Tips on How to Manage Household Finances Anti-Waste

In the following, we will give you the secret to finding ways to manage household finances without being extravagant and spending will be more effective and save money.

Here are short tips that you can try to manage household finances so that they are not wasteful, including:

  1. Get to know your current financial condition
  2. Know your financial priorities
  3. Determine the salary allocation method
  4. Create a special account
  5. Record expenses in detail
  6. Make sure debt does not exceed income
  7. Reduce the use of credit cards
  8. Evaluation of monthly expenses
  9. Prepare an emergency fund
  10. Prepare insurance protection
  11. Regularly save and invest

In domestic life, married couples must know how to manage household finances so that they are not wasteful. Often, family finances become unstable because they unknowingly spend a lot of expenses every month. In fact, every family must also prepare an emergency fund. For this reason, husband and wife play an important role in optimizing income so that they can meet all household needs. Starting from basic needs to meet entertainment needs.

Actually, you can optimize a large salary or a small salary by managing the right household finances. Even though managing finances well is not easy, you can still apply the following tips so that they are not wasteful and household needs are met.

How to Manage Household Finances

1. Know Your Financial Condition and Your Partner
First, you must recognize the condition of your income and your partner’s in order to develop a strategy to manage your monthly finances. This will make it easier for you to manage the allocation of income to each expense item. If your husband and wife work, then you have to calculate the entire income each month before dividing the income allocation to meet needs.

Families who get a fixed monthly salary or fixed income will find it easier to plan. However, families who earn an uncertain amount of income can also do financial planning so that they can meet their daily needs. Thus, this first stage is an important part of avoiding a financial deficit.

2. Know Your Financial Priorities
Often, a family that earns an uncertain amount of income has difficulty making ends meet. Even families who have large monthly salaries still often face inflated expenses. For that, you must know your financial priorities. Every household must ensure careful planning of monthly spending. Make sure you meet basic needs first and allocate salary appropriately and effectively.

3. Determine the Salary Allocation Method
Every household has different spending needs. For this reason, husband and wife must use the salary allocation method according to their monthly income and expenses. You can apply the 50/30/20 method, which is 50% basic needs, 30% wants, and 20% savings and investment.

For example, a husband and wife’s income totals Rp. 10 million. That way, the allocation of basic needs, such as food, transportation, electricity, insurance, and so on is IDR 5 million, the allocation of desires such as new clothes, vacations, new cellphone installments, or other needs IDR 3 million, and savings and investment funds of IDR 2 million.

For households with large expenditures, you can use the 80/20 method, which is the allocation of 80% of basic needs. Meanwhile, the allocation for savings, investment, and entertainment needs is 20% of monthly income.

Also read: Mediocre Salary Can You Save and Invest? Try This Salary Allocation!

4. Create a Special Account
After knowing your household needs, you can create a special account for daily operations, savings accounts, and investment accounts. That way, you and your partner can allocate funds to each expense item easily and in control. This can also reduce the risk of spending money on basic needs for other less important things.

5. Record Expenses in Detail
Every time you spend funds, you must make detailed records to facilitate the monthly financial evaluation process. You and your partner can arrange categories and descriptions of the amount of expenses. Now, everyone can take notes manually or digitally through a sophisticated note-taking application. The existence of an expense recording application can make it easier for you to compile a list of expenses easily and practically so that this recording activity can be more effective.

6. Make sure your debt doesn’t exceed your income
Often, high-income families run into financial deficits. Generally, they are wasteful because they have a debt that is greater than their monthly income. The debt bill can be a burden that interferes with household finances. For that, every household must be wise in debt by taking installments or debts not exceeding 30% of your income and avoiding debt for unimportant purposes. In addition, you also have to ensure that you meet your bills on time to avoid the burden of fines that must be met.

7. Reduce Credit Card Usage
One way to avoid debt and installments is to reduce the use of credit cards. You and your partner must be wise in using credit cards to avoid consumptive living habits. If it’s not an important need, then you have to minimize the use of credit cards. You can set a credit card limit in anticipation of maintaining stable finances. In addition, you can also carefully calculate the installment simulation along with interest and monthly installments.

Often, people unknowingly shop with a credit card until the bill becomes a serious problem in the household. You can seek savings funds to buy certain items that have high prices and spend funds according to spending priorities so that household finances are more controlled.

8. Evaluation of Monthly Expenditure
Based on the expense record, you and your partner can evaluate each expense. If your monthly expenses start to swell, you can save money, reduce expenses that are not too important, and re-sort between needs and wants. Everyone has a desire to own something. However, you must know between a need or a mere desire. Don’t let you spend a lot of money to fulfill a high lifestyle.

This evaluation can also make married couples more open about financial issues and share their thoughts on how to manage household finances so that they understand their financial condition in detail. That way, your household can be free from wasteful habits.

9. Prepare an Emergency Fund
In addition to basic needs, a family also often allocates funds for secondary needs to entertainment. However, you also have to keep preparing an emergency fund every month. In domestic life there will always be unexpected things that cost money in a short time. That way, you don’t have to worry about money to meet emergency needs. In this case, you can allocate emergency funds in special accounts or low-risk investment instruments such as money market mutual funds. In addition to saving, the allocation of emergency funds to mutual fund investments can also optimize your income.

10. Prepare Insurance Protection
In addition to the allocation of basic needs, you must also consider protecting the health and safety of family members. Insurance products are important as financial protection as a form of anticipating health risks in the future. If one day a family member gets sick, then you don’t have to worry about the cost of the treatment. Today, many of the best insurance companies offer affordable insurance premiums. You can choose insurance products according to the needs of family members.

In addition to health protection, you can also choose life insurance, child education fund insurance, or other insurance that can provide guarantees and protection in the future. For simple families with small salaries, you can choose middle-class insurance products with affordable premiums to provide health protection or assets in unexpected situations.

11. Regular Savings and Investments
In addition to insurance, you also need to prepare savings and investment funds to optimize your income every month. Regular saving and investing activities every month can bring many benefits in a calm future. However, you need to identify investment goals, such as emergency funds, pension funds, children’s education funds, home savings funds, and other financial goals. That way, you can adjust the best type of investment according to your investment goals and period.

For starters, you can choose low-risk investment products such as mutual fund investments. If you want to prepare funds for the long term of more than 5 years, then you can choose fixed income mutual funds, mixed mutual funds, stock mutual funds, or gold investments. However, you can prepare an emergency fund or short-term financial goal by investing in money market mutual funds.

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