Sabtu, 07 Januari 2012


Has become a common phenomenon that many of our colleagues, or people around us who often complain that their financial condition helter-skelter. The number of debts were mounting and exceed their income, even exceeding the number of assets owned. In this condition, which usually becomes the scapegoat is the small amount of income they have.

Yet the root problem is not actually located on the revenue side, but the failure to manage finances. Many of us who do not have a financial plan, never even thought to plan for the financial condition, especially in the future. Financial planning is actually an essential activity that must be done by anyone and this is what will differentiate between groups of people who always stuck by liquidity problems and a group of people who can enjoy life. This paper will try to discuss in simple, how one should start planning their finances.

Diagnose the financial condition
The first step that needs to be done in preparing the financial plan is to diagnose the condition of our current personal finances. To consider in diagnosing the financial condition is the amount of total revenue, total expenditure, the amount of assets and liabilities are debts that we have.

In general, it is clear that the amount of total income must not exceed the total expenditure. For people who have a fixed income each month then it could easily have estimated the amount of total revenue in one year, including non-regular income such as holiday allowances and bonuses. Then the expenditure should not exceed the total revenue is set routine they have.

Non-routine income should not be allocated to cover the total expenditure, but must be allocated for investment purposes or to strengthen an emergency fund. As for people who have this type of income variable (not fixed), the total expenditure should not exceed 80% of average earnings.
The next heading is the asset that should be observed. We often mistakenly defined the asset in relation to financial planning.

Assets are the things that actually deliver results or supporting our productive activity. A simple example is the house we lived in and the vehicles that we use can be classified into an asset for supporting our productive activity, while the villas, stereo sets, acoustic guitar, golf clubs and a second vehicle that we rarely use, certainly not an asset category. Savings and investment is one of the real intentions yielding assets.

Debt is the plural is actually done and not something to be feared. Debt is essentially increase our buying power by pulling our revenues in the future into the present. What to watch for in terms of debt is a type of debt and the amount of installment obligations that we must bear. Home mortgage and productive vehicle is clearly the type of debt is reasonable and can be tolerated, but credit card debt is a type of debt that absolutely must be avoided. The interest rate credit card debt for an average of 35-48 percent per year and this is clearly a burden to our financial liquidity.

Given the magnitude of interest rate credit card, then use a credit card should be aware of the extent of practicality and convenience only and not to increase our buying power by way of debt. In terms of managing the debt, the total amount of our debt repayment obligations may not exceed 30 percent of our total revenue. When we are trapped in conditions of debt obligations that exceed the threshold, then the debt restructuring should be done with absolute priority to the debts that have high interest, such as credit card debt, unsecured loans and the like.

Has Emergency Fund
The second step in preparing the financial plan is to check the availability of emergency funds that we have. Emergency fund is a fund at any time must be available when unexpected expenses arise. Many people do not think the availability of emergency funds in their financial planning, so that when unexpected expenses arise so frequently done is to increase purchasing power by creating debt, and usually kind of debt is debt with high interest rate debt such as credit cards and credit / loan without collateral.

But it is obvious that the debt actually totally should not be used as a mainstay to cover these unexpected expenses. This is where the importance of the availability of emergency funds, so we'll miss the high-interest debt. The amount of emergency funds to be held in the financial planning varied, ranging from 5 to 20 times our total monthly expenses, depending on the load that we bear. If you're single then just have a five-month emergency fund total expenditures, while more and more members of our family, the greater the emergency fund we have to prepare.

Simple benchmark is each family member who became
dependent we should have a 5-month emergency fund total expenditures. So that when we are married and have 2 children, then the total amount of emergency funds that we have is 20 times our total monthly expenses. This emergency fund is not categorized as an investment, but keep an emergency fund should be invested in order to evolve.

Types of investment options for an emergency fund is an investment that are illiquid and have high levels of investment risk is relatively small. Investment in an emergency fund is not for the purpose of growth but rather on the availability at any time and are not cracked by inflation. It must be realized that the magnitude of this emergency fund should be increased in line with the increase in our standard of living.

Creating a List of Spending
The third step in preparing the financial plan is to make a list of expenses. At this stage the absolute do is check the type of expenditure which we live. Broadly speaking the types of expenses that can be divided into four parts, namely the obligation to pay debts, expenses such as routine household expenses, electricity, telephone, etc., investments and personal expenses.

As already described in the first step above, the amount of the obligation to pay the debt (mortgage) may not exceed 30 percent of our total revenue. And this is the first priority should be placed on the expenditure side. Defer payment of debt obligations will only lead to the creation of new debt opportunities in the future that has a higher interest rate. The second priority in spending is managing expenditures.

Must be clearly distinguished between regular expenses and personal expenses. Routine expenditure is the type of expenditure that absolutely must be done to support our productive activity, not could be saved without degrading the quality of life and can not be avoided, while personal spending is the kind of expenditures that must be sacrificed when a decline in revenue. The amount of expenditures must be maintained at around 50 percent of our total revenue. When the routine expenditures already exceed the threshold 60 percent of our total revenues, then we do not have the opportunity to invest.

As a result we will lose the opportunity to improve the quality of life in the future. So when expenditures are nearing the threshold, we must work even harder so that our total revenue increases. Investments should also be a priority in the allocation of "cost" us. This investment is useful to improve our quality of life in the future. Investment will increase the assets we have and be a source of passive income.

Cultural investment should begin to be done early, how
even small our revenue. The amount of the allocation of "expenditures" for minimal investment is 10 percent of our total revenue. In order for this condition is reached, the allocation of investment rather than from the rest of our income after deducting the expenses, but it was already allocated as soon as we receive the revenue.

It should be understood that the investment is not the same as saving, since saving only provide asset growth rate is relatively very small. The younger the age we are the greater weight (percentage) of our investments in investment instruments that can provide a high return rate to support our financial future.

It must be realized that the investments that provide higher yield rate has always had a high level of risk and risk level should be fixed in accordance with the characteristics of risk tolerance that we have. The more settled conditions of our economy, then the asset allocation in the form of investment must be the greater, until, in turn, we can achieve financial freedom when we receive the results of the work has exceeded our investment assets or at least close to the results of our productive work.

Personal expenses are the only type of expenditure that can and should be sacrificed when there is an increase the percentage of expenditure in the three other expenditure items. Postal delays and reductions in personal expenses will not reduce our quality of life and not harm our financial condition in the future.

This is clearly different if we reduce our spending allocations to the three spending priorities of the first post. One way to control personal spending is to open a special account at the bank that used to support these personal expenses and the account contains only the rest of us the previous month income after deducting the total expenditure of our third priority expenditure items that should not be contested. This special account used to fund personal expenses so as not to undermine these three priority expenditure items. With the special account then we also need not bother to calculate the amount of the allocation of personal expenses that may be performed.

Once we fix our financial condition, we must enter the fourth step, which is planning a short-term financial goals and our long-term. In determining the short-term financial goals and long term financial goals should be clearly illustrated to be achieved and over time to achieve it. Target goals should be realistic and of course adapted to our conditions. Long-term target and then broken down into short-term targets and strategies to achieve those goals.

One factor that most determines success in achieving financial goals is the commitment and order us to obey the strategy that has been determined. Professional financial planners from the banking world can be engaged to restructure our financial goals. Hopefully this will inspire us to reorganize and improve our personal finances. Successful investing.

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