When we talk about managing our money, we mean managing efficiently the resources we receive, that is, knowing where our money comes from, where it is going and, above all, we refer to the fact of making the right decisions that generate us well-being in the present and future.
Fixed income is committed
In general, fixed income is committed to our monthly expenses, such as rent, vehicle payment, food and other basic necessities. Extraordinary income is what sometimes gives us a break, but what to do with the extra money? How can I manage it? Or what should I do with it?
To help you with the answer, let’s focus it differently. What would happen in my environment if I ran out of income? This answer can lead you to a more concrete answer of what to do with your extra money, for example, if your answer is that it would not affect you for the next two months, it means that you have a short-term savings, but it is not enough , so you must allocate that extra income to increase savings to have a minimum of 6 months of income. Another answer may be that you would be left with a lot of debts, so, the most advisable thing is that that extra money is destined to make payments to the capital of your loans to decrease your debts, either in terms of term or in terms of amount due.
Immediate expenses or needs
Many people have extra income but do not make the best decisions and spend it all, assuming that those income will be forever, unfortunately that is not always the case and over time that income may disappear or multiply, that is uncertainty. For this reason you should make the most of that moment of financial slack to take immediate action to the answers to the question : What would happen to my environment that I would run out of income? A technique that helps people a lot is not to contemplate in their mind that passive income (extra income) for their immediate expenses or needs, because before that money arrived, they could already perfectly fulfill their month.