Managing finances is not an easy thing. Even though you already receive a salary or regular income, increasing the amount of money you have sometimes still feels difficult. Especially if expenses continue to increase every month while income does not increase.
One of the bad habits that we often do is spending money at the beginning of the month, then starting to save money at the end of the month. If this continues, there may not be any opportunity to save. To avoid this, careful planning in financial management is needed. Here are some healthy financial tips that you can do!
1. Prepare a Budget and Record Expenses
The first healthy financial tip is to make a monthly budget and record every expense. A budget is a guide to knowing how much money you have and how to use it. Make sure the budget includes basic needs as well as savings, investments, and alms or zakat.
Keeping financial records allows you to monitor your expenses. This helps allocate funds for investment or saving better. Recording your finances allows you to monitor your expenses, so you can better choose which expenses you can cut.
2. Separate Needs from Wants
Distinguishing needs and wants is very important in managing finances. Needs are basic things such as food, clothing, and shelter. Meanwhile, desires are synonymous with hobbies, activities related to self-rewards or activities that are less of a top priority.
According to the National Institutes of Securities Marketing (NISM), needs are essential to your survival and well-being and should be a priority when managing your finances. Meanwhile, desires are things outside our needs and are considered not that important, but can improve the quality of our life.
Understanding these differences helps you prioritize your expenses correctly. This avoids debt and builds financial intelligence. Here's how to differentiate between your needs and wants:
2.1 Determining Priority Scale
After separating needs and wants, you need to determine a priority scale. Prioritize basic needs such as living expenses and bills. After that, you can fulfill your wishes wisely.
2.2 Avoiding Impulsive Buying
Avoiding impulse purchases is a big challenge. When you see an interesting item, you often want to buy it immediately. Before buying, ask yourself: "Is this a need or a want?"
By separating needs from wants, determining priorities, and avoiding impulse purchases, you can manage your finances better. This will give you peace of mind and improve your quality of life.
3. Debt and Financial Risk Management
Managing debt and financial risks wisely is very important. You should avoid unnecessary debt. Apart from that, you also have to prepare an emergency fund to deal with unexpected situations.
Also Read: Definition of Debt: Types, Benefits, Risks, and How to Manage It
3.1 Avoid Unnecessary Debt
Debt can disrupt your financial stability. So, avoid adding new debt unless absolutely necessary. Make sure to pay debts on time. Discipline in managing debt is important for maintaining your financial health.
3.2 Prepare Emergency Funds
It is important to prepare sufficient emergency funds. According to financial experts, an emergency fund is equivalent to 6 times the expenses if you are not married and 9-12 times the expenses if you are married. This emergency fund protects you from unexpected circumstances, such as job loss or sudden medical costs. With an emergency fund, you can avoid bigger financial problems.
3.3 Consider Investments
Once you have prepared an emergency fund, you can consider investing in either gold, mutual funds, or shares. Make sure the investment you choose is safe because this investment has its own risks. Dig as deep into the information as possible and make sure the investment does not interfere with your other financial posts.
By avoiding unnecessary debt and preparing an emergency fund, you can manage financial risks better. This will give you peace of mind and improve your quality of life in the future.
4. Practice a Frugal Lifestyle
The next healthy financial tip is to practice a frugal lifestyle. To maintain your financial health, adopting a frugal lifestyle is very important. Like a frugal living or minimalist lifestyle, it helps you allocate funds for savings or investment.
There are several ways to create a frugal lifestyle. Some of them are:
- Reduce purchases of unneeded items. By sorting out your needs and wants, you can be wiser when shopping.
- Maximize promos and discounts when shopping. In the digital era, there are many attractive offers, especially on certain days.
- Adopt a minimalist lifestyle. This not only saves expenses, but also increases focus on important things.
- Cook your own food at home. By cooking yourself, you can control food costs and nutrition.
- Avoid activities triggered by "Fear of Missing Out" (FOMO). FOMO often makes you make unnecessary impulse purchases.
- Apply energy saving tips, such as turning off lights and electronic equipment when not in use, and using enough water.
5. Increase Income
The last healthy financial tip is to increase your income. You can increase your income by looking for additional sources of income. There are several ways to increase income, such as:
- Become a freelancer in your area of expertise such as design, programming, writing, or consulting.
- Open a side business according to your interests and abilities, such as selling products or services online.
- Doing side work outside of main working hours, such as teaching, being an online transportation driver, or renting out space.
- Develop new skills that can generate additional income, such as creating digital content or selling crafts.
- By having several sources of side work, you can increase your income. This helps you achieve better financial goals. However, don't forget to maintain a balance between your main job, family and health.
Also Read: Here are Side Job Recommendations for Your Additional Income!
6. The Importance of Maintaining Healthy Finances
In fact, managing healthy finances is more than just the money in your account. Maintaining finances is the basis for a more peaceful and quality life. By controlling your financial stability, you will experience many benefits, such as:
6.1 Providing Peace of Mind
Stable finances are a strong foundation for life. With healthy finances, you feel calmer and less stressed. No need to worry about bills or financial uncertainty.
6.2 Improving Quality of Life
Healthy finances give you the freedom to choose a better life. You can buy a house, continue your education, or start a business. Stable finances also protect you from crises and improve your quality of life.
Maintaining the importance of managing finances is a worthwhile investment. With discipline and good planning, you can ensure your finances remain healthy. It supports the lifestyle you want.
BFI friends, having healthy financial tips and good financial management is very important. This helps you achieve a brighter future. By applying the principles of healthy financial tips, you achieve life balance. This creates peace within you.
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