Discover how to improve your personal finances and get ready to invest in real estate with Equito. Practical tips and savings strategies.
Getting started:
Welcome to Equito, the real estate investment app that makes it possible to invest in property from as little as €100. In this blog, we'll give you practical advice on how to improve your personal finances, establish a solid budget and prepare for your first steps into the real estate market. You will learn how to manage your finances effectively by following the 50/30/20 rule and much more.
1. Understanding the 50/30/20 Rule
The 50/30/20 rule can be an effective way to allocate your monthly budget, as it is very easy to understand and apply. Here's how to allocate your budget:
- 50% for Needs: Half of your income should be spent on basic necessities such as housing, food and transportation. For example, if you earn €1,400 per month, your budget for this category will be €700.
- 30% for treats: Set aside 30% for personal expenses and entertainment. This includes dining out, shopping and non-essential subscriptions and recreational activities. 420 of your €1,400 salary will be what you can spend on indulgence.
- 20% for Savings and Investment: The remaining 20%, i.e. €280 should go towards savings and investment. Let's imagine that every month you invest €200 in Equito and spend €80 on saving for 10 years, applying compound interest... At the end of the blog, you will find the result.
2. Establishing an Effective Budget
Creating a solid, personalised budget can be one of the most interesting options for improving our personal finances:
- Expense Tracking: Start by keeping a detailed record of your monthly expenses. Use financial apps or a spreadsheet to track every euro spent. This will help you identify spending patterns and areas where you can save.
- Set Financial Goals: Set clear savings and investment goals. For example, you could set a goal of saving €3,000 in the next six months as an emergency fund.
- Prioritise Spending: Identify unnecessary expenses and reduce spending on them. For example, if you eat out frequently, consider cooking at home more often to reduce costs.
3. Smart Saving
What if we stopped worrying?
- Automate your Income / Savings: You can set aside part of your salary on a monthly basis to invest in real estate tokens, which will allow you to earn a return on your salary. You can also set up automatic transfers to a savings / investment account. For example, you can set up 10% of your salary to be automatically transferred to a savings account each month.
- Shop Around: Research and compare prices before making large purchases. Use websites and apps to help you find the best deals. For example, when buying a new appliance, compare prices at various shops and online to get the best deal.
- Eliminate High Interest Debts: Prioritise paying off debts with high interest rates. For example, if you have a credit card with a 20% interest rate, allocate part of your budget to pay off that debt faster and you will reduce the interest you pay in the long run.
4. Create an Emergency Fund
A fundamental method to improve your personal finances is to create an emergency fund. What can it do for you?
Financial Support: An emergency fund gives you great security and peace of mind in case of unexpected expenses, such as car repairs, medical bills, job loss or job change.
Set a savings goal, such as saving at least three months of monthly expenses, and contribute regularly to your emergency fund until you reach the amount you think your fund should be. The recommended amount is between 3 and 6 months of salary.
By the way... After 10 years of investment and savings you would have:
€35,874.07 in investments.
9.600 € saved
Conclusion:
Improving your personal finances is the first step towards success in real estate investment. We hope these tips can help you with your personal finances.
Remember that every financial situation is unique, so it is crucial to tailor these tips to your personal needs.
Equito is here to help you on your real estate investment journey!