Having financial security today is one of the life goals of millennials. Of course, this goal can only be achieved by having an understanding of how to manage finances properly and correctly. Any amount of income will not make your life prosperous if you can’t manage your finances and organize your income and expenses. We will be wracked with financial problems that can lead to stress to frustration. Therefore, before the problems pile up, try to follow the tips on how to manage personal and family finances so that they are not extravagant from the following mihinoa.com.
- 1 How to Manage Personal Finance
- 2 How to Manage Household Finance
- 3 How to Manage Business Finance
- 3.1 Record All Expenses
- 3.2 Making Financial Projections
- 3.3 Keep Personal and Business Finances Separate
- 3.4 Pay All Bills On Time
- 3.5 Calculate Income and Profit in Detail
- 3.6 Minimize Travel Costs
- 3.7 Pay Attention to Contract Agreements with Third Parties
- 3.8 Monitor Financial Cash Flow
- 3.9 Use Profit to Grow Your Business
- 4 How to Manage Monthly Finance
- 5 Benefits of Managing Finance
How to Manage Personal Finance
Money has various influences on human life. There are those who choose to be frugal, there are also those who have difficulty managing their finances to make the money run out quickly. A good way to manage personal finances is to minimize expenses and maximize income, that way, life in the future will be more secure.
Well, for those of you who are single or not yet married, it’s a good idea to start trying to manage your finances better. Try following the methods below!
Create an Expenditure Budget
The first way that you can do to manage personal finances, both with small and large salaries, is to make an expense budget. Making a spending budget doesn’t need to be difficult, the most important thing is that you must be able to prioritize your spending first.
Setting priorities will help you allocate income more easily. Some of the prioritized priorities include daily expenses such as monthly bills and shopping needs. After that, prioritize debt installments (if you have one), and you can allocate the rest for investment savings, emergency funds, and social funds (such as zakat or tithing).
Record All Personal Income and Expenses
Without having a personal financial record, of course we will not be able to manage finances properly. Routinely or accustomed to recording personal income and expenses has many uses and is one of the first steps in managing finances. You can track which posts our income is in, so that in the future we can know if there are expenses that we can reduce or increase in nominal according to needs.
This method is also useful for designing our financial goals. For example, you have a goal to buy a laptop in the next three months, so you can plan from now on by saving the money in advance. You can also estimate the amount of savings that you need to spend each month so that these goals can be achieved within a predetermined time frame according to your financial capabilities.
Use the 50/30/20 . Formula
Well, if you want a more detailed and detailed way of managing finances, try to follow the 50/30/30 formula method in the style of United States senator Elizabeth Warren, which is quite popular. This method requires you to break down your net income into three large sections, with the following explanation:
- Set aside 50% of income for daily needs and mandatory bills, ranging from shopping for daily necessities such as food and toiletries, to medicines, also included in this calculation. In addition, also include mandatory bills such as electricity, water, insurance, or other installments that have not been paid off. Calculate well, are your daily needs and bills enough with 50% of your income? If it turns out to be overspending, then you can replace some items at a cheaper or more economical price.
- Set aside 30% of your income for entertainment and other needs, so you can still enjoy your free time with vacations, buy things you like, or want to develop yourself by attending training and workshops by preparing the budget early. So that doesn’t mean you can’t have fun if you want your finances to be secure.
- Set aside 20% of your income for savings and investments, whether in the form of an emergency fund, things or items you want to achieve/buy, retirement funds, or even investment capital.
Pay Debt & Installment On Time
Debt-free is one of the main factors that make your finances more secure and comfortable, because you have no other burden than your daily living expenses. You will also avoid stress or the risk of being involved in an endless vicious cycle. Debt behavior is usually triggered when you have a need that cannot be met by your daily income, or even when you are unable to pay your debt, you can go into debt again to pay it off. As a result, you will be trapped in a debt trap that is getting bigger and bigger.
To get out of debt immediately, the first thing you have to do is control and try as much as possible to get rid of the possibility of debt. If your debt is in the form of a credit card or other loan, be sure to choose one that doesn’t pay interest. You can also combine several debts in one place, so you don’t have to worry about breaking down your income at the beginning of the budget. Don’t forget to always pay the installments on time, don’t wait for it to be paid off quickly!
Press Consumptive Expenditure
If we discussed debt earlier, this one thing is directly proportional to the wasteful or consumptive life attitude. Consumptive debt will make your wallet tighter, so many experts and financial planners don’t recommend it. Press the consumptive expenses you have, as much as possible in mind to always buy the things you need, not what you want, and at an affordable price.
Allocate for Emergency Fund
What should not be forgotten in managing personal finances is setting aside some of your income for an emergency fund. An emergency fund is a very important amount of money to anticipate an emergency or unexpected situation so that it does not affect our financial condition . The nominal emergency fund is adjusted to your financial capabilities and spending priorities, but ideally for those of you who are not married, you need to collect 6 times the total expenditure per month. Keep in mind that emergency funds and savings are not the same thing and don’t touch or take funds from savings or income for unexpected expenses.
Have Health and Life Insurance
Having health and life insurance is an excellent investment. Unfortunately, many people still feel at a loss because they always pay for insurance every month but never feel the benefits. In fact, what must be instilled in the mindset is that insurance functions like an umbrella that can protect us from rain or scorching heat. We never know when the rain or heat will come, but we need to be on guard by preparing an umbrella.
Herein lies the importance of health and life insurance. With the rising cost of health care, you can get medical or treatment costs and focus on healing without having to think about finding money to pay for it.
How to Manage Household Finance
Finance in household finances is the key to family welfare. Maybe you are familiar that many divorces or fights in the household are triggered by financial problems. Because, managing finances in the family does require good cooperation from all family members. By properly understanding how to manage family finances, the whole family can be assured of both present and future life. Here are some surefire ways to manage household finances.
Calculate All Income
The first step you have to do is measure your financial ability and your partner first. Calculate all monthly income earned from salary or business you run. The number of figures obtained is very important to determine the monthly budget or allocation of funds for every detail of family needs. That way, you can avoid the risk of expenses that swell from income. The key is that you and your partner must be open, tell honestly how much total income you get each month and from where.
Create a Monthly Shopping Budget
Making a budget per month can help control family expenses more. Make a monthly shopping plan that you can prepare from the previous month. We recommend that you separate the financial budget for primary, secondary, and tertiary needs, with details as follows:
- Primary needs include food, transportation, education costs, savings, mortgage insurance, vehicle (motor/car) installments , electricity, water, and telephone bills.
- Secondary needs such as shopping for clothes, the cost of eating out, entertainment costs such as internet subscriptions and television subscriptions.
- Tertiary needs for example vacation abroad, buying new skincare or jewelry, branded products, expensive furniture, or luxury cars.
After that, compile a shopping list with a priority scale, starting from primary needs with the highest priority to be fulfilled to tertiary needs with the lowest priority and can only be fulfilled when all primary and secondary needs have been met. Only then can you set a budget from every detail of family needs, not to exceed the ability or family income in a month.
In principle, all income must be spent or included in the expenditure budget in the appropriate post. If there are remaining funds, can be put into savings or investments. You can use the 50 – 30 – 10 – 10 formula. With this formula, 50% of the total family income will be used to meet living expenses. Meanwhile, 30% of family income is used to pay various debt installments. Then 10% of income is allocated for savings and investment. The remaining 10% of income is for social fund needs.
Allocate Funds for Savings, Insurance, and Investments
In making a monthly budget, don’t forget to keep allocating funds for savings, insurance, and investment. additional income earned into savings or investment products, such as time deposits, mutual funds, property, business, or gold. But don’t put it in the same post, separate it by allocating funds for savings first, then if there is any left over, it can be used as investment funds .
Meanwhile, setting aside insurance funds can also ensure the family’s financial security because it avoids and costs higher than income. Register your family for insurance with premium contributions that match your financial capabilities. The type of insurance also adjusts to the needs, it can be education or health insurance.
Prepare an Emergency Fund
One more fund that you need to allocate in managing household finances is an emergency fund. Whether you’re a newlywed or long-term couple, setting up an emergency fund is one way to manage important family finances. Emergency funds are special savings that can only be used during emergency conditions, such as sudden household management, spouse losing their job, children, illness, and other unexpected expenses.
This method is important for managing monthly finances in the household. Therefore, include an emergency fund item in the monthly budget planning and the money that has been set aside can be stored in a separate account with the daily account so that it is not used. Don’t forget to discuss with your partner first to determine the amount that must be set aside each month to be used as an emergency fund.
Maintain Debt & Installment Ratio
Being able to distinguish between wants and needs is a crucial factor in managing family finances. When you want to buy a product, you should not be driven by prestige or simply to indulge your desires. Especially if you have to go into debt to be able to buy these items. Lifestyle and debt can be a financial burden for your family. Therefore, one of the good financial indicators is indicated by the amount of debt that is not more than 30% of the main income.
As much as possible avoid buying goods by way of debt, either using a credit card or with a loan from a bank or other people. No matter how much income you get, it will never be enough if this consumptive behavior persists. Start reducing debt by paying the smallest installments first, so that later your income doesn’t run out just to pay off debt.
Perform Financial Evaluation Periodically
Well, if you have applied all the ways to manage finances above, then now is the time for you to evaluate your expenses on a regular basis. The goal is to keep your finances from being excessive and you can see how much you spend per month. If in one month your expenses are excessive, then re-check which posts cost more or if there is an increase in the price of basic goods, or maybe you and your partner have not been able to eliminate the consumptive nature. In the future, you can review whether it is necessary to increase or decrease the nominal in the post so that expenses and income become more balanced.
How to Manage Business Finance
Business is one of the most important investments and a good way to make money. In doing business, it is very important to have the ability to manage finances to avoid losses or even the possibility of bankruptcy. Not only that, understanding the right way to manage finances in a business or business can give you other benefits. Then, how to manage finances in a good business? Below are some ways that you can keep your business financial flow healthy.
Record All Expenses
The first, in managing business finances is to track and record all expenses and manage books properly. You can work around this by keeping all evidence of income and expenses that occur during the business process. You can do it manually or can be assisted by using various accounting software or hire the services of a good accountant.
Making Financial Projections
It is important to make financial projections of what may happen in the business. How to? It can be done by making expenditure plans for the next period. That way, you can get various financial priorities in a certain period so that you can anticipate and avoid unexpected expenses that are outside the plan that can make expenses swell.
Keep Personal and Business Finances Separate
This is the most important thing about how to manage finances in a business or business, namely by separating personal and business financial accounts. Because it can make it easier for you to track the company’s cash flow, where you can find out which expenses or income you get for personal or business matters.
Maybe you’ve heard of cases of business money being used for the personal needs of the business owner, and even worse, it’s not known exactly how much money was used. As a result, the business capital owned is reduced imperceptibly and has an impact on the business being run. This problem is the most common or dominant cause of business failure.
Pay All Bills On Time
Billing does not mean that the profits obtained will be reduced, especially if it is related to business operations. Which means it’s the bills that keep the business going. So, so that business finances run smoothly and are not biased, get in the habit of paying the bill immediately and don’t delay it so you don’t forget and even make bills pile up. You can also avoid the obligation to pay additional late fee penalties for not paying on time. It may sound trivial, but the amount of fines can be quite large and affect business operations.
Calculate Income and Profit in Detail
Getting profit or profit is the main goal of doing business. Unfortunately, there are still many entrepreneurs who do not calculate profits properly and correctly. Though this is very important to measure the extent to which your business can run well. When calculating income and profits, make sure all costs have been calculated in detail. Don’t forget to calculate depreciation costs, tax costs, and other interest so you can see how much net profit your business has over a certain period.
Minimize Travel Costs
Travel is often included in the business process, for example meeting clients or becoming suppliers out of town. This will not be a problem as long as you pay attention to keeping the travel costs to a minimum in order to remain economical and maintain business financial stability. Organize your trip well, rent accommodation that is comfortable but still economical so that it will make your business trip less expensive.
Pay Attention to Contract Agreements with Third Parties
The involvement of third parties in running a business certainly exists so that the business grows and gets bigger. With a third party, businesses can be helped both in the production process and during decision making, especially those that affect the financial management of your business. It is recommended to make this third party either as a supervisor or fully submit the matter of business financial management. And also sometimes using the services of a third party can make expenses increase, therefore always pay close attention to the contract agreement that has been made.
Monitor Financial Cash Flow
When running a business, you need to regularly monitor financial cash flow. Sometimes this is the most difficult thing for business actors to do because it requires a fairly high level of accuracy. If you have difficulty monitoring financial cash flow, you can use the services of an administrator to control cash flow and establish good financial procedures. You can also use accounting software if you don’t want to spend too much money on hiring these services.
Use Profit to Grow Your Business
Profit is the most awaited income for business actors because it is considered as a measure of the success of a business. If your business is already making regular profits, immediately turn profits into something productive, such as business development. For example buying additional company fleets or adding product variants. Do not immediately spend the profits earned for personal purposes.
How to Manage Monthly Finance
Do you often have difficulty managing monthly finances, even money often runs out at the end of the month? This can happen because you are not able to manage your salary or monthly income properly. But don’t worry, there is a surefire way to manage your monthly finances wisely so you don’t run out of money before it’s payday. Check it out below!
Create a Monthly Budget
Of course, it is very important to make a monthly budget because you know what costs you have to spend each month. Sometimes people can’t keep track of their expenses so they tend to be wasteful and overspending. By making a monthly budget, you can list what your expenses are and then see if it’s more than your monthly income or not. Make sure these expenses are detailed, fixed and the same every month, for example, such as boarding costs, transportation costs, insurance costs, and others.
Determine Financial Priorities
Well, after making a monthly budget, it’s time for you to determine your financial priorities. A good way to manage finances is to prioritize buying the things you need that have run out and you refill the stock or goods for daily needs. Also determine the maximum amount you have to spend each month so you don’t overdo it when shopping.
Immediately Pay the Bill
Don’t assume you get rich right away as soon as you receive your salary, because the first thing you have to do after payday is pay all your bills up front. Such as electricity, water, telephone bills, credit card installments, and so on according to the monthly budget you have made. This is very important so as not to interfere with the cost of your daily needs. Prioritize paying bills on time and evaluate if there are bills or installments that can be paid or closed so as to reduce the financial burden.
Allocate for Savings and Investments
Allocating some of your income for savings and investments will not make you poor, you know. Instead, you can protect yourself from unforeseen conditions and have enough savings for the big things you want to achieve one day. The amount of funds that you can set aside is quite adjusted to your other needs. It would be better if you set aside a rather large amount so that your personal expenses can be reduced.
Have Two or More Bank Accounts
The next tactic to keep your monthly finances safe and secure is to have two or more bank accounts for different purposes of saving money. For example, you can use the first account for daily expenses, while the second account is used for saving. Especially for accounts used for saving, you should choose one that has low administrative costs and can be accessed without an ATM card. By creating two accounts, you will be able to distinguish which money you can continue to use and which you can’t argue with unless there is an urgent matter.
Record All Financial Transactions
Maybe this method is one of the laziest ways to do it, even though it is very effective for controlling your expenses. Now there are also several detailed financial note-taking applications that make it easier for you to record your daily expenses if you don’t want the hassle of having to write in a notebook. That way, you can calculate how much you spend on average and also determine the maximum spending limit you can spend for one day.
Benefits of Managing Finance
Our needs will continue to increase, and indirectly we will feel compelled to work even harder in order to cover those needs. Not to mention preparing for future savings and investment capital, we end up being overwhelmed. Therefore, good financial arrangements are needed in order to fulfill them without problems. If you are able to apply how to manage your finances wisely and correctly, you can get a series of benefits that will certainly make your life more positive and calm. What are the benefits that you can get?
Make Yourself More Organized and Disciplined
Being able to manage finances means that you are able to sort out and choose which ones are your needs and which ones you want. So you can be more disciplined in buying something, even your bad consumptive habits can also slowly disappear. You will automatically implement a frugal life and become more orderly and organized because all good needs are always planned in detail. Not only basic needs that you can fulfill, but also other needs with low priorities such as vacationing abroad.
Have a Plan for the Future
One of the most important benefits of being able to manage finances is that you always have a plan for the future. When everything is well planned and organized, you no longer need to worry about the future. For example, you want to get a comfortable and debt-free retirement. You can try to invest in the right investments and try to project what you will be like in the next 5 (five) years. Do you already want to own a house, get married, or if you are already married, you may want to ensure that your children’s education costs are guaranteed. In essence, realizing a good future must be balanced with consistency in doing the things you have planned beforehand.
Have Protection From Unexpected Events
Life is full of uncertainty, we never know what will happen to us tomorrow, the day after tomorrow, and so on. Of course we need proper protection from unexpected events. By managing your finances to the maximum, of course you will also think about how to choose the right protection for us, for example in the form of investment or insurance.
Consumptive and wasteful bad habits will lead you to an attitude of debt. Having debt indicates poor financial management. Paying off debts immediately and on time, then avoiding them in the future can be achieved by managing finances wisely. Buy what you need, or you can look for a cheaper but still efficient replacement.
Stress often occurs in those who experience financial problems. Though stress can trigger various diseases and endanger your health. Avoid things that can trigger stress, such as large debts, loans that have not been paid off due to higher interest rates, and excessive lifestyles and others. By managing your finances well, you will be free from stress and your mind will be lighter because everything is in order.
Benefits of Managing Family Finances
Implementing family financial management is not just allocating existing funds to meet family needs. With increasing and diverse needs, especially if you already have children, then you need a better and wiser financial management strategy. Setting up good family financial rules can provide a number of benefits, such as financial security in the future, affordable children’s education expenses, and safety from increasingly suffocating health costs.
Clearer Life and Financial Goals
Everyone must have various life goals, such as buying a house, getting married, building a business, buying a vehicle, and so on. With the right financial planning will certainly help realize these goals. If previously you were often confused about finding a purpose in life, when your finances are well managed you will be able to find it more clearly and be motivated to make it happen according to your financial capabilities.
That’s how to manage finances wisely and appropriately so that your finances are safe and avoid financial problems personally and family. You no longer need to feel like you’ve worked as hard as you can but the money you get runs out quickly. No matter how hard you try to raise money, if you don’t understand how to manage your personal monthly finances, it could be useless. By following some of the ways above you can get a series of benefits in your financial condition. Well, if you need financial information that suits your condition, you can visit mihinoa.com to get it!