Aprende. Ahorra.

Aprende finanzas personales con tu familia en Inglés y Español. Cambia tu vida sin vender nada, con tu propio trabajo.

Budgeting: It’s all about the Cash Flow

The band El Tri sings:

Año con año el dinero vale menos (Year by year money is worth less)
año con año todo vale más  (Year by year everything is more expensive)
año con año la crisis va avanzando (Year by year crisis advances)
y aumentan los abusos del gobierno  (And government abuses increase)

This, of course, speaks of the phenomenon of inflation. Inflation is the natural increase of prices. Every country has inflation, and although we are not going to discuss exactly what happens on a personal finance blog, we should simply be happy that we now live in a country where inflation is more or less in check.

Does this mean we need to ignore the effects of inflation on our cash flow? No, but it does mean that we can do something sometimes we couldn’t do in our countries of origin: We can budget, and delay purchases.

I remember the 1980s in Mexico, where you had to run to the store to buy things before the prices went up. This was not only bad because of the government, but it made it very difficult to plan.

In the United States, inflation is more or less in check. Prices fluctuate both up and down, and while there is a general increase in prices, you can plan month to month and simply absorb the cost for next year. As long as you plan, you shouldn’t feel it. And even if you do, keep this in mind – every moment we spend complaining about the politicians and the state of the economy is a moment we could be working on our plan. We are famous for working very hard. Let’s work as hard to keep it.

How do  you plan, you say?

It’s simple if you can add and subtract. It’s called making a budget. In the next post we will see how.

But in the meantime, just think that changing your attitude is the most important thing. As a new or recent immigrant, you have a unique opportunity to redefine how you relate to money, as you redefine how you relate to everything else in your new country. Take advantage of it. You won’t regret it.