Tips for managing finances-Entering adulthood is the right time to manage finances wisely. As we get older, it also requires us to be smarter in choosing what is a need or just a desire. The greater the income earned does not determine someone in a stable financial condition. If someone cannot manage finances properly, then they will always be trapped in the wrong lifestyle. How to manage the finances of each individual must be different according to the conditions and abilities faced. At the very least, in this article you will get an idea of how to prepare for a safe and desirable future.
Here’s how to manage the right finances to prepare for a bright and happy future:
How to Manage Finances Properly ala
The proverb “Diligent at the base of cleverness, save at the base of the rich” is true. This proverb teaches us to be able to apply the culture of diligent saving and living frugally. We cannot predict what will happen to us. So, it would be wise to be able to set aside what percentage of the income we receive for savings.
If you need guidance on how to save properly, try using the “Kakeibo” (Japanese art of saving) method or allocate 20% of your monthly income to savings accounts.
2. Create Expenditure Details
Make expense posts every month so that it can be easily traced where the money you use. For example, make expenses for daily meals, shopping for primary needs, paying off debts or installments if any, entertainment needs, and so on. You can use an existing financial management application or record it manually in a notebook.
3. Start Investing
To prepare for a bright future, taking steps to invest is the right decision. There are many investment instruments that you can use, including stocks, bonds, gold, mutual funds, and others according to the type of risk level that arises. As a start, choose an investment instrument that has a low level of risk. As you get older, the results from investments that have been planted early will definitely be very beneficial.
4. Pay off Debts and Installments on Time
For those who have debts or monthly installments, such as mortgage and credit card installments, pay off on time. This is done so that we are not charged interest that is too high and to keep our credit score in a good status. If you have credit card installments, try to always pay in full, not with the minimum payment amount. This is done to prevent us from being too consumptive.
5. Provide Emergency Fund
Emergency funds are funds that are prepar to anticipate unexpect and urgent things such as accidents, illness, or conditions when there is no source of income. The amount of each individual’s emergency fund is definitely different, but generally it is 10 times the income we receive each month. Separate the emergency fund account with the daily necessities account so that the emergency fund is not us.
6. Wisely Use Credit Cards
Credit cards do make it easier for us to have goods by installments every month. However, the use of credit cards must also be controll according to the portion and not us for overly consumptive purposes. As for tips for using a credit card wisely, try to pay the installments every month in full payment. In addition, do not even lend a credit card to your relatives. Because if it has changed hands from its original ownership, it will be difficult to control where the credit card expenditures are going.
7. Prepare a Pension Fund
Finally, you may be able to plan your needs when retirement comes. Retirement is a time when we are not requir to find another source of income, but a time to enjoy old age. You must also be able to adjust your lifestyle when retirement arrives in accordance with your conditions and abilities. If you plan to retire at the age of 55, then you have approximately 25 to 30 years to prepare the pension fund.
8. Differentiate Needs and Wants
Before actually compiling a monthly financial plan that is right for you, first understand which things you need or want.
– Basic needs are all goods or services that are primary to be fulfill. Some examples are consumption and education.
– A wish is a product or service that is additional in nature and is only fulfill for personal enjoyment. An example is shopping for lifestyle and hobbies.
By distinguishing the two, managing finances will be easier to do because you know which one is a form of obligation and just to satisfy yourself.