
Finance and financial goals don’t need to be the source of stress from year to year. Manager of Pension Products Luminor Hannes Kuusk in the Baltic Countries, shares practical advice about that, how to become more financially literate and ensure
a more stable future. Money. Illustrative photo. Photo: Nattakorn_Maneerat/shutterstock
Finance and financial goals don’t need to be the source of stress from year to year. Manager of Pension Products Luminor Hannes Kuusk in the Baltic Countries, shares practical advice about that, According to the expert, the way to financial well-being begins with clarity. “The first step is to reduce unnecessary stress caused by money questions, and to ensure that you are confident in yourself on a daily basis. When financial activities are under control, you can consider investing and making your dreams come true,” Says Kuusk. Gaining financial wisdom is a long-term process, which requires forming new habits. That’s why it’s important to be consistent, because even small steps can bring big results. Everything begins with tracking the income and expenses. You need to be honest with yourself and make a map of all your income and expenses, to understand where your money really goes.do with the help of various spreadsheets or applications. “The basic rule is that your monthly expenses should not exceed your income, but even if this condition is met, you should critically evaluate your expenses. “There will likely always be a place where you can reduce your spending, whether it’s a common coffee, a box of candy or other small small everyday purchases, ” he advises. Creating categories and setting monthly limits can help to control the budget. This will help you steadily control spending and give a complete picture of spending. It is also possible to categorize “saving money”, which means saving a determined amount on salary day, or for example, contributions to the third pension step. But Kuusk warns that while saving money, it’s important not to forget to enjoy life: “If the budget allows, then 10 – 15 percent of income should be spent on leisure and entertainment. This way, the process of accumulating money will be more pleasant and sustainable in the long-term prospect, than if you were not spending anything on pleasure.” In the words of an expert, to cope with unforeseen expenses or loss of work, The Reserve Fund can cover expenses for up to six months, if it is necessary. “Such a fund should be available quickly, so that people can use the money in unforeseen situations. “It is not necessary to invest this money, but better to place it in a separate savings account, which often offers a small interest rate.” -Says Hannes Kuusk. Many people don’t think about using pension savings as investments, but Luminor expert Luminor recommends using this opportunity to maximize. “There are few ways to manage pension savings economically. In the case of a second pension step you can increase the contribution rate to four or six percent, which will provide significant benefits in the long term, because contributions to the second step are not taxed. As for the third step, this is where you can also use the tax deduction for contributions, that is, the state refunds the income tax on contributions and to this step. “It is definitely worth considering whether you can benefit from this and in how much, Kuusk explains.Step 1: review your budget
Step 2: Create a fund financial security
Step 3: take advantage of tax benefits