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How to put your Christmas allowance to good use?

There are many ways to use your money wisely. These are some suggestions.

By the time you read this article, you have already received your Christmas allowance. For most families, this means an extra income in December of around 1,500, 2,000 or 3,000 euros, depending on the income of each family.

I know that for many, Christmas, holiday, and IRS reimbursement are the financial oxygen balloons that help keep family finances afloat. But this year it’s even more important how you use that money. You may have to make even tougher choices this time around.

Review your monthly budget

It is not news to you that very difficult times are coming. Inflation and the increase in Euribor is suffocating thousands of families.

Regardless of your situation, I’m going to give you some suggestions on how you can make the smartest use of your Christmas allowance or any extra income later this year or early next (some companies pay performance bonuses, for example).

First, although it seems obvious, pay your bills normal. Never leave bills unpaid. Between shopping for gifts and dining out with family, friends and work colleagues, the choice can be difficult, but it is necessary. Don’t be ashamed if you have to turn down some invitations. You may find it strange, but you are the one who has to pay the bills, not the others.

Then the priority is amortize all credits that have high interest rates (credit cards, personal or car). Amortize as much as you can. As long as you are paying credit installments you will never have financial peace. If you manage to take a (substantial) part of the Christmas subsidy and, for example, write off 1,000 or 1,500 euros from a loan with interest of 8, 9 or 10% (or more) you will be increasing yourself in the same proportion and he is freer to bear the other increases of essentials which he cannot do without.

After paying off all your debts, beef up your emergency fund?? That’s 6 to 12 months of all your monthly expenses. It is absolutely essential to deal with the unforeseen circumstances that you will have. This step is forgotten by many Portuguese. Fix this point: without having a full emergency fund, you will never get your bills in order in your entire life. If you’ve never done so, start now! Today!

Once you have your emergency fund complete, start investing your money: Saving Certificates, if you are tax averse; on one PPR fundif you’re willing to take a little risk in the long run.

If you are one of the bravest, subscribe and reinforce an SP500 ETF ( Google it). Later, when you have more financial literacy, you can eventually move on to other types of financial tools, starting to diversify your investments.

Can also invest in works in your home, related to energy efficiency, such as replacing windows or installing a solar panel. It does wonders for your electricity or gas bill. By investing in works, you will be saving in the long run, although initially this may seem like a cost.

As you can see, there are many ways to use your money wisely. Review how you’ve been spending your money. Of course, you can spend your money on gifts for yourself and others, however you like. You are in charge of your money…

Making choices – however much it costs us – is part of life. And there are times when we can make smart and prudent choices… or not. Don’t forget that we are not living in normal times.

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