How to Turn Your Personal Finances Around (Part 1 of 4)

Today, we all have access to a wealth of information. If we need advice on how to improve our health or solve a financial problem, we just have to type it into a search engine and instantly find articles, videos, books, and courses on the subject. We can also use Artificial Intelligence. All of these are powerful tools for learning virtually anything.

But here's the paradox: we know exactly what to do, but we don't do it. How many times have you read one of my articles on how to save, invest, or get out of debt, only to think, "This makes sense."... only to then continue doing the same thing? How many people do you know who know they should stop using credit cards for everything, yet they get deeper into debt every month?

The problem isn't a lack of information, but a lack of action. And behind this inaction, there are two clear causes:

1. We don't apply what we learn: Information remains theoretical. We read, we nod, we even save the article... but we don't change our habits.

2. Lack of real motivation: Knowing something is important isn't enough. We need a deep, personal reason that drives us to act. Without it, inertia wins.

That's why I try to include more than just practical advice in my writing. I like to help you reflect on why you know what you should do, but you still don't do it. Because understanding that is the first step to breaking the cycle.

Think about the last time you asked yourself, "Why am I always short on money at the end of the month?" "Why do I never stick to my budget and end up spending more?" You're not alone. Many of us spend our days making money decisions without pausing to reflect on why we make them. Some are conscious, others impulsive. Some are born out of habit, others out of social pressure. The problem is that if we don't question these decisions, we'll keep getting the same results.

Some time ago, I met a woman who worked as a domestic worker. She earned little, but managed to save enough to start a small business. Her secret wasn't earning more, but rather managing her money better. Instead, I've given you many examples of top executives who are mired in debt precisely because their spending has a tendency that's hard to stop.

What would you do if you lost your job and it took you six months to find another opportunity that paid the same amount you're used to? Could you continue living without setbacks during this time? I've been there, and sometimes—in those moments—unexpected expenses arise, like the need for car repairs (or an illness). These aren't fictional scenarios: they happen. If you're not prepared, such a scenario could be catastrophic or, at the very least, ruin much of what you've built.

The good news is that turning around your financial situation doesn't necessarily depend on how much you earn, but rather on how you manage what comes in and out of your pocket.

What makes us repeat financial mistakes?

We are creatures of habit. If you saw your parents using their credit cards for "emergencies" as a child, chances are you'll do the same. The first step is to break that chain.

Ask yourself these questions:

• Impulse spending?

• Do I feel guilty after buying something?

• Have I used credit to cover expenses that I couldn't pay in cash?

It's not about judging yourself, but rather understanding what drives you to make those decisions. Once you identify it, you can change it.

Start with a simple habit: track your expenses. You don't need a complicated app or a perfect budget. Just a notebook and 5 minutes a day. Write down:

What did you spend it on? Was it necessary? Could you have avoided it?

This exercise isn't meant to punish you, but rather to provide insight. After a week, review your recurring expenses. Do you see patterns? This allows you to see what's driving or holding you back.

Don't make a budget: make a spending plan

Budgets aren't bad, but they often involve estimating your expected income and expected expenses.

A spending plan is much more proactive. Every time you receive an income (not before), you sit down and ask yourself a simple question: What do I need this money to do for me before I get paid again? With the money you already have. This helps you prioritize and maintain better control.

Of course, things still happen along the way. The electricity bill may end up being higher than you planned. In that case, you modify your plan to reflect it. Because it's not written in stone. You use it as a tool to make decisions and maintain control.

Now, how do we break the cycle of debt? We'll discuss that in Part 2.