Financial planning is one of the important things in improving the quality of your life. Empirical Rule should be known before stepping any further.
In a family, financial planning is such as preparing children’s school funds, setting up side businesses and preparing pension funds.
This is done by adjusting the target time target. For example, the funds you need to retire at the age of 50 and the funds you prepare for children’s education, such as college..
Financial planning is important so that financial targets are achieved on time. Some of the ways this can be done by investing in various instruments such as stocks or deposits.
Each of these instruments has its own risks.
Hopefully, some of the financial planning methods below from the Cigna Team will provide inspiration for you. This article is for small families with one or two children.
Prepare Long and Short Term Strategies
One form of good financial planning is to think about short and long term financial strategies in family life. Short-term strategies, for example, to meet the necessities of life such as paying for children’s school fees in a year.
Quoted from www.cermati.com, this short-term strategy can be done by periodically evaluating how your expenses and income flows.
Then, you can also sort out what budgets are priorities so that it will cut other needs that are not really important.
After that, you can think of a long-term strategy such as how the target to achieve your financial assets in the next ten or twenty years?
What assets will you have to achieve that?
If you want to invest then you have to think about how much money you want to invest in investing? Does this not interfere with your monthly expenses?
There are many long term investment instruments such as deposits, Indonesian Retail Bonds (ORI), stocks and property. You can adjust it according to your risk profile.
Studying the Investment Risk Profile
Quoted from www.thebalance.com You can also learn about the risk profile of the investment that will be made with your partner.
Make sure if your partner agrees with your choice if you really want to invest in a joint venture.
If your partner does not agree, you should invest in a limited manner, meaning that this investment should not interfere with your financial profile in the future.
Make sure that this investment will help your financial strength in the future, such as in preparation for retirement or payment of children’s tuition fees.
Make an investment by studying the worst that could happen.
Setting up an Emergency Fund
Preparing an emergency fund is essential to achieve good financial planning. An emergency fund is important when you have children because many costs are required such as hiring a babysitter or spending a budget for the child’s sports activities.
In addition, reserve funds are also needed for children’s education costs.
An emergency fund is also needed in case something happens to you in your family life.
So you need to have life insurance that can cover health when you are sick or experiencing a disaster.
Preparation of reserve funds can be done by investing in stable instruments such as deposits, Indonesian Retail Bonds (ORI) in the long term.
Apart from being liquid, this investment also has good returns to fight inflation.
Then one way to manage the right finances as quoted from www.forbes.com is to reduce unsecured debt such as credit cards.
Usually, the amount of unsecured debt has a higher interest rate than guaranteed.
You have to make sure that this debt doesn’t interfere with your expenses. Ideally, the amount of debt reaches 30 percent of your income.
That is for productive debt such as a house or a vehicle that is used to go to the office.
The way to manage finances is good by starting to select the basic needs needed and not needed. You should also start limiting the use of credit cards.
The way that can be done as quoted by limiting vehicle ownership and buying smaller houses for small families. Another step is to shop for goods at wholesale.
Hopefully the method above can meet your financial needs in the future by having a careful financial planning.
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