savings vs. debts: when is it good or bad to borrow or save

January is a month that traditionally represents an adjustment in the pocket and building a budget can become a key ally to efficiently manage resources from the beginning of the year.

The program of BBVA Financial Education in Colombia proposes a series of recommendations to efficiently plan the investment and take care of resources with which they are counted.

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According to BBVA, the first ‘type’ to plan your budget is identify your incomethese can be calculated by adding the different sources of resource generation, which offers the possibility of setting a consumption limit in order to determine the amount of money to spend.

Additionally, buy what is necessary It is essential because there are many products and services that can be ignored. The key question will be: ‘do I need it?’. Therefore, the elaboration of a budget of fixed expenses will allow to know where the payments of the obligations acquired in January are going to be directed.

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And another characteristic that a good financial plan It is the opportunity to be modified as new needs arise or pay off outstanding debts.

On the other hand, it is ideal to contemplate the unforeseen, in order to have a financial cushion; and savings, which are of great help to obtain the resources to achieve the set goals and objectives.

It should be noted that a financial plan not only allows you to maintain control, but also constantly evaluate what is invested to change consumption habits as many times as necessary and thus to maintain the financial health of the pocket.

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Finally, experts say to leave to memory the amounts associated with food, income and celebrations, It involves a risk since, eventually, you can lose control of the money.

It must be remembered that one of the main keys to To prepare an efficient budget is to be realistic, so it is necessary to avoid rigid budgets that are impossible to meet.

Thus, it is best to be as honest as possible with income and expenses.

1. Separate income and expenses by categories: You must be able to identify the inputs (income) and outputs (expenses) of money, as well as its periodicity and level of need.

2. Budget analysis: It is essential to recognize that the budget is a tool that must be constantly updated in order to have the best information for manage, change and adapt all our money inputs and outputs.

3. What to do if we have an imbalance?: Two decisions are derived from financial management that are often incompatible: asave or get into debt

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And here it is key to understand that although the saving seems to be a uniquely positive tool, its excess can thave pernicious effects, So it slows down consumption.

Therefore, it is good that you know some tips to save:

1. Set a goal: Set a goal to save money and, before you start spending, set aside the amount that corresponds to the savings from your income. If the savings come after the expenses, you may not make it. It is important to always keep a reserve fund for emergencies.

2. Financial planning: pay your debts on time and do not exceed your debt capacity, as this will be seen in your credit history.

3. Safe place: nobody likes to lose their savings. So you should be careful where you keep your money. Always do it in products from authorized entities, for example, a bank savings account, which is also reflected positively in your report of information centers.

Keep in mind that, on many occasions, getting into debt is the only option to access products and services, such as a home, which if done through savings would have to be postponed for many years or would even be impossible to afford. .

Even though the word “debt” attracts negative thoughts in peoplethe truth is that they are not always entirely bad when they know how to manage.

The “good debts” are those that allow us to generate money through them, for example in the case of real estate, which, as time goes by, can be valued. In some cases, even more than twice as much is earned. invested in your purchase.

But there are also the “bad debts” which are the ones that generate unnecessary expenses, such as buying a cell phone at too many feeswhich will exceed its useful life; or go into debt to go on vacation.

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