In everyday life, how to manage household finances is an important thing to learn. Many families often experience difficulties in managing their finances, causing family finances to become unstable.
Therefore, it is important for every family to learn how to manage household finances properly.
How to Manage Household Finances So It’s Not Wasteful
Managing household finances is not difficult if done properly. There are several things that need to be considered in managing household finances, let’s discuss in detail about how.
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1. Determine Household Financial Goals
Determining household financial goals is the first step in managing family finances. This aims to provide clear direction and goals in managing family finances.
The easiest way to determine household financial goals is to make a list of family wants and needs. This list will make it easier for us to identify the goals to be achieved.
After that, we need to determine the priority of financial goals. This priority will help us to determine which goals must be met first. For example, if your family’s goal is to buy a house, then your priority financial goal is to set aside money for a down payment on a home purchase.
Next, we need to calculate the financial need to reach that goal. For example, if the family’s goal is to buy a house worth 1 billion rupiah and a down payment must be provided of 20%, then the family must prepare funds of 200 million rupiah.
2. Make a household budget
Making a household budget is the next step in managing household finances. The household budget is useful for controlling expenses and managing money effectively.
The first step that must be taken is to determine the family’s monthly income. This income can come from the husband’s or wife’s salary, side income, or the family business.
After knowing the family’s monthly income, then we need to make a list of monthly expenses. This list contains all expenses incurred in a month such as electricity, water, food, clothing, and others.
It is important to record all expenses to make it easier for us to control expenses and know where family money is being used.
After determining the list of monthly expenses, we need to determine the allocation of funds for each category of expenses. This fund allocation aims to ensure that each expenditure category has a predetermined spending limit.
Apart from that, the allocation of funds is also useful for setting spending priorities according to the family’s financial goals.
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After determining the allocation of funds, we need to identify expenses that can be reduced. Some expenses that can be reduced include shopping for food outside, unused cable TV subscriptions, and unexpected expenses.
Small savings in everyday expenses can help a family save money that can be used to achieve financial goals.
3. Reducing Debt
Reducing debt is an effective way to manage household finances. Too much debt will drain the family’s finances, causing financial instability.
The first step that needs to be done is to find out the amount of debt you have. After knowing the amount of debt, we need to make a debt settlement plan.
Debt settlement plans can be carried out by prioritizing debts that have high interest and paying off debts in stages. In addition, we also need to avoid adding new debt. Avoid excessive use of credit cards and avoid borrowing money for purposes that are not too important.
4. Saving and Investing
Saving and investing are important steps in managing household finances. Savings can help families to raise money for urgent needs such as children’s education costs or health costs.
In addition, by saving, families can also form a habit of saving money which can help in managing overall finances.
Investing is also important to increase family wealth. However, before investing, we need to determine the investment goals we want to achieve and choose the type of investment that suits our risk profile and investment objectives. There are many types of investments to choose from, such as stocks, mutual funds or property.
5. Improving Financial Education
Improving financial education is an important step in managing household finances. By improving financial education, we can learn better and more effective financial management concepts and strategies.
There is a lot of information and learning resources about finance that can be accessed for free, such as books, video tutorials or seminars.
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How to manage household finances is not difficult if done correctly if you follow the steps described above. You can easily manage household finances well and maintain family financial stability.
In addition, by managing household finances, families can also prepare themselves to face a brighter and more prosperous future.
Thus the article on how to manage household finances effectively so as not to be wasteful. Hopefully the above article is useful, yes!