Financial Planning
A person will have a definite meaning and direction if he has done financial planning for his life goals. Because planning can recognize the extent to which the financial goals that are made will affect other financial aspects. Setting financial goals is the basis of the process of planning, implementing, and monitoring the progress of personal financial planning. Things that can be used as a guide in setting financial goals are as follows.
Realistic
Financial goals must be based on the amount of income and living conditions. For example, it might not be a realistic thing to have a plan to buy a car once a year for those who just graduated from college and just got a job.
Specific and Measurable
Know clearly the number of funds needed and how to get it. For example, it took Rp. 50 million to pay a down payment on a house for the next three years and now each month is set aside from personal expenses to be invested in a certain company equity fund.
Target Time
As in the previous example, that has a target time of three years to achieve it. Setting a target time allows assessing the progress of each planning financial goal.
Actions to Do
Financial goals are the basis of a series of other steps that will be taken. For example, reduce or stop debt with a credit card so you can invest or find a side job. There is a saying if you don’t know where you’re going, you might end up somewhere else and not even know it or in other words, know your direction and purpose if you don’t want to get lost. Try to apply the things that have been mentioned above so that financial goals are more focused.
Tips to Maximize Your Financial Planning Goals Effectively
If you want your life to be better, you should start paying attention to your finances. Indeed, life is not just about financial matters. But it cannot be denied that money plays a big role in determining the quality of our life. It would be very good if you can manage and manage your finances well because later you will also get a positive effect. And please don’t think that financial planning is only for people with just enough economies.
If you happen to have an abundant financial condition, that’s a good thing for you because you can easily get what you want by buying it. However, that is not an excuse for you to always spend your money and go wild without planning. Remember, life is like a wheel. You can’t always be on top. When you are at the top, you have to be prepared when you are down there. And that is the essence of the purpose of financial planning. So, what can you do to plan your finances well? Here are a few things that might help you.
The main purpose of financial planning is how you can meet your needs and save money. For matters of fulfilling your needs, of course, you have no more questions because we do have money to spend. However, for matters of saving, we will discuss it later. What is clear, it is you who have to manage money, not the other way around. It’s a good idea to provide clear portions of your shopping categories.
For simplicity’s sake, let’s think of your salary as your only source of income and you get that salary every month. Consider your total salary including bonuses etc. as 100%. You must budget a maximum of 80% of your salary to meet the needs of your life. For those of you who are well paid, maybe this is very sensible and very easy to do. However, if your salary is mediocre or even less frequently, 80% is a very small number. Why is it small? Take for example your monthly salary is 1 million and you have to support your children and your wife.
If you have to allocate 80% of your salary for the necessities of your life for a month which includes basic needs, school fees for children, and others, that means there are $800 that you can allocate. This figure is theoretically small and insufficient. But you are strongly advised to always be able to manage your expenses. How can those $800 meet your needs? It’s tough, but you have to try it.
Maybe at this point, you will be wondering why only 80% is allocated for the necessities of your life? Why not 90% or even all of them? You should know that the remaining 20% you will allocate for savings and for unexpected funds. You can divide it into 10% or 15% and 5% respectively. These savings will serve to reserve your funds in the future, such as when you are planning to buy a house or for your child’s school entrance fees. Meanwhile, unexpected costs are costs that you will use for things outside of your planning, such as your child suddenly getting sick. If you do not use these funds, you can allocate them for your basic needs, or become part of your savings.
The percentages and allocations above only apply if you are not in debt. If there is a debt that you have to pay, please set your own percentage of the debt as long as it doesn’t interfere with 80% of your basic needs allocation.
