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10 Ways to Manage Your Finances So You Don't Waste It and Examples


10 Ways to Manage Your Finances So You Don\'t Waste It and Examples_e0437674_07540121.jpg

So that your finances remain safe and fit until the end of the month, you must know how to manage your personal finances wisely. Without proper financial planning, your future finances will be in disarray, and you will even be threatened with not having savings or valuable assets.

How to manage finances is quite simple. You don't need to bother thinking about the calculations because you can use a simple formula which is easier to understand. In fact, now there are several personal financial record applications that can help you
manage your personal finances. You can also use Excel format to create personal financial reports.

With proper personal financial management, you can spend your salary wisely, starting from daily needs, entertainment, giving to your parents, to investing. So even though your salary may still be small now, you still have the opportunity to own valuable assets

The following is a review of how to manage personal finances for beginners that you can follow. This article will also discuss several examples of managing your salary. Listen carefully, OK?

How to manage personal finances wisely Here are 10 tips for managing finances wisely for everyone, including employees,
students, and housewives that Lifepal has summarized for you.

1.Record all income and expenses

The first thing you can do is start diligently recording your income and expenses every day. This is done to find out how much
you need in one month. Record all expenses, even if it's only Rp. 1,000, to make it easier for you to analyze your monthly
expenses. In this way, you can also cut expenses that are not really necessary, for example buying coffee at expensive places
or buying 'printed' items that are not needed. Do this habit of writing down every month, so you can get used to only spending money on important things. Although occasionally you can give yourself a reward by buying the item you want.

2. Set financial goals

The next way to manage your finances is to set your financial goals for the future. For example, in the next 5-10 years you plan to buy a house, perform the Hajj, or buy your dream car. Having clear financial goals will motivate you not to overspend on
spending the money you have. Your financial condition will also become healthier and more organized. Apart from that, you also learn to be frugal and save so that your financial goals can be achieved according to what you want.

3. Create a realistic budget

Next, start making a realistic budget every month according to your conditions. For example, your salary is only IDR 4 million,
but you force yourself to save 50 percent of your total salary with the aim of accumulating your savings quickly. This method is
not recommended because it will make you difficult and not enjoy life. It's best to make a realistic budget according to your
conditions.

You can manage your finances using the 50:30:20 method, namely 50 percent for daily needs, 30 percent for additional needs, and 20 percent for saving and investing. For example, your salary is IDR 5 million, then your budget according to the 50:30:20 formula is as follows.

Basic needs 50% x IDR 5,000,000 = IDR 2,500,000
Other needs (installments) 30% x IDR 5,000,000 = IDR 1,500,000
Savings and investment 20% x IDR 5,000,000 = IDR 1,000,000
The budget you create will be a limit on how much you will spend each month and don't exceed the predetermined limit.

4. Take advantage of a personal expense record application

If you have difficulty writing expenses manually, you can use personal finance applications on Android or iOS smartphones.
Several financial record applications are also equipped with complete features such as personal financial reports and categories
for each expense and income, making it easier for you to know where your expenses have been.

With a personal finance recording application, you can also classify categories for each of your expenses, for example for transportation, food, and investment. So it's easier to sort.

5.Avoid debt

As a millennial, you probably want to always look trendy with branded clothes or the latest model cellphone. However, don't let this desire mess up your financial management until you apply for a loan. To make your wishes come true, you should just be patient and save according to the financial plans that have been made. To make your wishes come true, you should just be patient and save according to the financial plans that have been made. Avoid going into debt to buy consumer goods whose value
decreases from year to year, such as new clothes, cellphones, or laptops.

6. Start Investing

Investment is one surefire way to manage personal finances so that your assets continue to grow. Now, there are many
investment instruments that are suitable for beginners like you. You can invest with capital of just IDR 10,000, such as mutual
funds or gold savings.

You can choose various types of investments that suit your risk profile, such as money market mutual funds or fixed income
mutual funds whose potential returns can reach 4-6 percent per year.

If you are looking for an investment product with cheap capital and minimal risk, you can try this mutual fund investment
product. Distinguished between needs and wants The next way to manage finances is to differentiate between needs and
wants.

Often people always buy what they want under the guise of self-reward. However, if it is not controlled, this guise of self-reward will make your expenses even greater and ultimately other important needs will not be met. It is best to buy prioritized things
that are necessities, for example food, clothes for work and so on. If the item you want to buy is not an urgent item, you can
postpone buying it later.

8.Create an emergency fund

When managing personal finances, don't forget to create an emergency fund. It is important to have an emergency fund if at
any time you need large amounts of money. You still feel safe because you don't need to use your savings.

Especially during a pandemic like this, where the economy is unstable and people are vulnerable to layoffs, it is important to
have emergency funds. A person's emergency fund can vary depending on their status and job. If you are single, you can
collect an emergency fund of 3-6 times your monthly expenses.

If you are married and have dependents, then your emergency fund should be 6-12 times your monthly expenses. The funds that must be set aside for an emergency fund are 5 percent of your income. If you have fulfilled your emergency fund, then your
finances can be safe and stable, even in a pandemic situation like this. You can calculate your emergency fund with the
calculator below.

9. Have different accounts

To prevent too much consumer spending, you should have different accounts. One account specifically for your personal needs
for one month, another account specifically for savings. Now, there are also many types of digital accounts that have many
attractive features with quite large interest rates. You can choose this digital account so that your savings can grow well.

Having a different account also helps you not to be fussy about using money that is specifically for savings. This also makes you more careful in spending money because if the money runs out, you won't be able to withdraw your savings from a different
account.

10.Have insurance

When everything is planned or arranged well but you don't have insurance, your finances can also be in disarray. Because, in life you will definitely encounter various kinds of risks that you never know when they will occur, for example getting sick, having
your car damaged, a house fire, or even death.

If there is no financial protection such as insurance, then the savings and assets you have accumulated so far could be lost.
Considering the costs for hospitals, workshops and due to house fires are not small. As protection, you can buy the insurance
you need, for example during a pandemic like this you can buy health insurance and also life insurance which can cover hospital costs and the risk of death.

If you already have a car, don't forget to also buy All Risk insurance which can provide coverage for all types of car damage,
from scratches, falls, to loss due to theft. You can compare policies and premiums between insurance products on Lifepal with
competitive benefits and prices.

Those are 10 ways to manage personal finances that you can apply. To find out when you can experience financial freedom, you can calculate it using the following calculator.

Why should you manage personal finances?

Managing personal finances is important to know your expenses every month. Without financial management, your financial condition will be messy, unhealthy, and you won't even be able to have assets for the future.

Below are some positive benefits that you will get if you start managing your personal finances.

1. Can have assets and savings for the future

By being disciplined in managing your finances from an early age, you will get great benefits, one of which is having lots of
savings and abundant assets. It doesn't matter if at the beginning you have to refrain from spending your money according to
the plan you made because you will reap the rewards later when you retire. In retirement, you can enjoy your hard work when you were young because you were wise in terms of financial management.

2. Prevent debt

Discipline in managing finances will also you from getting into debt traps. Because, when you can't control your desires, you might go crazy and choose to prevent buy consumer goods by going into debt. When you owe money and you don't pay , the
interest will continue and make your debt pile up. As a result, all the assets you own must be given up to pay debts. By having a commitment to managing your finances wisely, you will not be influenced by buying things that can cause debt to Pile up.

3.Feel calmer

Managing your finances according to your needs and portions will make you calmer because you don't need to take savings.
Everything is regulated and has its own limitations.

Moreover, if you have added insurance to your routine expenses category, you don't need to worry anymore if there are risks in the future. All losses experienced will be covered by insurance.

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by kingnanay100 | 2024-03-15 11:20 | finnace | Comments(0)

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by kingnanay100