If you want to be rich, you have to be able to manage your personal finances well! It turns out that it is not complicated to be able to manage finances independently! Follow the method below!
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How to Manage Good Personal Finance is Easy
Everyone certainly hopes to have a significant income, but did you know that the most important thing is that you can enjoy it, right? It’s unfortunate if we have a large salary or income, let’s say above INR 20 million, but our debts and bills are more than 70 percent of our income, and we can’t save or invest.
Any amount of income will not guarantee the welfare of our lives if we do not manage sound personal finances. Even rich people will be stressed and frustrated if they don’t manage their finances and manage their income and expenses.
Financial problems will certainly make your head dizzy, and you can’t sleep. So before financial problems pile up, it’s better to fix one by one simple thing and move on to the next stage. Let’s follow these Seven ways in managing finances that will make your financial life better, even avoiding the trap of consumptive debt.
#1 Have Personal Financial Records
Without personal financial records, we will not be able to manage personal finances properly.
Personal financial records are instrumental. This is an essential step we have to take. If we don’t do this initial step well, even consistently, then our finances will still be messy and not well organized. By recording personal finances, we can track where the money we earn is spent.
In addition, we can find out what expenses we can reduce, or we need to increase the nominal according to need. Recording personal finances can also help design financial goals; we can find our financial strength to achieve our financial goals within a specific period.
For example, suppose we have a financial goal to buy a house with a mortgage of 300 million in the next five years. In that case, we can plan from now on by saving a minimum down payment of 30 percent, which is 90 million for a specific time, according to our financial capabilities.
Besides buying a house, what other financial goals can we achieve? Of course, the first step we have to do is to record personal finances.
#2 Create a Monthly Budget
In creating a monthly personal finance budget, here is a formula that you can use 40-30-20-10, in the form of a division:
- Allocate 40 percent of your income for daily expenses, such as monthly bill fees, to daily shopping needs.
- Next, allocate 30 percent of your income to pay off debt installments if you have one.
- You can allocate 20 percent of your following income for investment savings for a better financial future.
- Then, 10 percent of your income you allocate to donations, gifts, or charity.
Easy, right?
#3 Manage Expenditures Wisely
This is where the art of managing personal finances comes in. Everyone certainly has their strategy, including you, right?
The first expense we need to pay is taxes or deductions.
Usually, this tax will automatically be deducted from the salary for workers or employees each month to receive a net wage that the cost of paying taxes has deducted.
In addition, deductions for social security for workers have also been paid automatically.
The next expense that needs to be regulated in managing personal finances is donations or charity.
Usually, 5 to 10 percent of the income is received.
Furthermore, to build good financial strength, we need to prioritize savings through investment vehicles.
Saving in the bank alone is not enough. The average amount of interest received in one year is not comparable to the current monthly administrative discount, which is quite large, especially with the inflation rate increasing every year.
Therefore, it is highly recommended to invest through various investment instruments that are very profitable to build a personal finance printer and prepare for a better financial future.
From this investment savings, we can also increase our income by building a business from the investment income.
Thus, we will increase the financial income stream.
#4 Create an Emergency Fund from Investment Savings
An emergency fund is a significant fund to anticipate an emergency or urgent situation not to affect our financial condition.
There are many events or disasters that we cannot predict, so we need to have an emergency fund.
So, where can we collect emergency funds from? Did you know that we can collect emergency funds from investment savings funds?
Already know the number of emergency funds you have to prepare?
- Usually, you need to collect six times the total expenditure per month for single or unmarried couples.
- In contrast to those who are married but do not have dependent children. Ideally, they need to raise an emergency fund of 9 times their total monthly expenses.
- Meanwhile, families with dependent children need to collect an emergency fund of 12 times their total monthly expenses .
#5 Have Health & Life Insurance
There are still many people who do not understand the usefulness and importance of having insurance.
They feel a loss because they have paid for insurance so far but have never received the benefits.
The question is: does anyone want to get sick or experience bad things? Insurance is used as an umbrella to protect us from rain or the scorching heat.
We don’t know when the rain will come, but we need to be prepared and on guard, correct?
Herein lies the importance of health and life insurance where we need to have it!
There are many benefits of having insurance, including:
- The insurance premiums we pay can pay for treatment or care.
- The insurance premiums we pay can protect assets and prevent loss of assets and debt.
- The insurance premiums we pay can replace installment payments and debts
- Increase funds for family needs.
- Can focus on healing
#6 Pay Debt or Installment
If you have debts or installments, prioritize them first to pay them off one by one.
To get accurate advice and solutions to get out of debt that binds you and makes it difficult for you to sleep, immediately contacts my Financial Planning Consultant that you can rely on!
Did you know that hiring the services of a financial planner or financial consultant is very expensive?
But, no need to drain your wallet just by subscribing to the Financial Application for one year at a subscription price of Rp. 350 thousand/year, you can consult with a Certified Financial Consultant and get the right solution on managing personal finances and how to get rid of confusing debts.
#7 Avoid Consumptive Debt
Consumer debt will make your wallet tighter. However, financial planners and financial experts agree that consumer debt is not recommended.
On the other hand, productive debt can increase your income; for example, you borrow some money for business capital from the bank or make a vehicle loan where the vehicle is used to work or make money.
Managing Personal Finance is Easy & Fun
It turns out that managing personal finances is fun and not complicated, right!
Keeping track of personal finances is not complicated, you know! We can be assisted with financial recording application services and apps, many of which are free.
These apps make it easier for us to record daily finances. Not only taking notes, but this application can also help calculate the costs that must be collected per month to achieve a financial goal.
We can also consult with a Certified Financial Planner. So don’t forget to immediately record expenses and income transactions that occur at the same time, so you don’t forget to register or miss them.