Learn the basics of personal finance!

This subject is widespread in various communication channels, whether on television or the internet, but talking about finance has not become completely obsolete, as there is a lot to understand about how to maintain and double your savings.

So, let's start by covering the basics of finance, as the obvious needs to be said and we need a solid foundation before taking bigger steps towards our financial independence or at least obtaining a financially comfortable life.

The basics of personal finance

First, it is necessary to bear in mind that what will bring results is knowledge combined with practice, which means that it is no use just knowing about finance and not actually practicing what is known about this subject.

It is very easy to study finances, since there is all kinds of content accessible on the internet, but you must apply what you study in managing your own money.

Now, let's get to the basics that everyone should know about personal finance:

• Map your spending and set goals for your money;

• Spend less than you earn, that is, do not have a negative account;

• Make your savings one more of your expenses;

• Always save, even if it's small amounts, because what matters is the frequency;

• Don't put all your financial security in your current job, that is, we shouldn't depend entirely on our current income, because we don't know how our situation will be in the future;

• Have an emergency reserve;

• If possible, have more than one source of income.

In addition, there are finance basics you should also know:

Liquidity

This concept is about the level of ease or difficulty to redeem or transfer the money invested. If the investment has low liquidity, this means that the investor will not be able or will have great difficulty withdrawing the money before the defined deadlines, that is, the money will not be released until the stipulated maturity.

On the other hand, high liquidity determines that the money will not have many obstacles to redeem it.

Risk

In the financial sector, the risk consists of the chances of an investment being devalued, that is, of the investment not yielding as expected. In practice, it is the possibility that the yield will be less than the amount initially invested.

Return

It is the value resulting from an application. That is, when we make an investment, the value we get from it is our financial return.

Diversification

It is not necessarily a basic concept of finance, but an investment strategy in the market. To carry it out, you must divide the application of your money into different types of investments, aiming at reducing risks – but how? Different types of investments tend to fluctuate differently. When one is down, others can register gains, for example. This occurs because events that benefit one sector of the economy, for example, can be bad for another.

With social inequality, high unemployment and the chaotic national and international political scenario, the basics may seem unfeasible for many people, however, everyone should be able to manage their money in the best way. To do this, adapt the tips to your financial reality and do what you can!