Jakarta, Armfalcon.com – Eid holidays last a long time and as a result of high spending in the month of Ramadan, it is very likely that our finances will no longer be as healthy as they used to be.
It is important for you to check your financial health after the Eid holiday ends. This is so that in the following month, you can take the right steps to improve your financial condition.
For those of you who want to do this, here are the steps to check your financial health.
Cash flow health
The first step is to evaluate your income and expenses in a month, starting from when you receive your salary in March until your salary in April. Find out what expenses have the greatest value and try to find out whether in that time your expenses exceed your income.
If your expenses exceed your income, then the consequences you have to face are reducing the total savings in your account.
A healthy cash flow is characterized by a surplus from the reduction of total income and expenses, which amounts to 10% of income.
Amount of debt repayments
When you take credit during the month of Ramadan, it will certainly contribute to an increase in the amount of your installments every month in the future.
It would be better to keep the amount of installments so that it does not exceed 30% of income.
The amount of outstanding debt
Not only installments, the amount of debt must also be maintained properly. Do a careful calculation of the total debt that has not been paid to date.
If the value of the total debt is still below 50% of the total assets, then that amount can still be considered reasonable. But if it’s even above it, you have to be vigilant.
Net worth is your actual wealth or net worth. Net worth is obtained from the subtraction between assets and debts.
As long as your net worth is positive, no matter how big the amount is, your net worth is declared healthy. However, if it is negative, it indicates that you have taken on too much consumer debt, and you are declared to be on the verge of bankruptcy.
Total current assets
Current assets, namely cash and cash equivalents, show the value of the savings you currently have. To determine whether your current assets are healthy or not, you can add up all the money you have and divide it by your net worth.
The ideal current assets are around 15-20% of net worth. Keeping too many current assets is certainly not good, because the value of money will be eroded by inflation.
When there is negative cash flow, your current assets will decrease.
Emergency fund amount
The emergency fund value is obtained from current assets in the form of cash and savings divided by the total expenses in a month.
The quotient tells you how many months you can survive if your income is lost.
For single employees, three is the ideal value. But for those who already have dependents, the minimum score is six.
Total investment assets
Is there any investment that you disbursed during the month of Ramadan? Or you instead buy some new investment assets?
To find out the ideal amount for your investment, you can add up all the investment assets you have, such as gold, mutual funds, stocks, bonds, property assets and others. After that, the total value of the investment assets can be divided directly by the total asset value.
The minimum investment assets are 50% of total assets, the higher it indicates that the better you are at doubling your wealth.
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