10 Ways to Make the Right Financial Planning

The purpose of financial planning is that financial flows are used on target. Let's learn how to arrange it properly

It feels like it was just yesterday's payday but today the money is running low. Do you feel the same complaint? Maybe there is something wrong in the preparation of your financial planning.

Where financial planning or good financial planning can certainly make it easier for you to manage your finances so that they don't run out quickly.

Therefore, let's make your financial planning even better, OCBC NISP friends through the following 10 tips for making correct and wise financial planning.

Understanding Financial Planning

Before understanding how to plan financially, you must first understand the meaning of financial planning. Financial planning is a way to manage finances wisely in order to achieve financial goals.

The term financial plan is often known as "financial planning". The existence of good financial planning makes the income obtained will not be in vain due to unmeasured expenses. So that every rupiah collected can be maximized.

Purpose of Financial Planning

A financial plan without a goal makes your financial planning in vain. Therefore we need a financial goal to be achieved. So, to make it easier for you to determine your goals, determine your goals based on the timeframe, namely short-term and long-term financial goals.

Short-term goals, also known as short-term financial planning goals, are financial goals that you want to achieve in the near and short term such as the next few months or under 10 years. Examples include emergency fund needs, rental fees, insurance costs, credit card installment payments, traveling, and weddings.

While long-term financial planning or long-term goals are financial planning goals that will be achieved within 10 years or more. Examples of long-term financial planning include retirement funds, children's education savings, asset investments, and so on.

10 Ways to Make Financial Planning

In order to better understand the implementation of a financial plan, let's look at the steps in preparing a financial plan below.

1. Determine the financial planning goals you want to achieve

The first step in preparing a financial plan is to determine the financial goals to be achieved. By knowing your financial goals, you will understand the biggest reasons why you should make various efforts to achieve financial goals.

If the goals are not clearly defined, then you may be uncommitted and easily complacent to spend money on things that are less important. In addition, having a good financial goal allows you to determine the next step.

For example, if you want to buy a house within 5 years, then you must manage your expenses and income as well as possible. If you have prepared a financial plan, it turns out that with this income condition, you are still not able to meet the nominal target to buy a house within 5 years. Then you have to look for other ways such as increasing your income or borrowing from the bank.

That is why making financial planning must be realistic in accordance with financial conditions. To be clearly measurable both income and financial expenses.

Therefore, it is very important for you to determine the direction of your financial goals in order to easily determine the next step.

2. Do a monthly financial condition record

After determining financial goals, the next step is to record all expenses and income both monthly and yearly. It is useful to know the condition of financial health.

Having a record of expenses and income allows you to control and evaluate expenses.

Suppose you always record every financial expense and income. Then before the end of the month, it turns out that your money has run out. By looking at the record of expenses and income you can assess what expenses made the money run out before the end of the month.

If you find it difficult to record financially, try using financial applications that are often found on the Playstore or Appstore to help manage personal and family finances.

3. save money

One of the best ways to manage finances is to be frugal. How to save money that can be done by prioritizing needs. So you only buy the things you need.

Distinguish frugal with stingy yes. Even if you save money, you can still help others by allocating special funds to charity or donating. Frugality also does not mean killing your happiness to go out with friends to the mall or tourist attractions.

This can be done by allocating special funds for entertainment. But you stay tight on expenses that are not so important. Start cutting back on some non-essential expenses, without killing your fun.

4. Paying debts on time

Increased needs that are not commensurate with expenses sometimes make you forced to go into debt. Even if you have debt, you can still make financial planning.

One way to manage a financial plan when you have debt is to make debt payments on time. It is important for you to pay debts within the time limit so that the nominal paid does not swell over time.

Debt itself is not always negative. Debt can be a positive thing if it is used for productive things such as building a business. But debt can be negative if it is used to buy consumer goods.

5. Allocate emergency funds

An emergency fund is an important allocation of funds. The purpose of the allocation of emergency funds is to prepare costs if at one time an unexpected event occurs.

Take, for example, the current pandemic. Many workers are laid off so there is no income. Now while looking for other sources of income, you can use an emergency fund to meet your needs.

Emergency funds can also be used for hospital care costs, medical expenses and vehicle accident costs.

Having an emergency fund will make life more comfortable and you don't have to worry. Because when an unexpected event occurs and you need funds, you don't have to be hard to find a loan.

6. Saving and investing

Saving and investing can help you achieve your financial goals. The goal is that the assets owned are maintained and of value in the future.

There are many types of investments that you can try, from savings deposits, stock investments to mutual funds. Choose an investment instrument that suits your abilities and needs.

This step can also help you in earning additional income. If the investment generates a profit, it will certainly support your financial goals.

7. Sign up for insurance

In living life, of course there are unexpected things that can be present in the future. As a preventive measure, you can register yourself and your family through insurance.

Registering for insurance will guarantee protection for you and your family so you don't have to worry when you face unexpected events. You also don't need to be confused in finding loan funds if you need it at any time.

It is better to buy life insurance as early as possible because we do not know when the unexpected will come in life. Life insurance makes a smart financial plan that will not run out in an instant.

8. Define and implement strategy

After knowing the various tips and ways to manage finances above, you can determine a strategy that suits your needs and conditions. The strategy that has been planned will be of no use without realization.

So don't forget to apply the strategies and tips that have been made. Of course you will face some difficulties because you are not familiar with the planning and strategies that have been designed. But after some time you will get used to it and become a new profitable routine.

9. Financial plan monitoring

The next tip is for financial planning to be managed properly through monitoring. Monitoring of the financial planning process is important for conducting evaluations. By knowing what you are missing after taking a few steps in managing your finances, you will improve it for the better.

Do a financial check every 3 months, 6 months. 9 months or once a year. Reviewing your financial plan regularly will make your financial condition and life better in the long run.

10. Evaluate financial planning consistently

The last step of financial planning is to make improvements or introspection on the shortcomings and mistakes that have been made.

In the process of monitoring the financial plan, you will get various results from the financial design that has been done. That way, you can improve it even better in the future.