Jakarta, Armfalcon.com – Managing personal finances is indeed something that is never taught in school, that’s why not a few people have serious financial problems, ranging from difficulties in saving to being in debt.
“Good at managing cash flow or financial cash flow (income and expenses), is an important element in household finances that must exist. And that is also a very difficult thing to do,” said one of the financial planning team CNBC Internationall, Douglas Boneparth, quoted by CNBC, (1/5).
Boneparth also adds that two important things about mastering cash flow are knowing the total expenses you allocate for lifestyle, and the allocation of funds for saving and investing.
“Balancing these two things is indeed the most difficult thing in personal financial planning,” he added.
Apart from that, Boneparth emphasized that in practice, people will be more enthusiastic about investing rather than improving their financial foundations, especially if it’s not income and expenses.
It’s no secret that managing cash flow also has its challenges, but that can be made easier by doing a few things below.
Distinguish between needs and wants
The two ways to make cash flow healthy are to reduce expenses and increase income. But sometimes, it is often found that a person or family whose expenses exceed income.
Unfortunately, they don’t even know what caused the large amount of household expenses that occurred.
From now on, learn to be able to distinguish these two things first, because this way you can be wiser in managing your monthly expenses.
Supposedly, you should prioritize what is a need rather than wants. Don’t let those two things get reversed.
Net cash flow equivalent to 10% of income
The difference between income and expenses is often referred to as net cash flow. Naturally, the current difference from the reduction is not in a minus condition.
If the difference between your income and expenses is “0,” then your income is expressed as equal to your expenses. This is also not good to be left.
To keep your finances healthy, it’s a good idea to create a surplus of at least 10% of your income. The goal is that you still have remaining funds that can be allocated for savings, investment, or protection.
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