Money has become one of the essential things for all aspects of life. For this reason, there will be expenses made for various needs and activities every day.
For this reason, all types of expenses must be arranged in such a way as to prevent financial plans from being disrupted. But before managing your expenses properly, you can learn more about the various types of expenses that are divided into several groups. Here are some types of expenses that you can use as a reference in your financial plan.
Types of expenditure that you must know
Personal expenses do not have the same value between one individual and another. In this explanation, we'll discuss the portion/percentage of each spending post.
1. Routine expenses
Routine expenses are types of expenses that you are required to pay every month for your living needs. In routine expenses, there are several main expenses such as food, electricity bills, transportation, children's school fees, and whatever is incurred for daily needs.
For this reason, routine expenses are one of the expenses that require the highest percentage of your income. This type of routine expenditure can reach 40% to 60% of your total income each month.
2. Issuance of installment or debt payments
Installment expenditure is a type of expenditure that requires you to pay a certain amount of money to pay off some of the items or activities that you have previously purchased. Usually, this one expense is often an expense that burdens many people's finances.
If you make payments in hindsight, you will feel that your expenses are more economical when buying an item on debt or in installments. But installment expenses actually make your monthly expenses even more swollen.
It's a good idea to provide a portion for this installment payment expense, a maximum of 30% of the income you can get each month. In addition, you also have to consider the due date of each transaction you make so that there are no bill payments past the due date.
3. Expenditures for savings and investment
This type of investment expenditure is an expense you must set aside for your financial security in the future. The reason is that this type of expenditure will be beneficial when you need it in old age or an emergency.
Apart from that, you can also rely on these savings or investment expenses for several purchases with a sizeable nominal amount. You start by buying a car, getting married, or buying a property. You can set aside 10% to 30% of the income you receive each month.
4. Lifestyle expenses
You can set aside these expenses, but they are not a priority. The reason is that this one expenditure is an expenditure that aims to give satisfaction to oneself.
Because usually, your lifestyle expenses are used to buy goods or activities you like. You start by watching movies, concerts, or other activities that can make you happy. The amount itself, you can set aside 15% -20% as needed.
5. Expenditures for social needs
This type of expenditure is less closely related to entertainment activities than many imagine. Social or entertainment needs, such as hanging out or spending time with friends, are equally essential monthly needs.
But behind all the income that you have succeeded in achieving, there are several other people's rights that you should also know about. There's nothing wrong with setting aside a little of your income to include this social expenditure, from giving alms and paying zakat to carrying out other social activities that can benefit many people.
6. Insurance expenses
Spending on savings or investment is to guard against certain conditions that are classified as emergencies. In that case, you can make the following insurance expenses as another option.
The reason is that by setting aside expenses for insurance needs, you can take advantage of these expenses for unexpected events in the future. Starting from health insurance, vehicle insurance, or other insurance, you can include it in one of your expense lists. Of course, it must also be adjusted to your needs.
7. Expenses for children's education
If you already have a family, including children, one of the most necessary expenses for you to pay attention to is spending on children's education. The best educational facilities for children are currently relatively expensive and will require a lot of expenses.
For this reason, you can set aside educational expenses early so that the child's educational facilities can be guaranteed. The best way to manage children's education expenses is to open a savings account separate from your personal savings account. That way, spending on children's education costs can be used according to its primary purpose.
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Managing expenses and planning finances is indeed an activity that is considered difficult for many people. Discipline and accuracy are needed to realize the desired financial plan properly.
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