Good Financial Habits

By: Flor Núñez Sotelo & Joel Mendoza

What word would you think of first if I asked you: How do you manage your finances? Surely many go through your mind, but the important thing is to know if you are aware of how you manage that part of your life, financial habits should be taught at an early age since they play a determining role in our lives and if we learn from a young age, when we are adults they can save us a lot of headaches.

To change a habit, you need conviction, either by desire or by obligation, and to be constant, repeat and repeat. If we want to change something, we must think of different routines and options to achieve it, since the older the habit, the more ingrained it will be.

Earning a lot of money does not mean being financially free. History is full of cases of people who earn millions a year and from one day to the next lose everything. Why? Simple lack of planning and determination of objectives. Planning is the basis for all work, projects, and even life to turn out as desired.

Nationwide, nearly 25 million people (35.5% of adults) save through a financial institution. The two most important products to do so are the payroll account and the savings account, with 60.5% and 46.6% respectively.

According to data from the latest National Survey of Financial Inclusion (ENIF 2021), we find revealing figures on the savings, consumption, and protection habits of the Mexican population:

• Adults with an account: Only 15% of the adult population (18 to 70 years old) said they have an account through a formal mechanism of the Financial System.
• Deposit products: The percentage of adults who say they have savings use as main products, 52% Payroll; 36% Savings; 17% Government; 9% Pension; 3% Checks; 2% Term and 1% Investment
• Percentage of the population that saved in accounts: By age group, it was 23% for those between 30 and 39 years old; 21% for those between 40 and 49 years old; 20% for those between 18 and 29 years old; 19% for those between 50 and 59 years old; and 13% for those between 60 and 70 years old.
• Credit card use: The percentage of the population, by age group, was 85% for those between 30 and 39 years old; 84% for those between 40 and 49 years old and between 50 and 59 years old; 81% for those between 18 and 29 years old; and 80% for those between 60 and 70 years old.
• Taking out life insurance: The percentage of the population, by age group, was 20% for those between 30 and 39 years old and those between 40 and 49 years old; 18% for those between 50 and 59 years old; 15% for those between 18 and 29 years old; and 9% for those between 60 and 70 years old.

A healthier financial practice is to spend less money than you earn, so you can save. Since it is very common to do the opposite, we spend more and earn less, and how we do it by getting into debt with credit cards.

We are usually waiting for a promotion or a higher income to start saving, but instead, we should opt for austerity, live a lifestyle according to the income we have, and avoid getting into debt.

For this, having adequate control of monthly income and expenses is essential; In addition, it is necessary to make a personal budget, ideally from the moment you start working.

We must define the percentage of income to allocate for the different expenses, differentiating the basic ones (housing, food, health, services, and transportation), from those that can be classified as fun or recreation.

To achieve financial freedom there is no other way than to start saving now, and the younger you start the better, since you will have more time to save, you must start with at least 30% of your income if you are young without commitments of wife and children and 15% if you already have a family, only then will you be able to have a heritage in the future.

An illustrative example of a tax-deductible or non-deductible retirement savings plan invested in an authorized insurance institution.

A 30-year-old young man begins to save 36,000 pesos annually, invested in UDIS (investment units) with an estimated increase in inflation of 5% per year for only 15 years, stopping making contributions at 45 years of age.

Amount contributed over 15 years: 776,850 pesos. Amount to receive at age 65: 3,900,127 pesos. Life insurance and total and permanent disability benefit: 1,276,041 pesos.

These amounts are estimates, as they may vary depending on inflation.

Nobody has the future bought, look for mechanisms that help you minimize the economic impacts of fortuitous situations such as earthquakes, traffic accidents, or illness. Always remember to have an emergency fund or failing that, try to purchase insurance for these difficult times.
If you need information in this regard, you can contact us via WhatsApp at 667 103 9088 and on social networks @viasegura we will give you various options, at Viasegura we are committed to your safety and financial well-being.

Saving for retirement is not an expense, it is an investment.