As people grow older, attitudes and behaviors must also grow more mature, especially in the financial aspect of life. It’s an undeniable fact that our needs continue to increase, day by day.
If your needs are not balanced with mature financial management and responsibility, you may struggle to fulfill those essential needs. What kind of financial management that indicates maturity? Check the list below!
Expense Records and Financial Goals
Each month, you receive a salary. However, towards the end of the month, you start to get confused on how fast your salary is fully spent. That’s why you need to have a financial budget.
Write down every single expense that you’ve made, no matter how small it is. From here, you can see the expenses categories that consume most of your income. If there are specific expenses categories that are not considered crucial, then you can allocate the fund to other expenses categories.
In compiling your financial budget, make sure that you set aside a portion of your income for savings and investments. But first, you must determine your own financial goals so you have a clear target. For example, in five years to come, you wish to buy an apartment. Therefore, you should do a payment simulation to see how much money you need to save monthly in order to pay for an apartment unit in five years from now.
Prepare an Emergency Fund
Why must an emergency fund be in your financial management? Life is full of uncertainties, you never know when the next emergency situation will come. For example, broken work laptop, house renovation, salary cuts or mass layoffs.
When this type of situation happens, an emergency fund will temporarily cover your daily expenses. Ideally, you need to set up an emergency fund that consists of 6 month worth of your normal expenses.
Investment as a Pension Fund
Apart from an emergency fund, a pension fund is just as important to be prepared immediately. The earlier you start, the more money you get to save. There are plenty of ways to prepare for your pension fund.
Pension fund is a long term benefit, so long term investments with more than 5 years of terms can be the suitable choice for you. Why not just use a savings account? It’s because investment will get you higher interest rates than a common savings account.
Have More than One Savings
Although investment has higher interest rates, it doesn’t mean that you shouldn’t open a conventional savings account. Moreover, your monthly salary is usually transferred to your bank account. If you want to have a savings account, make sure to have multiple and separate them based on their functions. For example, account A is used to buy your daily needs, whereas account B is used as a savings deposit.
Have an Insurance
Insurance should not be omitted in your financial management, one of which is health insurance. No one wants to get sick. However, in these uncertainties, you should always prepare for the worst.
In case you fall ill, a health insurance will cover all your treatment bills, so you don’t have to pay anything. Not just health insurance, you may also consider having life insurance, property insurance, and vehicle insurance.
Credit Card as a Complement
Banish your perception of credit card as a tool that makes you more wasteful of money and brings you to debts. As long as you use it wisely, credit card can actually make your life easier.
If you still have a credit card debt, make it a priority to pay it off. Afterwards, re-arrange your credit card usage as a budget complement, like using it to get discounts or cashbacks in chosen merchants.
It’s time for you to be more mature in terms of managing your finances. By doing so, not only can you achieve your financial goals, but you may also reach financial independence. Therefore, you can live a more peaceful life.
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