Is managing personal finances very different from running a company?

The strategy for personal finance Let's see, a sewing machine… "If you need to stand up, you can stand up." What's this? Is it like an abacus?

Oh, yes, it is!I don't know how to use this, but, like, hundreds, tens, thousands… I don't really know how it works.

Symbolically, it's very beautiful.It's super cool.

Let's see:"Is managing personal finances very different from managing a company?" Phew.

Ah, I think there are similarities and many differences.

I think the fundamental principles are the same, that is,there are inflows of money and outflows of money.

The goal of companies is to make profit, make investments in the right places,manage the resources we have in the best way to achieve the greatest profit,and develop products that are better received in the market to become increasingly profitable, to have a better ROI,a Return on Investment.

In personal finances, we start from the same principles:there's money coming in and money going out.

The big differences are shown in companies: we have financial teams dedicated to understanding where the money is going, whether it makes sense,what the return is on all the investments being made,and which business areas are giving us the best profitability.

When we think about people, the reality is that most of them work 40 or more hours a week to receive, to generate that inflow of money,and then they don't even spend an hour trying to understand where that money is going.

In fact, in this room, if I asked you how much you spent on food or on your home last month, how many people could actually say how much they spent on food last month?

And in a company, you can just go to the food account and clearly see how much was spent.

I think that's where the big differences start.The first major aspect of personal finance is managing our money.

Understanding how much comes in and how much goes out,what it's spent on and when, so that we can make the right decisions and start saving money. And then, to be able to invest.

If we don't know where our money is going, we have no awareness of whether we're making the right decisions or not.

Translating that to a company: if I spend money on whatever I feel like, maybe I'm not spending or investing in the areas of the company that make the most sense and where I'll get a better return.

And I think that's the big difference between personal and corporate finance.

Then there's another aspect related to investment.

Companies analyze quite frequently the investments they're making."I created this new product and invested money in advertising and development is it giving me the return I expected or not?" "I spent a lot of money, so I want to know what the return is." When I think about personal finance, people can't manage to save since they don't have control over their money, and therefore have no money to invest, much less to know whether the investment was good or not.

That's why people need to control their finances and understand where the money is going, make the right decisions to start saving money.

Once they start saving, they should start investing and taking care of their investments to understand whether they have a return that makes sense for their investor profile.

But yes,theoretically they should be the same. But I think the attention given to personal finances is far below what it should be, combined with the fact that financial literacy levels in Portugal are among the lowest in Europe.

I think we're currently second to last, next to the bottom,when it comes to financial literacy.

Therefore, there's a long way to go for Portuguese families.

And it has to start with us.We can say: "My parents didn't know how to do it either, they can't teach me." Personal finance is still a taboo in Portugal nowadays:talking about money is taboo, you don't talk about money at the table.

If something is very expensive, people say "price available upon request".

The reality is that we must start by no longer thinking of money as a taboo.

Money is part of our daily lives: it's something we all have to deal with,If we need to start talking more about money, we must understand better where our money goes, so that we can break this vicious circle of financial illiteracy.