Family Finances: How to Plan a Good and Correct Family Finances

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Want to avoid financial problems in the future? You must know how to properly plan family finances. In this way, you can manage your income and expenses more wisely and manage your family’s financial allocation well so you can avoid the big risk of a stake rather than a pole.

To manage how to know how to plan family finances well, you can see examples of family financial planning tables that are widely shared on the internet. However, in general, how to plan effective family finances must pay attention to several important points which will be discussed as follows:

How to Plan a Good and Correct Family Finance

1. Calculate the Total of All Family Income

The first step in planning family finances is to calculate the total amount of monthly income. This includes a fixed salary, business run, freelance work, and other income. This summed figure will be very important in determining the allocation of funds and spending priorities for every detail of family needs.

2. Create a Monthly Expenditure Budget

The next step to help manage family finances is to make a monthly expenditure budget. The purpose of making this monthly expenditure budget is to monitor financial flows.

This can be a good way to manage family finances so that they are not wasteful. How to plan family finances by making a monthly spending budget is easier for newly married couples.

This is because couples who do not have children have more definite and manageable expenses when compared to families who already have children. You can also see if there are expenses that can be reduced to reduce expenses to be more efficient.

In making a family expense budget, there is a simple formula that you can use. The key is that you only have to prioritize new priority needs, set a budget for every detail of family needs.

To make it easier, you can also use a simple formula that is 50-30-10-10. This formula means that 50% of the total family income is used for living expenses, 30% for paying installments and debts, 10% for savings and investments, and the last 10% for social funds or alms needs.

3. Determine Family Financial Priorities

In making family financial planning, you must be able to determine financial priorities. Each family usually has its own financial priorities that you can discuss with your partner.

You must be able to separate which needs are priority and which needs are not too important. This method is very suitable for husband and wife who work together and unite income in one account before dividing it for each expense item that has been recorded previously.

The way to determine the priority of family finances is to prioritize primary needs or basic necessities such as the cost of daily meals, electricity and water bills, school fees and so on. Furthermore, the new set for secondary and complementary needs.

By determining financial priorities, family needs will be easier to manage. This method is also in accordance with sharia family financial planning by prioritizing alms and zakat.

4. Record All Expenses in Detail

To avoid spending too much, it’s a good idea to record all expenses in detail. You can take notes in a book, use a computer with Microsoft Excel tools or you can also use financial note-taking applications that are widely available today.

By making detailed records, the family’s financial allocation can be monitored properly. Applying these tips can also help new family financial planning management better because each expense becomes clearer, more detailed and in accordance with the needs of the family.

5. Prepare for an Emergency Fund

Every household, whether newly married or for years, is legally obligated to prepare an emergency fund. An emergency fund itself is a special savings that should only be used during an emergency such as sudden household management, husband loses his job, sick child, and other unexpected expenses.

To set up this emergency fund, you can see an example of family financial planning by including an emergency fund post in monthly budget planning. Then set aside and save the emergency funds into a special account that is separate from the daily necessities account so that it is not used. You can discuss the amount of this emergency fund with your partner according to your monthly expenses.

6. Make Sure to Maintain Debt Ratio

In managing and planning family finances, you must maintain a debt ratio. Make sure whether the debt ratio is too large so that you find it difficult to divide expenditure items and lead to failure to manage family finances.

In family financial planning, lifestyle and debt are burdens and obstacles. One indication of good family finances is the debt ratio of no more than 30% of the main income.

Consumptive life habits usually encourage debt. Therefore, as much as possible avoid buying goods by way of debt either using a credit card or with a loan from a bank or other people.

No matter how much income your family has, it will not be enough if you still carry out consumptive behavior. Therefore, start to reduce debt by paying the smallest installments first so that later your income does not run out just to pay debts.

7. Separate Savings and Investment Funds

You are wrong if you think that savings and investments come from the same post. In fact, the two things are separate as described in the OJK family financial planning.

Savings is money that you have set aside and planned from the start. If you have extra money, you can use it as an investment fund. By separating savings and investment funds, you will be able to help family finances in the future more precisely.

For the type of investment, you can choose according to your needs and budget. As a recommendation, you can invest in gold, property investments such as houses, to business investments such as cafes and restaurants.

8. Set aside insurance funds

In managing family finances, don’t just set aside for an emergency fund. However, try to set aside some of the income for insurance funds. By having insurance, you have a family financial security guarantee to avoid costs that are higher than income.

You can choose the type of insurance that suits your needs such as education and health insurance. For health insurance, you can use BPJS health services or if you have more funds you can register for private insurance with wider and larger facilities. So try to include insurance funds in family financial planning.

9. Wisely Use Credit Cards

Using a credit card can indeed make it easier for users to make financial transactions. However, make sure to use credit cards wisely so that you don’t go too far which can lead to the failure of family financial management.

Because if you get carried away, you can get into credit card debt and have to pay installments every month. If you must use a credit card, make sure to use it wisely. There’s nothing wrong with taking advantage of discounts and promos offered by credit cards to cut expenses.

In addition, make sure to use a credit card to buy items that are really needed or included in your monthly needs. In using a credit card, you must be able to distinguish between needs and wants.

Credit cards can boomerang and trap users in prolonged debt. This will be even more difficult if you start having trouble paying it because the use of credit cards is more than your monthly income. If this happens, it means that you have failed in planning for family financial management.

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10. Perform Family Expenditure Audit Periodically

To ensure all family financial planning goes well, don’t forget to evaluate expenses regularly. This is to maintain and ensure financial management remains on the right track or not excessive.

From this audit you can see expenses per month and it will be useful for financial planning for the next month. If during the audit you find that your monthly expenses have skyrocketed, then check which post costs more and find out the cause. That way you will be able to find a solution so it doesn’t happen again in the next month.

In making financial planning for the family, it’s good to make it as comfortable as possible and not too strict. You only need to pay attention to the percentage of household finances so that it does not exceed the monthly income.

With less stringent planning, you can still make changes if needed for better financial planning.

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