Everyone must have financial needs and goals in the present and the future. To meet financial needs, you need to make a financial plan so that financial goals can be achieved, and needs are met. What is a financial plan, and how do you make a financial plan? Come on, read and understand this article.
What is a Financial Plan?
Making a financial plan is the process of achieving one's life goals through planned financial management. Based on this definition, there are goals that a person wants to achieve when making financial plans, such as wanting to get married, buying a house, buying a personal vehicle, spiritual needs such as going on a pilgrimage, to the ultimate desire to achieve financial freedom.
How to Make a Personal Finance Plan
After knowing what a financial plan is, you can pay attention to the following ways to make a personal financial plan:
- Evaluation of the current Financial Condition
Before making a financial plan, you first need to evaluate and analyze your current financial condition. You can pay attention to several things, such as:
- Marital status (not married or married)
- Working conditions (already have a permanent job or not)
- Age (related to remaining working age)
- Family conditions (number of dependent members)
- Economic conditions (ease of finding work and income)
- Education level (education level can affect income)
- Health conditions (affecting costs and continuing to earn income)
- Create Financial Goals
To make a financial plan, you also need to set goals that you want to achieve, both short and long-term. For example, for short-term goals like you want to get married in the next year or for long-term goals like owning a house in the next 5 years. Setting important financial goals, so you can create a financial plan that fits these goals.
You can set financial goals using the SMART method (Specific, Measurable, Attainable, Realistic, Timely)
- Specific, meaning your goals must be clear.
- Measurable, the financial goals you want to make must be measurable targets and the timeframe for achieving them.
- Attainable, which is related to determining priorities when making a financial plan, because usually, there is more than one goal when making a financial plan.
- Realistic means that you have to be able to make financial plans that are not grandiose by taking into account your financial condition. Don't make a financial plan that is too burdensome for your financial condition because it can cause frustration to achieve your goals or even make your finances worse and get you stuck in debt.
- Timely, meaning you have to make a financial plan with a clear timeframe to achieve these financial goals.
You can also use the Financial Calculator feature from OJK to help you determine the number of investment funds that you must prepare to achieve your financial goals.
Determine the Priority Scale
To make a good financial plan, you must also determine the priority scale of the monthly income that enters your account. You can apply the 40-30-20-10 formula when creating a financial plan. 40% of income can be allocated for daily needs, 30% you allocate for debt needs, 20% for savings and investments, and 10% for social purposes.
In allocating finances, there are long-term matters such as savings, investments, health insurance, and guarantees that you must include in your financial plan. For savings purposes, you can also open a MAS Savings account at Bank MAS as part of your financial plan. Apart from being an investment, savings can also be an emergency fund to prepare for unexpected needs in the future.
Do a Financial Plan Arranged with Discipline
After making a financial plan, the most important thing is to practice the financial plan with discipline. If your financial plan is not implemented, it will be difficult to realize the goals you want to achieve beforehand.
Periodically Review and Improve Financial Plans with the Latest Financial Conditions
In implementing a financial plan, you must also evaluate regularly because a person's financial condition can change anytime. For example, a family member is sick and requires a lot of money, and the monthly income has decreased significantly for one reason.
With these unexpected conditions, you also need to adjust the financial plan that you have made to your current financial condition. This means that the financial plan is dynamic and can be adjusted according to the current conditions of each person.
The Benefits of Creating a Personal Financial Plan
Making a financial plan also has benefits for you. Here are some of the benefits of a financial plan:
1. The Direction and Meaning of Financial Decisions
With a financial plan, you can understand how every financial decision can impact other areas of your overall financial condition. You will see that financial decisions are part of the whole, so you can consider the short and long-term effects of financial decisions on your life goals. This condition will also allow you to more easily adapt to life changes and feel more secure because you are on the right track to achieving your goals.
2. Tools to Meet Present and Future Financial Needs
A financial plan can also meet current and future financial needs. By making a financial plan, you can prioritize and allocate the right proportion of funds to meet your current needs and long-term goals in the future, such as buying a house, buying a personal vehicle, and investing.
3. Helps Achieve Financial Freedom
A financial plan also helps you achieve financial freedom, which can be interpreted as being free from debt, the availability of income streams from investments made, and being financially protected from any risks.
Start making your financial plan now so you are #MakinReady to achieve your financial goals.
Source :
Becoming Smart Millennials Planning Finances - OJK
The Smart Way to Plan Finances - OJK