Managing money is not an easy task. Surveys show that nowadays, Costa Ricans have a greater financial knowledge, but they are making mistakes that complicate their family’s economic situation.
José Prado, from the Department of Administration of Costa the Rica’s Institute of Technology, explained Costan Ricans’ main mistakes in this regard are:
-Expenses are higher than incomes: people tend to spend more than what they can generate until they reach a deficit in finance and the debt is simply huge.
-No budget or investment plan: families should be oriented to manage a budget and an investment plan in the short, medium and long term.
-Misuse of credit cards: a good use of a credit card can bring great returns because there will be periods without interest rates. However, there is a problem when people use the card to fund their operations. Prado explained that when misused, cards can become a snowball and people tend to have less cash each day.
-To get an easy credit: desperate people want to pay off their debts. As consequence, they get an easy credit, which has no requirements and come from some financing sources known as hard money loans. Their interest rates can exceed 40%. This is a huge financial mistake, because it’s hard to cope with such an interest.
-Short-term debt: debts are not bad as long as they are moderate and people can afford them. Short-term debts are risky because people get worried after requesting a less-than-a-year loan.
– Low income diversification: most revenues come from a single source. As consequence, they are likely to have significant changes at any time.
-No savings: It is estimated that 54% of Costa Ricans try to save money. However, experts suggest that financial education should start from elementary school.