Family Financial Planning Tips – Do you know the proverb "Bigger a peg than a pillar"? Yup! It is a term for people whose expenses are greater than their income. Well, as millennials, don't be like that, okay!
Do you want to avoid financial problems when you are married later? Well, that way you have to know, here, the right family financial planning.
By knowing family financial planning, you can later manage your income and expenses better and wisely. It is not easy to manage family finances.
There are many factors that can influence it, for example, needs that must be met and desires that are entertainment or additional in nature. Therefore, it takes tips to organize and plan finances so that family needs are met. Especially in this millennial era.
If so, let's take a look at some tips for managing millennial family financial planning!
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7 Millennial Family Financial Planning Tips
1. Distinguish Between Needs and Wants
When you are married, you must know what needs you have to fulfill. Don't let your money run out because you just follow your wishes, okay!
Even though family finances are not only used for needs, fulfilling desires also needs to be a form of self and family appreciation. As long as you don't overdo it, okay? Don't let your finances be allocated more for your wants than your needs.
This is because usually the desire is not too important for us to have. For example, such as buying the latest version of the gadget even though your gadget has not been damaged, fashion up to date, to other goods that are secondary and even tertiary. Everything can make you wasteful.
Well, even so, it's not that you can't buy these items. However, make sure that your primary needs are met properly and sufficiently.
What are the primary needs, anyway? Primary needs are like daily food, education if you have children, mortgage and transportation, and much more.
So, to manage family finances, the most important thing is to understand and distinguish between needs and wants. Fulfill your family's needs first, then allocate them for personal desires.
2. Calculate All Income
Next, to manage family finances effectively, you record and calculate all the income you get for one month. The purpose of income here is not just about salary, but it can also be the incentives you get from overtime wages or investment profits.
Especially, if you work with a daily income system. You must always remember to take notes and count them, yes!
Calculating the entire amount of this income is very important to be allocated to daily needs. That way, managing finances can be easier and more effective. Remember! First, you have to fulfill the primary needs.
3. Create an Expenditure Budget
Making a monthly expenditure budget is an important step in managing family financial planning. The purpose of making this budget is to monitor your financial flows. This is also one way so that you are not wasteful.
To make this budget, you can imitate it from other people's financial plans. Well, only then can you record your income with your partner and make details of expenses per month. By making this budget, you already have to separate between primary, secondary, and tertiary.
In making a financial planning budget, there is actually a formula. The main key is that you have to prioritize new priority needs and set a budget for other needs.
To make it easier, you can use the 50-30-10-10 formula. The meaning of this formula is that 50% of income is used for living expenses, 30% pays installments, 10% is savings and investment, and another 10% is for social fund needs.
4. Record All Expenses
When you record all your expenses, your family finances can be monitored much better. If you continue to apply these tips in family financial planning, your finances will be more detailed, clear, and of course according to family needs.
5. Separate Emergency Fund
When you have a family, it is obligatory to set aside an emergency fund. This is because in living a family life, not everything can run smoothly. Many things happen that are not planned so it must eat up your expenses more. Examples such as illness, loss of work, and others.
To set aside an emergency fund, you can include an emergency budget in your monthly financial planning. Then, save the emergency fund separate from daily needs so that it is not used. Now, for the amount of your own emergency fund, you can talk about it again with your partner, OK!
Remember! Everyone has a different emergency fund according to their income and the needs they meet.
6. Maintain Debt Ratio
In order for your finances to run smoothly, you should avoid debt. Debt bills can become a family burden that makes family finances chaotic and disrupted. However, there are some factors that inevitably force you into debt.
If forced into debt, use it for basic needs and do not let the payment deadline in the near future. For that, you can owe for home installments and transportation which have a long enough repayment period.
Outside of basic needs, you should avoid debt, yes!
You really have to maintain your debt ratio. As much as possible you pay debts of no more than 30% of your income. More than that, your family's finances can definitely be disrupted.
7. Set aside Savings and Investments
Make no mistake, yes, saving and investing are the same thing. Turns out, they are two different things. This has also been explained by OJK (Financial Services Authority) in family financial planning.
Saving is funds that you have set aside and planned from the start. Meanwhile, investments can be made if there is more money that you can use.
By separating the two funds, it will help your family finances more effectively. For your own type of investment, you can adjust it according to the budget you have, yes.
You also don't really need to worry because there's a lot right now money management app(s) which can accommodate both. Especially, the Whiz money management app has complete features. Of course, this application can help you to do both things.
Read also: Bad Habits in Managing Finances to Avoid!
So, those are some tips. Interesting, yes! Don't forget to also use the Whiz financial app. That way, you will be able to manage your financial condition for the better.