Who has the intention to improve the financial aspect but doesn't know where to start? Or are you fresh graduates, traders, or freelancers who are still having trouble finding the most basic steps in managing finances?
The following is basic information on how to manage finances in a simple way without using complicated techniques. We can practice these ways in managing our own personal finances. What are the tips?
1. Record Every Incoming and Expenditure
The most basic part is recording every income and expense. Although this is already known by many people, but rarely apply it in everyday life. In fact, technological developments have made it easier for us to do financial records because many of these applications are available on smart phones.
Why do we have to record every income and expense? Because by recording this, we can find out how much our monthly expenses are, whether we exceed our income or not, or what expenditure items are the cause of our swollen expenses.
Likewise income, don't just rely on estimates. In fact, even for uncertain income, it is still mandatory to record, for example, for freelancers or traders.
2. Collecting Emergency Funds and Budgeting
After making financial records and knowing the monthly income and expenses, the next step is to budget money for certain costs, such as if we record the internet fees, whether the costs are too large or not.
The process of making this budget is the time to review all of our expenses that are daily, monthly, to yearly, certain and uncertain.
Then collect funds that are used in emergency conditions, namely emergency funds of 3-6 times monthly expenses for single or employees with fixed income, then 9-12 times monthly expenses for those with families, freelancers, and business people with non-fixed income.
3. Create and Set Financial Goals
The last part is determining financial goals. Setting financial goals is divided into needs and wants, long, medium, and short, then general and non-general.
An example of setting a financial goal is the need to buy a smartphone, but a desire that has the apple logo bitten. Then long term for retirement, medium term for example owning a house, short term having insurance and investment, and general nature such as insurance, children's education, houses, and vehicles.
Then the non-public ones such as holidays, traveling, changing vehicles, and others. This third part usually requires guidance in the form of books, seminars, workshops, or financial planners to accelerate the achievement of our financial goals.
Hopefully the three basic steps above are useful for learning and practicing the most basic ways of managing finances for beginners. Good luck!