There are several conditions that make a person experience financial difficulties. This condition can be found, for example, in entrepreneurs whose turnover has decreased, entrepreneurs who go bankrupt, employees who have lost their jobs, or families who have lost a source of income. In the midst of financial difficulties like this, someone has the potential to use the savings that have been prepared for future plans, to make a living.
As a result, he could fail to achieve the plan that had been prepared.
Have you been in the same situation? Actually, no matter how difficult the financial conditions you face, keep trying to realize the financial plans that you have compiled. Empirical rule helps in that.
This plan can only be realized if you remain disciplined in saving and do not use your savings to cover your needs while your finances are running low.
There are several saving tips that you can try.
- Pay for routine needs
No matter how small the income you receive when financial conditions are sluggish, try to immediately set aside 10% to save.
Only after that, use the income to pay for routine needs.
Paying for routine needs is a basic step in managing personal finances so that you can achieve financial freedom.
Which includes routine needs, for example:
- Pay bills in full, such as electricity and water bills
- Pay rent for your house or apartment if you rent a place to live
- Paying life insurance and health insurance premiums
- Paying mortgage installments, or KPR, or apartment ownership credit, or KPA, if you buy a place to live)
- Paying motor vehicle loan installments (KKB)
- Paying high-interest consumer debt such as credit card debt and unsecured credit (KTA)
- After paying the bills, then you can allocate income for monthly shopping, entertainment costs, and other tertiary needs. By prioritizing saving and paying for routine needs up front, it means that you have to be flexible in adjusting the amount of monthly spending with the remaining budget.
- Close urgent debt according to ability
The next post that you need to secure is to cover urgent debt according to your ability.
For example, you currently have mortgage debt with installments of IDR 7 million per month, an interest of 11% per year, and a tenor of 10 years.
At the same time, you have credit card debt of IDR 3 million, interest of 2% per month or the equivalent of 24% per year, and a period of six months.
To determine which debt should come first, you should first examine the cash you currently have.
Then, compare the two types of debt that you have, which one are you more able to cover, a debt of IDR 7 million per month or a debt of IDR 3 million?
Second, compare the interest expense that is the most burdensome. In the example above, it is clear that the 24% per year credit card debt interest puts more pressure on your finances.
With these two things in mind, you should cover the credit card debt of IDR 3 million.
- Reduce monthly costs
Because the remaining budget for a limited monthly fee, now you have to be creative in making savings on certain items. Cut costs that are tertiary and aim to meet wants, not needs. Examples of tertiary costs include:
Pay TV subscription fees, video streaming, song streaming. Because this is not a necessity, cutting these costs is one strategy so that you have healthy finances.
The cost of hanging out and eating out. In a sluggish condition, try to bring supplies and stop hanging out until financial conditions improve.
The cost of buying coffee. You can keep these costs down by making your own coffee in your home or office.
Lifestyle expenses such as shopping for clothes, make-up, accessories, and expenses for other hobbies.
Hold on to spending on hobbies like this until your financial condition recovers.
Apart from cutting monthly spending costs, there are other strategies to reduce monthly spending.
The trick is to maximize credit card promos and digital wallets when shopping. Also control the electricity consumption of household appliances you have.
Toaster ovens actually consume less electricity than regular ovens. You can also consider using a stove oven instead of an electric oven. If you previously used your washing machine every day, you might consider using it every two or three days.