focused on freelancing and minor work-earnings (I can stand in line for my customer, drop/pick up the child to/from school, walk animals, babysit, clean the house, and if the family is not picky in food, I can also cook). I managed get a little money this way, and then my additional source of income found me: the children I took to school needed a tutor, and I speak English and French. Later, the idea of ​making English classes on Skype with adults came", said Marina Sokolova from Kiev.

But Irina Zotikova from Kharkov took care of occupation in advance in case of unemployment.

"Rumor had it several offices at our workplace were closing, so I decided to learn a new profession that would feed me, just in case. Fortunately, there are plenty of one-two-day-week courses. I chose eyelash extensions. The only drawback was the course was quite expensive for a person who was about to lose work, but I decided that it was worth it. I took courses and began practicing the skills once a week, saving money. I did not lose my job, but now I have a backup, and make some extra money on the side. So far I have been saving my additional earnings on travel", said the girl.

Applications "are watching" expenses

  • Monefy (Android и iOS)

You can maintain a family budget. There is a free version with a minimum of options (cost calculation) and paid one with enhanced functional services (systematization of costs). Systematization allows you to see the records of all family members, whom you are keeping it with. The application has a calculator, a schedule of expenses and revenues: you can monitor the costs per day, week, month, year, and analyze them.

  • Money Lover (Android и iOS)

Two wallets can be set up here for free, and the following will be paid. The program will allow you to remember who owes you, and how much you owe to others. There is a tab "Accounts", where you keep a record of utilities, a currency converter and a search for ATMs nearby.

  • Financius (Android)

Free application with a simple menu: planning and analysis is minimal, but you can keep track of expenses and incomes. There are several sections: "accounts", "transactions" and "reports".

Remove taboo on financial issues

In some families it is not customary to talk about money. It, however, interferes you from feeling comfortable in society, when you are hired, etc. Such a taboo creates and cultivates fears of financial failures.

"You should not be afraid of the money topic the family. On the contrary, it needs to be raised in order to have a healthy well-being: so everyone realizes how much and where the money goes, how and what this money can be saved for, proposed their options. Children are not excluded from that, you cannot tell them, you have no money, you need to explain how much money you have, where this money will be spent on, how much remains, and only then you can buy what the child is asking", says psychologist Inna Rozuman.

The adult must work out “the poor man’s philosophy”. According to psychologists, it is present for every third Ukrainian, although it is translated in different ways. Some wear clothes until it is worn into holes, they obviously look poky in it, so cannot get a good job, even holding a good profession. Others spend beyond all measures due to the fact that they were deprived of something in their early age, and even with a good salary their wallets are always empty.

"For this, you can resort to denying your negative habits and thoughts." And since it is difficult to notice one's own flaws, you need to look at someone else's. Certainly, you know some people who are struggling. Watch, what they think about and how behave themselves, notice their attitude to money, try to understand their philosophy, and try to remove everything you have just marked”, advises Inna Rozuman. - You will be surprised, but poor people who are far from financial literacy, the philosophy is alike: they deny knowledge, actions and any progress. Among their "bad habits" are unreasonable expenses, constant complaints about lack of money, and so on".

Then you need to watch people whose financial situation attracts you.

"But in this case, you need to analyze deeper, and do not repeat immediately after them, even if everything seems to be right and lucrative. This category of people thinks quite different numbers; their actions are likely to stipulate the risk, which they are morally ready for. And you may not expect such an outcome and lose a lot", - says the expert.


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