5 Ways to Manage Personal Finance

For a beginner, knowing how to properly manage personal finance will be able to help them get through various kinds of problems. Creating a financially secure life can seem like a daunting task and requires expert skills.

Personal Finance

However, what you really need is a well-targeted financial arrangement. Personal finance is all about how you can meet your personal finance goals. Starting from financing short-term needs, planning for retirement, or saving for your child’s marriage and education. If you are still confused and unsure about the best way to manage your personal finances, then the following information will be able to help.

Like This How to Manage Personal Finance

The sooner you start a plan to manage your finances, the better the results will be. But it’s never too late to start doing this to give you and your family financial security and freedom. Here are some of the best ways to manage personal finances, especially for beginners.

1. Plan a Monthly Budget to Manage Personal Finance

A monthly budget is very important so that you can meet your short-term and long-term financial goals. The 50/30/20 budgeting method can be a good framework.

Fifty percent of salary or net income after taxes are used for living necessities, such as rent, utilities, groceries, and transportation.

Thirty percent is allocated for indirect expenses, such as eating out and shopping for clothes.

Twenty percent is used for the future, savings or investment can be your choice.

2. Prepare an Emergency Fund to Manage Personal Finance

It’s important to make sure that you can set aside money for unexpected expenses, such as medical bills, car repairs, and various other emergencies. The cost of living for three to six months is the ideal safe limit. It is highly recommended to set aside 20% of each salary every month, even if your emergency fund is already collected, never stop putting it aside.

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3. Limit Debt

Indeed this sounds very simple, but you should not be careless. Leasing can sometimes be more economical than buying outright, whether you’re renting a property, renting a car, or even subscribing to computer software. But set limits so you don’t get overwhelmed later on.

4. Use Credit Cards Wisely

Credit cards can be a trap, but it’s also unrealistic if you don’t have one in today’s world. It’s a good idea to track your expenses, because this can be a help in planning finances. Don’t overuse it.

5. Plan Funds for Retirement

Retirement may be something you feel very far away from, but it can come sooner than you expect. A person will need about 80% of their current salary in later retirement based on some research. The younger you start, the easier it is for you to benefit from the magic of compound interest, which grows over time.